The cash flow dam is a strategy that converts your personal debt into tax deductible business debt. It’s similar in principle to the Smith Manoeuvre.
Until relatively recently, this strategy was used primarily by higher-net-worth clients. Few others had heard about it. Many that did know about it were uncertain of the tax implications. That’s all starting to change.
Nowadays, big financial institutions are starting to get in on the act. National Bank now has a cash flow dam webpage. Investors Group is promoting it as one of their tax strategies. Even RBC has an article on it.
If you’re self-employed and interested in the cash flow dam, consult a good tax advisor. There’s a lot of caveats.
From a mortgage standpoint, you’ll need a line of credit or readvanceable mortgage. We or any good mortgage planner can help with that.
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