The First Five FCA Tax Decisions of 2026

In an eventful start to 2026, the Federal Court of Appeal (FCA) has already released five notable tax decisions. Signalling an active and consequential year ahead, here’s what you need to know about these decisions:

1. Continued General Anti-Avoidance Rule (GAAR) Uncertainty. In Canada v. DAC Investment Holdings Inc., the FCA overturned the judgment of the Tax Court of Canada (TCC) and unanimously found that it was abusive for a taxpayer to cease being a Canadian-controlled private corporation by continuing to a foreign jurisdiction prior to realizing a gain on the disposition of shares. The decision sharply deviates from the TCC’s comprehensive 57-page analysis and highlights the inherent uncertainty in GAAR litigation.
2. Interpretation of a Deeming Rule. In Suncor Energy Inc. v. Canada, the FCA considered the scope of subsection 13(31) of the Income Tax Act (Act), which deems depreciable property transferred between related parties to be “available for use” by the transferee per paragraph 13(27)(b) at the time that it was acquired by the transferor. The FCA held that “the only way” these provisions can operate coherently in a case where a transferee is deemed to acquire property before the transferee legally exists is if the transfer is treated as having occurred in the notional taxation year of the transferee had it existed at that time.
3. Single-Supply Analysis Is Highly Fact Specific. In Amex Bank of Canada v. Canada, the FCA held that Amex was not entitled to input tax credits for GST/HST paid on reward costs incurred in operating its loyalty reward credit card program. The decision was grounded in factual findings made by the TCC that the various components of the program were intertwined into a single composite supply of exempt financial services, underscoring the fact-driven nature of single-supply analysis.
4. Application of the Bona Fide Purchaser Defence. In Toronto-Dominion Bank (TD Canada Trust) v. Canada, the FCA overturned the Federal Court and held that an unsecured creditor can rely on the bona fide purchaser for value defence when the Crown claims that proceeds paid to the creditor were unremitted source deductions. The decision clarifies the availability of this defence in priority disputes involving the Crown.
5. Judicial Review of Downward Transfer Pricing Adjustments. In Meglobal Canada ULC v. Canada, the FCA agreed with the TCC that the decision to allow or refuse a downward transfer pricing adjustment under subsection 247(10) is discretionary and thus only reviewable by the Federal Court. The ruling confirms the avenue for recourse available to taxpayers challenging the exercise of that discretion.

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