Afridi & Angell inBrief (Canada edition): by James Bowden
On 17 June 2022, the Supreme Court of Canada issued its much-anticipated decision in Canada (Attorney General) v. Collins Family Trust. The facts can be summarized briefly as follows:
In an 8-1 majority decision, the Supreme Court found against Collins stating that it found “nothing unconscionable or unfair” about the facts at hand, and that this was simply “the ordinary operation of a tax statute”. Given the factual context of the case, it is difficult to comprehend the conclusion that there is nothing unfair about the application of what are effectively punitive tax consequences on a surprise, retroactive basis. The majority also went out of its way, somewhat bizarrely, to state that equitable remedies could never apply to relieve a tax mistake.
In the minority was Justice Côté whose dissenting reasons accounted for 71 out of the total 100 paragraphs in the judgment. On our reading, the dissenting position and reasoning of Justice Côté was much more rational, more persuasive and fairer than that of the majority. Côté uses strong language in places taking the majority to task for what she saw as incorrect and inappropriate reasoning and conclusions by the majority, and stating that tax mistakes were eligible for equitable relief if they met the usual tests (which were indeed met in this case, in Côté’s view). However, as convincing as Côté’s reasons are, she is only one out of nine and her position does not reflect the law in Canada as of today, unfortunately.
It is unfortunate not only for Collins (and the others who used identical structures), but for all Canadian taxpayers. Legally minimizing one’s tax burden is a fundamental right of Canadians, but the law is such that planning almost always contains some level of uncertainty. That reality is already an unfortunate starting point, and rather than achieving greater certainty over time, we seem to be doing the opposite. The Collins Family Trust judgment stands as a warning that taxpayers cannot even rely on planning that is thought to be normal, conventional, and entirely acceptable, including as affirmed in published positions of the CRA. ■
 Canada (Attorney General) v. Collins Family Trust (2022 SCC 26)
 Sommerer v. The Queen, 2011 TCC 212, 2011 D.T.C. 1162, aff’d 2012 FCA 207,  1 F.C.R. 379
 Re Pallen Trust, 2015 BCCA 222, 385 D.L.R. (4th) 499Download inBrief as PDF