Using Smith Manoeuvre to make mortgage interest deductible

QUESTION: My wife and I have a $300K mortgage (Manulife One account) that we
have began converting into a tax deductible investment loan. Right now we
are doing this by borrowing back the principal each month to invest it. We
are looking to accelerate this conversion from good debt to bad debt by
starting an unincorporated business (ala Cash Flow Dam strategy). My
question is: if we purchase a cottage rental business or campground in a
Parnership with my parents will we be able to still borrow from our Manulife
One account to pay all the business expenses each month? Or is there a twist
because my wife and I don't own 100% of the Partnership or asset (campground
or cottage rentals)?

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david ingram replies:

You can use the partnership income as well. Just watch your paper trail.

You should also go to www.centa.com and read the November 2001 newsletter in
the top left hand box. This was originally written in Nov 1976 and is the
first known place where making a Canadian mortgage deductible is explored in
print.