CRA reconfirms that structuring to convert a personal-use to an investment-use loan is not contrary to the revised GAAR

In 2013-0477601E5, CRA indicated that, generally, interest would be deductible where an individual used proceeds from the sale of publicly traded common shares to pay down a mortgage on a personal residence and then took out a loan to repurchase identical shares, provided that there was a direct link between the borrowed funds and an eligible use. Having regard to the introduction of ss. 245(4.1) and (4.2), has this position changed?

CRA indicated that this continued to reflect its position – although, as usual, reaching a GAAR required a thorough analysis of all the facts and circumstances.

A similar question and answer appear at 9 October 2025 APFF Financial Planning Roundtable, Q.3.

Neal Armstrong. Summary of 2 December 2025 CTF Roundtable, Q.2 under s. 245(4.1).