来源：https://taxinterpretations.com/cra/severed-letters/2002-0142035
In Cascone v. The Queen, (2000 DTC 1621), a taxpayer and his spouse ("the taxpayers") acquired one property ("Property 1") in 1978, which was used as a principal residence. In January 1988, the taxpayers acquired a second property ("Property 2") and financed the acquisition with a $220,000 mortgage registered on Property 1. The taxpayers moved into Property 2 in February 1988 and commenced to rent out Property 1. Property 2 was eventually sold in October 1988, with the proceeds being used to acquire a third property ("Property 3"). The taxpayers' claimed an interest deduction against the rental income, which was denied. Their appeal to the Tax Court of Canada was dismissed with the Court ruling that the borrowed funds were never "used for the purpose of earning income". They were used to purchase a property (Property 2) that never earned income (as rent), but was only used as a principal residence, and was eventually sold.

In McLeod v. M.N.R. (64 DTC 218), the taxpayer decided to convert the mortgage-free house in which he and his family were residing into a duplex and to move to a new smaller home, his intention being to obtain investment income and build up an estate. To finance the purchase price of $18,000 for the new house, the taxpayer arranged for a $9,000 mortgage on the old house and a $7,000 mortgage on his new home, and used $2,000 of his own funds. Interest on the said mortgages was disallowed. The taxpayer appealed to the Tax Appeal Board, which dismissed the appeal on the basis that the borrowed money was not used for the purpose of earning income from a business or property.

In Hills v. M.N.R., (70 DTC 1429), the taxpayer and his wife were the joint owners of a home, 25% of which was used for the purpose of producing income through rentals. To purchase the home, the taxpayer obtained a bank loan on which interest was paid. The taxpayer deducted the full amount of interest on the borrowed money, 75% of which was disallowed. When the taxpayer appealed to the Tax Appeal Board, the Board ruled that since only 25% of the house was used for the production of income, only 25% of the interest on money borrowed to purchase the house could be allowed as a deduction. The remaining 75% of the bank interest was a non-deductible personal or living expense.

In Holmann v. M.N.R. (79 DTC 594), the taxpayer mortgaged a rental property which he owned in order to have sufficient funds to acquire a principal residence. He then claimed the interest expense as a deduction. When the interest expense was disallowed, he appealed to the Tax Review Board where he contended that the borrowed money allowed him to retain the rental property while acquiring a principal residence, rather than selling the rental property and using cash from the sale to finance the acquisition. The appeal was dismissed, where the Board concluded that the interest charges were personal or living expenses, were not incurred for the purpose of earning income from a business or property, and therefore were not deductible.

In The Queen v. Attaie, the taxpayer acquired a residence in Canada. The purchase was partially financed by a mortgage, the interest on which was deducted by the taxpayer from rental income received from January to May 1980. In June 1980, the taxpayer and his family began to occupy the residence as their principal residence. Instead of using a portion of a $200,000 amount that the family brought from Iran to repay the mortgage, the taxpayer invested the $200,000, producing interest income thereon. The taxpayer continued to deduct the mortgage interest paid after they occupied the residence, which was disallowed. Both the Tax Court of Canada (85 DTC 613) and the Federal Court - Trial Division (87 DTC 613) agreed with the taxpayer that the interest is deductible. However, the Federal Court of Appeal (90 DTC 6413) overturned these decisions on the basis that once the taxpayer had ceased using his house to generate rental income, interest paid on the mortgage thereon was no longer deductible, regardless of the fact that the taxpayer chose to invest the funds from Iran in order to generate income rather than using a portion thereof to pay off the mortgage.