take money out of my heloc, lend it to spouse for invest, interest is deductible?
If I take $100k out, lock it with my lender at 2.79% for two years, and lend it to my spouse.
She invests that money on dividend ETF and pays me back interest with CRA determined rate 1%,
which is $1k a year. Then I need to pay income tax for the $1k.
Now my question is :
Is the interest generated from $100k ( which I borrow from my HELOC) tax deductible?
On paper, I borrow the money $100k for getting interest income , admittedly low at 1%.
This fits the CRA requirement for borrowing money for investment purpose, generating income, not only capital gain.
THerefore it should be tax deductible, or am I wrong?