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Is the Smith Manoeuvre
Legal?
The Smith Manoeuvre uses the common tools of Canadian financial institutions
and CRA (Revenue Canada). It has been reviewed by the CRA and endorsed
by economists, financial planners and financial institutions. It is
a legal and common practice to deduct interest when you borrow to
invest to produce income.
How can debt be good?
Debt is good when it is tax-deductible. It is bad when it's the wrong
kind of debt - the kind that is not deductible against your income.
Bad debt can be converted to good debt if you employ The Smith Manoeuvre.
Wealthy people have debt, and they like it that way. They use their
after-tax cash for toys and holidays. However, they borrow to invest
and deduct the interest on those investment loans. That's called "good
debt" and it's how the rich become richer. If you have house
mortgage debt, it is the wrong kind of debt until you convert it to
tax-deductible debt. The Smith Manoeuvre's streamlined techniques
show you how to make it happen.
Can I really get free money?
Yes. By converting your mortgage into a tax-deductible loan, you are
turning the interest into a tax deduction. When you subtract that
deduction from your income, you get a tax refund. That refund is free
money. You don't have to invest any of your own income or increase
your debt to get the tax refund.
The refund you receive from investing in RRSPs is not free money.
You pay for your RRSP by using your own after-tax income to buy the
tax refund.
What is new and different about The Smith Manoeuvre?
It is a new method of designing your finances that extends the remarkable
benefits of debt conversion to almost anyone with a mortgage. Wealthier
Canadians commonly employ expensive tax accountants and tax lawyers
to replace their non-tax deductible loans (houses, vehicles) with
investment loans. Fraser Smith has improved upon those methods, introducing
a new procedure that enables the rest of us to convert our non-deductible
mortgage to a tax-deductible loan.
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