Bonnybrook – Federal Court of Appeal finds no reviewable error in CRA’s decision that failure to file returns for 13 years was not justified by major health problems

For its 2003 to 2015 taxation years, Bonnybrook did not file corporate tax returns and, consequently, was not entitled to receive dividend refunds. The Minister’s denial of Bonnybrook’s initial application in May 2016 for relief (based on the serious health issues for many years of its sole director) was found at 2018 FCA 136 to be based on the incorrect view that s. 220(3) does not accord the Minister the discretion to extend the limitation in s. 129(1) in order to obtain the dividend refunds. The FCA directed the Minister to reconsider. The Minister then requested and received details of the director’s health problems. In her reconsideration decision, the Minister acknowledged that the health issues were serious but concluded that taxpayer relief was not warranted because the director was capable of arranging for assistance in filing the returns and should have done so.

In finding that there were no reasonable grounds for interfering with this decision, Woods JA applied the Vavilov principle that in order for the Minister’s decision to be reasonable “the outcome should be considered in light of the underlying rationale to ensure that the decision as a whole is transparent, intelligible and justified” - and concluded that the decision satisfied those requirements. She also stated:

The fact that the Minister did not discuss the harshness of the tax result does not mean that it was not considered and does not render the decision unreasonable.

Neal Armstrong. Summary of Bonnybrook Park Industrial Development Co. Ltd. v. Canada (National Revenue), 2023 FCA 145 under s. 220(3).