Canada’s tax collectors cannot brush off taxpayers with vague assurances when rejecting appeals, a federal appeal court has ruled, saying the Canada Revenue Agency must clearly explain itself when decisions affect people’s rights and finances.In a sharply worded decision, Federal Court of Appeal Justice David Stratas said dismissive responses from administrative bodies undermine public confidence and have no place in government decision-making. Blacklock's Reporter said he ruled in favour of Vivatas Inc., a Louisiana-based software company that was denied a tax refund without a coherent explanation.“‘Trust us, we got it right’ has no place in public administrative decision making,” Stratas wrote, adding that a skeptical public deserves more than platitudes when dealing with tax authorities. Clear reasons, he said, are essential to transparency, legitimacy and accountability, particularly at a time of widespread mistrust of government institutions.The case involved consulting work Vivatas carried out in Canada between 2012 and 2014. .Although the company filed its refund claim late, the court found it was entitled to a substantial sum, described as a six-figure amount. The CRA rejected the claim but failed to provide a rational justification for its decision.Stratas said the agency’s handling of the matter fell below acceptable standards, especially given the financial stakes. He ordered the CRA to give the company a fair chance to make submissions, properly consider them and reconsider the file with adequate written reasons.As a general rule, the court said administrative bodies such as the CRA cannot decide matters that affect rights or practical interests without offering explanations that are clear and understandable. “This is no small thing,” Stratas wrote..The ruling emphasized that government agencies wield significant power over individuals and businesses, and that democratic accountability requires them to explain how and why decisions are made. Requiring reasons is not a paperwork exercise, the court added, but a safeguard against arbitrary decision-making.Stratas noted that the process of writing proper explanations often forces decision-makers to confront gaps or weaknesses in their own reasoning, leading to better outcomes. In this case, he said, the reasons behind the CRA’s denial of Vivatas’s refund were “pretty much a mystery,” a failing the court said could not stand.
