ParizConsulting Group

2026-10-25

Bygrave, 2017 FCA 124: the 'as soon as circumstances permitted' test looks at the period after the 90 days, not before

2017 FCA 124 · Federal Court of Appeal

Provisions

ITA s. 167ITA s. 169ITA s. 163

Text

Author: Sas Tullo

This is an appeal from a Tax Court decision refusing a taxpayer more time to appeal a reassessment. Mr. Bygrave missed the 90-day deadline because an accountant told him to gather all his documents first. The Tax Court refused an extension; the Federal Court of Appeal granted it. The decision matters to anyone who has missed a tax appeal deadline, because it fixes the period the court must examine when asking whether the extension application was made as soon as circumstances permitted: the time after the deadline expired, not the original 90 days.

Facts

Mr. Bygrave sold a condominium in 2010 that he had bought three years earlier and reported the gain as a capital gain. In 2014 the Minister reassessed the gain as income and imposed a penalty (para 1). He objected, and on January 12, 2016 the Minister confirmed the reassessment, starting the 90-day period under subsection 169(1) of the Income Tax Act for an appeal to the Tax Court (para 2). His bookkeeper referred him to a chartered accountant, who tried to persuade the CRA that the confirmation was a mistake, was told the file was closed, and then took the view that it would be unprofessional to file a notice of appeal without all the supporting documents in hand. Gathering those documents took Mr. Bygrave past the 90 days (paras 3-4). Some 52 days after the deadline the accountant filed an application under subsection 167(1) for an extension of time, and then acted as counsel at the hearing (paras 5-6).

The Tax Court gave judgment orally. It found that the application was made within one year, that Mr. Bygrave had a continuing intention to appeal, and that there were reasonable grounds for the appeal, which the Crown conceded. It was not satisfied that the application had been made as soon as circumstances permitted or that it would be just and equitable to grant it, and dismissed the application (para 8). The decision under appeal is not reviewed here.

Issues

The issues were whether the Tax Court erred in its conclusions under subparagraphs 167(5)(b)(ii) and (iii) of the Act: whether the application was made as soon as circumstances permitted, and whether it would be just and equitable to grant it (para 9).

Holding

The appeal was allowed with costs in both courts (para 23). The Tax Court erred in law by directing its mind to the wrong period (para 16). Exercising its power under paragraph 52(c) of the Federal Courts Act, the Court found that the application was made as soon as circumstances permitted and that it was just and equitable to grant it (paras 18, 21-22).

The court’s reasoning

Pelletier J.A., for a unanimous panel, applied the standard of review from Housen v. Nikolaisen, 2002 SCC 31, which governs discretionary decisions as well, citing Hospira Healthcare Corp. v. Kennedy Institute of Rheumatology, 2016 FCA 215 (para 10). He set out subsection 167(5), which permits an extension only if the application is made within one year after the appeal period, the taxpayer was unable to act or had a bona fide intention to appeal within that period, it would be just and equitable to grant the application, the application was made as soon as circumstances permitted, and there are reasonable grounds for the appeal (para 7).

The core of the reasoning is the identification of two distinct periods. The first is the 90-day appeal period under section 169, which frames the inquiry under subparagraph 167(5)(b)(i) into inability to act or bona fide intention (para 13). The second runs from the end of the 90 days to the filing of the extension application, and governs whether the application was made as soon as circumstances permitted under subparagraph (iii) (para 14). The question is not why the application was not filed in the fewest possible days, but whether the applicant “acted with diligence appropriate to the circumstances” during that second period (para 15).

The Tax Court had correctly stated that a late taxpayer must act diligently to apply for an extension, but it then concluded that Mr. Bygrave knew of the 90-day limit and could have appealed within it. That showed that the Tax Court had asked whether the circumstances permitted an appeal within the 90 days rather than whether, after they expired, the extension application was brought as soon as circumstances permitted; this was “an error of law that warrants our intervention” (para 16). The Tax Court’s treatment of subparagraph (b)(i), where it considered both periods instead of only the first, confirmed the reading (para 17). Pelletier J.A. also distinguished Carrier v. The Queen, 2005 TCC 182, and Kolmer v. The Queen, 2003 TCC 829, as cases of taxpayer inactivity in mistaken reliance on advisers, whereas Mr. Bygrave had embarked on a course of action in support of his appeal that he could not finish in time (para 12).

Rather than remit the matter, the Court decided it on the record to spare the taxpayer a further hearing (para 18). Mr. Bygrave had spent the period after the deadline gathering the documents his accountant said he needed, some from Jamaica, and filed as soon as they were in hand; those with knowledge of tax matters would know the evidence need not be assembled before filing, but he did not (paras 19-21). On the just and equitable branch, there was no conduct on his part that would make an extension unjust, and the Court added that a taxpayer facing a gross negligence penalty under subsection 163(2) “should be given every reasonable opportunity to defend himself against the imposition of such a penalty” (para 22).

Practical implications

The two-period analysis is, in my view, the decision’s lasting contribution. The Tax Court’s approach in this case, treating a taxpayer who knew of the deadline and could have met it as having failed to act as soon as circumstances permitted, is one the reasons show to be a natural but mistaken reading of subsection 167(5). The Federal Court of Appeal separates the two questions: knowledge of the deadline and the ability to meet it are relevant to inability to act or bona fide intention within the 90 days, while the diligence inquiry under subparagraph (iii) looks only at what the taxpayer did between the expiry of the deadline and the filing of the application. A taxpayer who moves promptly once the deadline has passed, even for a reason a tax professional would regard as unnecessary, may satisfy the test.

The decision also illustrates the Court’s willingness, under paragraph 52(c) of the Federal Courts Act, to decide an extension application itself on a sparse record, and its sensitivity to a subsection 163(2) penalty when weighing what is just and equitable. The text of subsection 167(5) was checked on the Justice Laws website and has not been amended since the decision. Whether leave to appeal to the Supreme Court of Canada was sought is not verified here.

For taxpayers who have missed the 90-day deadline, the lesson is to file the extension application at once and explain the delay in terms of what was done after the deadline passed. Reliance on an adviser is not an automatic excuse, but neither is knowledge of the deadline an automatic bar.

This comment is general information, not legal advice. The law may have changed since the decision; check the current text in the tax wiki.

Bygrave v. Canada, 2017 FCA 124, judgment dated June 12, 2017, Pelletier, Webb, and Near JJ.A. (reasons by Pelletier J.A.; heard May 10, 2017, Toronto; docket A-389-16). Reasons on the Federal Court of Appeal’s site. Also on CanLII. The decision under appeal, Bygrave v. The Queen (12 September 2016), Toronto 2016-2201(IT)APP (TCC), is unreported.