3533158 Canada – Federal Court of Appeal leaves open the extent to which s. 296(4)(b) denies refund claims for old ITCs

CRA refused to process three GST/HST returns of the taxpayer on the basis that such returns had not been filed within the four-year ITC limitation period under s. 225(4)(b). The taxpayer ultimately brought a mandamus application before the Federal Court to compel the Minister to grant refunds in respect of the initial three quarters.

The Federal Court denied 353's motion on the basis, inter alia, that its ITC claims were denied by the plain words of s. 296(4)(b). In particular, s. 296(4)(b) denied a refund of an overpayment of tax (attributable to an ITC) if, on the assessment date, such ITC could not have been claimed on that date in a return (due to the s. 225(4)(b) 4-year limitation).

Roussel JA dismissed the taxpayer’s appeal, but on the alternate ground that there was no palpable and overriding error in the Federal Court’s exercise of its discretion to determine that an unexplained 15‑month period of inactivity between the taxpayer having its objection denied by CRA and bringing the Federal Court motion created an equitable bar to the issuance of an order of mandamus.

She refrained from commenting on the Federal Court’s interpretation of s. 296(4)(b) and stated (at para. 4) that her “reasons should not be construed as an endorsement of the Federal Court’s analysis or conclusions with respect to this issue.”

Neal Armstrong. Summary of 3533158 Canada Inc. v. Canada (the Attorney General), 2024 FC 1090 under Federal Courts Act, s. 18.1(2).