Supreme Court Says No to Mortgage Interest Deduction

Link to court case:

Source: http://scc.lexum.umontreal.ca/en/2009/2009scc1/2009scc1.html

The Supreme Court of Canada has ruled against a couple that used a complex set of arrangements to make the interest paid on their mortgage tax-deductible.

The so-called Lipson case has been widely followed by tax professionals looking for guidance on how to advise clients to limit the amount of income tax they pay. One of the concerns was that the court would rule in such a way that would limit the ability of people to follow a strategy where they borrow against the value of their homes and invest the money in the markets, thereby making the interest they pay tax-deductible.


There's no clear indication yet on if/how this may affect the popular Smith Manoeuvre. The Smith Manoeuvre is different in many key respects but there is at least some overlap in principle