Osborne – Federal Court sets aside a CRA decision to not extend a s. 216 return filing deadline, because CRA did not address the taxpayers’ arguments

Two residents of Bermuda owning a Canadian rental property filed their s. 216 returns nine days after the filing deadline (which was six months after the taxation year end as a result of their having given undertakings under s. 216(4).) In requesting an extension to this deadline under s. 220(3) they alleged that CRA had misapplied their withholding tax payments to their general account rather than their non-resident account, and that much of their delay in filing their returns was attributable to their holding off on filing their returns (with some encouragement from their accountants) until this error was remedied (and they also proffered an excuse of sorts for the remaining portion of the delay).

Before returning the CRA rejection of their extension request (the “Decision”) for redetermination by another decision maker on the basis that (to quote Vavilov) the Decision did not “exhibit the requisite degree of justification, intelligibility and transparency”, Go J stated:

No mention was made [in the Decision] of the Applicants’ argument about the error made by the CRA in allocating withholding tax remittances to the wrong account or the delay by CRA in remediating the problem with the remittances. It may well be the case … that the error in the tax remittances was not made by the CRA or alternatively …that the Applicants could have filed the NR Returns before the filing deadline. However, that was not stated in the Decision.

Neal Armstrong. Summary of Osborne v. Canada (Attorney General), 2022 FC 122 under s. 220(3).