http://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/70937/index.do 
McAdams v. Canada (March 10, 2014 – 2014 FCA 99) involved an appeal from a decision of the Tax Court which refused to strike the Crown’s reply on the basis that it was an impermissible collateral attack on an assessment of another taxpayer. Mr. McAdams settled a spousal trust in 2001 to which he transferred shares that were then redeemed. The Minister assessed the trust on the deemed dividend on the redemption. The Minister subsequently alleged that the trust was a sham and assessed Mr. McAdams on the deemed dividend. Mr. McAdams moved to strike the Minister’s reply on the basis that it was a collateral attack on the earlier assessment of the trust. The Tax Court dismissed Mr. McAdams’ motion and the Federal Court of Appeal agreed:
[5] We agree with Justice Miller that it is not plain and obvious that the reassessment under appeal is an impermissible collateral attack by the Minister on the initial assessment of the trust. This Court has said that when facts are in dispute, the Minister may issue inconsistent assessments pending the resolution of the dispute (see, for example,
Antle v. Canada, 2010 FCA 280,
Hawkes v. Canada, 97 DTC 5060).
[6] In theory, the deemed dividend is taxable in the hands of only one taxpayer, which must be either the trust or Mr. McAdams. However, it does not follow that the initial assessment of the trust for its 2001 taxation year necessarily reflects the correct result. Nor is it plain and obvious that the Minister, having initially assessed the trust on the basis of the trust’s 2001 tax return, is precluded from assessing what she now believes to be the correct tax in the hands of Mr. McAdams (
M.N.R. v. JP Morgan Asset Management (Canada) Inc., 2013 FCA 205), or from defending that assessment on the basis stated in the reply.
[7] For these reasons, the appeal will be dismissed with costs.