In 2013-0477601E5, the CRA was asked “why in the Singleton case the interest deduction was allowed whereas in the Lipson case the deduction was not allowed”. The CRA responded that in Lipson v. The Queen the Supreme Court of Canada (SCC) focused on the abuse of the attribution rules under the general anti-avoidance rule in s. 245 (GAAR). The abuse arose not from the financing arrangements but rather from the non-arm’s length relationship between the husband and wife. Had this (attribution) relationship not been present, the result generated by the financing – namely, an interest deduction under s. 20(1)(c) – would not have been abusive tax avoidance under the GAAR. This was the essence of the decision in Singleton v. The Queen. In that case, a lawyer withdrew equity from his law firm to purchase a house. He then refinanced his law firm equity with newly borrowed money. The lawyer paid interest on the newly borrowed money and deducted the interest under s. 20(1)(c). The SCC held that financing is “not frozen in time” (Major J., at paragraph 32). As long as a direct link can be drawn between the newly borrowed money and an eligible use, the borrower is entitled to deduct the interest expense under s. 20(1)(c). A similar finding was made, in the context of a provincial general anti-avoidance rule, in Husky Energy Inc. v. The Queen in Right of Alberta, 2012 ABCA 231.