Singleton v. Canada

Holding

Direct and current use of borrowed money for an income-producing purpose is sufficient for interest deductibility even where the borrowing facilitates a personal use of separate funds.

Facts

Singleton borrowed to fund his law firm capital account, simultaneously using firm distributions to fund the purchase of a home.

Reasoning

Justice Major upheld the deduction by focusing on the direct use of the borrowed money rather than the overall financial motivation of the structure. The decision refined the Bronfman Trust test.