ParizConsulting Group

2026-09-28

Fortin, 2026 FCA 160: no equitable exception to alternative minimum tax, and no Charter argument raised for the first time on appeal

2026 FCA 160 · Federal Court of Appeal

Provisions

ITA s. 127.5ITA s. 127.51ITA s. 127.52ITA s. 120.2

Text

Author: Sas Tullo

This is a short judgment delivered from the bench, in French, on an appeal from the Tax Court’s informal procedure. A self-represented taxpayer realized a large capital gain in 2021, sheltered most of it with his lifetime exemption, and was then assessed alternative minimum tax of $33,860 against ordinary tax of $12,320. He accepted that the statute produced that result but argued that minimum tax was aimed at high-income taxpayers who abuse deductions, not at someone with a one-time gain who will never earn enough to recover the excess over the seven-year carry-forward. The Federal Court of Appeal dismissed the appeal. The case matters because it restates, in the context of the minimum tax, that a court cannot read unexpressed exceptions into the Income Tax Act on the strength of purpose or fairness, and because it shows how a constitutional argument fails when it is raised too late and without the required notice.

Facts

Division E.1 of Part I of the Income Tax Act requires an individual who benefits from certain deductions and credits to pay a minimum percentage of tax (para 2). In its 2021 form, the individual computed income without certain deductions, subtracted a $40,000 basic exemption and applied a 15 percent rate less a minimum tax credit under section 127.51 and subsection 127.52(1); the individual paid the greater of minimum tax and ordinary tax under section 127.5; and the excess could reduce tax in the following seven years under section 120.2 (para 3). In 2021 the appellant realized a capital gain of $538,767; because of his exemption his ordinary tax was $12,320, but part of the gain entered the minimum tax base under paragraph 127.52(1)(d) and subparagraph 127.52(1)(h)(i), producing minimum tax of $33,860, or $21,540 more (para 4). His own return reported that amount and he was assessed accordingly; he argued that he was not in the class of high-income taxpayers the tax targets and that his future income would not allow him to recover the excess (para 5).

Issues

Whether the Tax Court erred in law by interpreting the minimum tax provisions without regard to their purpose and to the inequitable result in the appellant’s case (para 6); and whether applying minimum tax uniformly to wealthy taxpayers who can recover it and average taxpayers who cannot infringes section 15 of the Canadian Charter of Rights and Freedoms (para 9).

Holding

The appeal was dismissed without costs (para 13). Purpose and fairness cannot displace the text of the Act (paras 7-8). The Charter argument could not be considered because it was raised for the first time on appeal without an evidentiary record and without notice to the attorneys general (paras 10-12).

The court’s reasoning

Goyette J.A. accepted that one objective of the minimum tax, as stated in the 1985 budget papers, was to increase the tax paid by high-income individuals, but held that Parliament itself defined in the Act the criteria for what counts as high income (para 7). It is well established that in interpreting the Income Tax Act a court cannot set aside or qualify the wording of a provision by exceptions not expressed in it and derived from the court’s own conception of its purpose: Lehigh Cement Limited c. Canada, 2014 CAF 103, at para 42; Hypothèques Trustco Canada c. Canada, 2005 CSC 54, at para 12; Shell Canada Ltée c. Canada, [1999] 3 RCS 622, at para 40 (para 7). As to the unfairness of the result, the court cannot create an equitable exception that appears nowhere in the Act: Chaya c. Canada, 2004 CAF 327, at para 4; Dow Chemical ULC c. Canada, 2024 CSC 23, at para 47 (para 8).

On the Charter, the court gave two reasons. Absent exceptional circumstances, a constitutional argument cannot be raised for the first time in an appellate court: Alberta (Information and Privacy Commissioner) c. Alberta Teachers’ Association, 2011 CSC 61; Ashurova v. Canada (Attorney General), 2026 FCA 54, at para 6. That is because Charter arguments require a full evidentiary record, which had not been provided: Sullivan c. Canada (Attorney General), 2024 CAF 7, at para 8 (para 11). Further, a party raising a constitutional question must notify the attorneys general of Canada and the provinces under subsection 57(1) of the Federal Courts Act so that they may respond: Guindon c. Canada, 2015 CSC 41, at para 19; no such notice was given (para 12).

Practical implications

The judgment breaks no new ground, but it is a clear and citable statement that the alternative minimum tax applies according to its terms, whatever the taxpayer’s profile. Taxpayers with a single large gain, and particularly those relying on the lifetime capital gains exemption, have long been the group most surprised by the minimum tax, and this decision confirms that the surprise is not a ground of appeal. The reasons describe the provisions in their 2021 form (para 3); the current text of sections 127.5 to 127.55 should be checked on the Justice Laws site before advising on later years, since the minimum tax rules have been the subject of amendment.

In my view the more useful lesson is procedural. Self-represented appellants who believe a provision discriminates against them must build that case at first instance, with evidence, and must serve the notice of constitutional question; an appellate court will not entertain the argument otherwise, however sincerely it is felt. Whether an application for leave to appeal to the Supreme Court was made is not verified here.

For anyone planning a sale that will produce a large exempt gain, the practical response remains the same: model the minimum tax before the year of the sale and plan the following years’ income so that the carry-forward under section 120.2 is actually used. The court will not relieve a taxpayer who did not.

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

Maxime Fortin c. Sa Majesté le Roi, 2026 CAF 160 (English citation 2026 FCA 160), judgment delivered from the bench at Montréal on 24 September 2026, Locke, Goyette, and Pamel JJ.A., reasons by Goyette J.A. Reasons on the court’s site (French only). Also on CanLII. The decision under appeal is Maxime Fortin c. Le Roi, Tax Court of Canada file 2024-320(IT)I, informal procedure, for which the reasons give no neutral citation (para 1).