A recent Federal Court of Appeal decision has sent an important message to the Canada Revenue Agency (CRA): decisions that affect taxpayers must be explained properly — not just decided.
In Jennings-Clyde v. Canada (Attorney General), 2025 FCA 225, the Court flagged a troubling pattern in CRA taxpayer-relief decisions: inadequate or boilerplate reasons that fail to meaningfully explain why relief was denied. The ruling reinforces a key principle of administrative law — reasonableness includes the quality of the reasoning, not just the outcome.
This has real, practical implications for taxpayers dealing with CRA relief requests, objections, and judicial reviews.
What Was the Court Concerned About?
Taxpayer relief decisions (such as penalty and interest relief) are discretionary. That does not mean CRA can simply say “no” without explanation.
The Court emphasized that:
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CRA decision-makers must grapple with the taxpayer’s actual circumstances
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Reasons must show that relevant evidence was considered
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Generic or template-style explanations are not enough
In this case, the Court noted a pattern where taxpayers were left guessing:
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What facts mattered?
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What arguments were rejected?
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Why discretion was exercised against them?
That lack of transparency was a serious problem.
Why “Reasonableness” Is More Than the Final Answer
Many taxpayers assume that if CRA has discretion, there’s little they can do when relief is denied. This decision clarifies that’s not true.
A CRA decision can be unreasonable if:
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It ignores relevant facts
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It fails to explain how conclusions were reached
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It relies on vague or stock language
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It does not respond to key taxpayer submissions
In other words, a decision can be unreasonable even if CRA technically had the authority to make it.
Why This Matters for Taxpayers
This ruling strengthens taxpayers’ positions in several ways:
📌 1. Better Grounds for Review
If CRA denies relief without meaningful reasons, taxpayers may have stronger grounds to challenge the decision — either through internal review or judicial review.
📌 2. Stronger Relief Submissions
Knowing that CRA must justify its reasoning makes it even more important to submit clear, well-documented relief requests that force CRA to engage with the facts.
📌 3. Accountability at CRA
The decision reinforces that CRA is accountable not just for what it decides, but how it decides.
Practical Takeaway
If you’ve received a CRA decision that:
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Feels rushed
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Uses generic language
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Doesn’t address your specific situation
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Fails to explain why relief was denied
…it may not meet the legal standard of reasonableness.
Before assuming “nothing can be done,” it’s often worth having the decision reviewed by a tax professional who understands both tax law and CRA administrative obligations.
Final Thought
This case is a reminder that fairness in tax administration depends on transparency and proper reasoning. Taxpayers are entitled to understand why decisions are made — especially when penalties, interest, or financial hardship are involved.
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