http://decision.tcc-cci.gc.ca/site/tcc-cci/decisions/en/item/66578/index.do 
Doulis v. The Queen[1] (January 23, 2014) involved a self-represented taxpayer making the thorny old argument that interest on income tax is deductible:
[3] The appellant stated in his notice of appeal that he had opened in the Isle of Man, UK, an investment account from which he received interest and capital gains that he reported to the CRA. He indicated that he financed this investment account with funds that he would have otherwise paid to the CRA for tax owed pursuant to the ITA. He now claims that, as a result of his indebtedness to the CRA, he incurred an interest expense, namely, the interest paid to the CRA on the tax arrears amount used to fund his investment account. In his view, the interest amount paid to the CRA ($8,953) is an amount paid or payable pursuant to a legal obligation to pay interest on borrowed money from the CRA used for the purpose of earning income from his investment in the UK, which interest amount, he states, is deductible pursuant to paragraphs 18(1)(a) and 20(1)(c) of the ITA.
[4] The appellant further asserts that the interest was paid to the CRA under a contractual obligation which was created in the context of a borrower-lender relationship between him and the CRA. He contends that the writ of seizure and sale obtained by the CRA against him with regard to his shares and dividends (Exhibit A-1) is evidence of the existence of a legal debt owed by him to the CRA arising from moneys borrowed from the CRA.
[5] Counsel for the respondent argued that the interest amount at issue was paid by virtue of a legal obligation to pay interest with respect to taxes owing for prior years in accordance with subsection 161(1) of the ITA. Hence the interest amount at issue was paid or payable under the ITA and therefore, pursuant to paragraph 18(1)(t) of the ITA, not deductible.
[6] In the alternative, counsel for the respondent argued that, should I accept that the appellant borrowed money from the CRA, the interest was not paid on funds borrowed and used directly for the purpose of earning income from a business or property in accordance with paragraphs 18(1)(a) and 20(1)(c).
The court made short work of the appellant’s arguments:
[7] I am of the view that subparagraph 18(1)(t)(i) of the ITA clearly prohibits the deduction of the interest amount at issue here.
[8] That interest amount is an amount paid or payable under “this Act” (the ITA). It was by the application of subsection 161(1) of the ITA that the appellant was obligated to pay the interest on tax owed for prior years. The fact that subparagraph 18(1)(t)(i) does not specify what particular amounts are non-deductible under the ITA does not mean that interest is excluded from the amounts paid or payable under the ITA that may not be deducted pursuant to that provision. On the contrary, it means that no amount paid or payable under the ITA, other than tax paid or payable under Part XII.2 or Part XII.6 (of which there is none involved here), may be deducted in computing income.
[9] This interpretation is consistent with the Explanatory Notes to Legislation Relating to Income Tax issued by the Minister of Finance in June 1989, where, in clause 8 dealing with the introduction of paragraph 18(1)(t), it is stated:
Clause 8
General Limitations
ITA
18(1)(t)
Section 18 of the Act prohibits the deduction of certain outlays and expenses in computing a taxpayer’s income from a business or property. This amendment, which is applicable to the 1989 and subsequent taxation years, adds new paragraph 18(1)(t) and denies a deduction in respect of any amount – including taxes, interest and penalties – payable under the Act.
Moreover:
[13] Furthermore, I also accept the respondent’s view that the interest payment is not deductible pursuant to paragraph 20(1)(c) of the ITA either. First, the appellant did not, properly speaking, borrow money from the CRA. There is no evidence of a relationship of lender and borrower between the parties. The CRA did not agree to loan money to the appellant. The appellant owes tax to the CRA by virtue of legislation (the ITA).
[14] There is not in this case a contractual agreement between two parties. We are not in a situation where capital was borrowed such that there existed a relationship of lender and borrower between the parties (
Minister of National Revenue v. T. E. McCool Ltd., [1950] S.C.R. 80.
[15] Second, even if there was a borrower-lender relationship, it is clear that the direct use of the “borrowed money” was not the investment of that money outside the country, but rather the payment of interest on the appellant’s personal income tax owed to the CRA
Accordingly the appeal was dismissed
[1] 2014 TCC 26.