In finding that interest paid by the taxpayer (an employed broker of an investment dealer) on a loan taken out by him in order to purchase the customer list of a departing employee was a payment "on account of capital", Major J. first responded (at para. 37) to the submission of the Minister that the Act was a complete code for the deductibility of interest so that interest payments could only be deducted if they met the requirements of specific provisions such as s. 8(1) (j) or s. 20(1) (c) by stating that “[i]t is evident from the manner in which [CRA] allows moneylenders to deduct interest payments, without reliance on any specific section of the Act , when they are calculating profits for the purposes of determining their income for the year under s. 9 that they have not adhered to this position in the past”, and noted that in other jurisdictions the question considered was whether interest payments were of a capital nature whereas in Canada, deduction was prohibited if a payment was "on account of capital". He then stated (at para. 39):
Under our current Act it is not necessary to determine whether the payment is a capital expenditure but to determine whether the payment is being made “on account of capital”. … This distinction means that under our Act it is only necessary to consider what the proceeds of the loan are to the borrower when they are received, and does not require an examination of what those loan proceeds are spent on. If the money adds to the financial capital then the payment of interest on that loan will be considered to be a payment “on account of capital”. If the loan proceeds constitute the inventory of the borrower, as is the case with moneylenders, then the payment of interest would be deductible.