Canadian Tax Litigation Insights: How the Jennings-Clyde (Vivatas, Inc.) Decision Protects Canadian Taxpayers’ Rights in Federal Court of Appeal

The recent Federal Court of Appeal ruling in Jennings-Clyde v. Canada (Attorney General), 2025 FCA 225, underscores the critical need for administrative transparency when the Canada Revenue Agency (CRA) exercises discretion in taxpayer relief matters. 

This Canadian tax litigation decision highlights how inadequate explanations from the CRA can lead to successful judicial reviews, offering valuable lessons for those dealing with late filing requests or refund claims under the Income Tax Act. Released on December 12, 2025, the ruling emphasizes accountability in public administration, particularly when significant financial stakes are involved, such as six-figure refunds.

 For business owners and investors managing complex tax obligations, understanding this Canadian tax precedent can strengthen strategies for challenging CRA denials. Expert Canadian tax litigation lawyers often reference such cases to guide 

entrepreneurs, professionals, investors, accountants, and crypto investors through CRA disputes, ensuring compliance and maximizing relief opportunities.

Backstory of Jennings-Clyde (Vivatas, Inc.) Tax Relief Dispute in Canada

The appellant, Jennings-Clyde, Inc., operating as Vivatas, Inc., sought permission from the CRA to file corporate tax returns beyond the standard deadline. This Canadian tax relief request aimed to secure a refund under subsection 164(1) of the Income Tax Act, which requires filings within three years of the taxation year’s end for eligibility. 

The CRA denied the application under subsection 220(3), which grants the Minister discretion to extend certain deadlines for taxpayer relief. Without legal representation, the appellant pursued judicial review in the Federal Court, arguing that the CRA’s refusal lacked sufficient justification. 

The Federal Court, in its 2024 decision (Jennings-Clyde v. Canada (Attorney General), 2024 FC 1141), declined to overturn the CRA’s ruling. The appellant then appealed to the Federal Court of Appeal, focusing on the insufficiency of the CRA’s reasoning. 

This sequence of events illustrates common challenges faced by unrepresented taxpayers, including entrepreneurs and small business owners, when navigating CRA administrative processes in Canadian tax litigation.

Core Tax Issues and Judicial Findings in Jennings-Clyde (Vivatas, Inc.) CRA Challenge

At the heart of this Canadian tax litigation were questions about the CRA’s obligation to provide adequate reasons for denying discretionary relief. The Federal Court of Appeal, led by Justice David Stratas, determined that the CRA’s explanation fell short of required standards. 

The CRA had distinguished the appellant’s situation from prior jurisprudence, such as Bonnybrook Park Industrial Development Co. Ltd. v. Canada (National Revenue), 2018 FCA 136, where subsection 220(3) was applied to a different refund provision. However, the CRA offered no clear grounds, analysis, or reasoning for this distinction.

Additionally, the agency asserted that subsection 220(3) could not extend the deadline in subsection 164(1), citing subsection 164(1.5) as evidence of parliamentary intent, but without interpreting the text, context, or purpose as mandated by Supreme Court guidance in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65.

The court further noted discrepancies in the record: the CRA referenced the appellant raising Bonnybrook in submissions, yet no evidence supported this claim, suggesting potential procedural unfairness. J

ustice Stratas highlighted a recurring pattern of substandard reasons in CRA taxpayer relief decisions, referencing cases like Osbourne v. Canada (Attorney General), 2022 FC 122, and Barrs v. Canada (National Revenue), 2022 FCA 147. The findings stress that administrative bodies must demonstrate genuine engagement with submissions, promoting better decision-making and public trust. 

Knowledgeable Canadian tax litigation lawyers apply these principles to ensure CRA decisions are transparent and justifiable, aiding clients in complex refund and late-filing disputes.

Broader Implications for Canadian Taxpayers in Jennings-Clyde (Vivatas, Inc.) Ruling

This Canadian tax litigation decision has significant ramifications for professionals, investors, and accountants handling CRA interactions. It signals that courts will scrutinize CRA denials for adequacy, potentially increasing successful judicial reviews where explanations are perfunctory. 

Entrepreneurs facing late filing issues due to business disruptions, such as those in volatile sectors like crypto investments, can leverage this to demand clearer rationales from the CRA. 

The court’s commentary on resource constraints at the CRA implies systemic issues, urging policymakers to address funding for improved administrative quality. Overall, it enhances accountability, encouraging the CRA to adopt efficient practices like referencing public documents or standard templates for recurring Canadian tax relief issues.

Seasoned tax lawyers in Toronto can use this precedent to advise clients on building robust submissions, reducing the risk of arbitrary denials and optimizing tax strategies.

Key Takeaways from Jennings-Clyde (Vivatas, Inc.) Canadian Tax Appeal

In conclusion, the Federal Court of Appeal’s allowance of the appeal in Jennings-Clyde (Vivatas, Inc.) reaffirms the importance of reasoned administrative decisions in Canadian tax matters. 

By setting aside the Federal Court’s judgment and remanding the case to the CRA for redetermination with proper submissions and explanations, the ruling protects taxpayer rights. 

Expert Canadian tax litigation lawyers view this as a reminder that transparency is foundational to fair tax administration, benefiting a wide range of stakeholders from investors to business professionals in navigating CRA challenges.

Pro Tax Tips

• When requesting Canadian tax relief, prepare detailed submissions addressing relevant precedents like Bonnybrook to anticipate CRA distinctions.
• Document all communications with the CRA to create a clear record, aiding potential judicial reviews in Canadian tax litigation.
• Consider engaging a knowledgeable Canadian tax litigation lawyer early to ensure arguments align with Vavilov standards.
• For crypto investors, factor in volatility impacts on filing timelines when seeking extensions under the Income Tax Act.
• Monitor CRA patterns in relief denials and challenge inadequate reasons promptly to secure refunds.

FAQs

What does this Canadian tax litigation case mean for late tax filings? 

It requires the CRA to provide thorough explanations for denials, improving chances of successful challenges.

How can businesses apply this ruling in Canadian tax disputes? 

Entrepreneurs should insist on detailed CRA responses and seek judicial review if reasons are lacking.

Does this affect refund claims under the Income Tax Act? 

Yes, particularly under subsection 164(1), where discretion under subsection 220(3) must be justified.

What if I’m unrepresented in CRA matters? 

The decision shows self-represented taxpayers can succeed by focusing on procedural fairness in Canadian tax litigation, as demonstrated by the unrepresented appellant’s victory in the Federal Court of Appeal on judicial review grounds. 

However, corporate taxpayers cannot self-represent in proceedings before the Tax Court of Canada, where representation by counsel is mandatory under the Tax Court of Canada Rules (General Procedure); individuals may self-represent in certain contexts, but engaging an experienced Canadian tax litigation lawyer is advisable for complex matters.

Is there a pattern in CRA decisions on taxpayer relief? The court noted recurring inadequacies, suggesting broader reforms may be needed for Canadian tax administration.

DISCLAIMER: This article provides broad information. It is only accurate as of the posting date. It has not been updated and may be out-of-date. It does not give legal advice and should not be relied on as tax advice. Every tax scenario is unique to its circumstances and will differ from the instances described in the article. If you have specific legal questions, you should seek the advice of a Canadian tax lawyer.