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The Supreme Court of Canada has ruled against a couple that used a complex set of arrangements to make the interest paid on their mortgage tax-deductible.

The so-called Lipson case has been widely followed by tax professionals looking for guidance on how to advise clients to limit the amount of income tax they pay. One of the concerns was that the court would rule in such a way that would limit the ability of people to follow a strategy where they borrow against the value of their homes and invest the money in the markets, thereby making the interest they pay tax-deductible.

Tax lawyer Evy Moskowitz said today's ruling does not have an impact on this kind of tax planning.

"If you're talking about borrowing in a tax-efficient manner, there's good news," said Ms. Moskowitz, who works for Moskowitz and Meredith, a tax law firm affiliated with KPMG LLP.

The Lipson case dates back to 1994, when Earl Lipson and his wife, Jordanna, both of Toronto, began a series of transactions related to the purchase of a home. The ultimate aim was to replace non tax-deductible mortgage interest with an investment loan where interest would be deductible.

"It has long been a principle of tax law that taxpayers may order their affairs so as to minimize the amount of tax payable," the court decision said. "However, this principle has never been absolute ..."

The Canada Revenue agency objected to the Lipsons's arrangements based on what's known as the general anti-avoidance rule, or GAAR, which is designed to prevent abuse of tax laws. Two lower courts agreed with the agency, prompting an appeal to the Supreme Court.

Mr. Moskowitz said the high-court ruling hinged on attribution rules, where income or losses are attributed to a taxpayer other than the individual who actually earned them. In the Lipson case, losses attributed to Mrs. Lipson were attributed to her husband, thereby lowering his taxes.