The Smith Manoeuvre converts your Canadian mortgage interest into a tax-deductible investment loan, while building a non-registered portfolio. For semi-professional investors with a 20-year horizon and a 40% or higher marginal tax rate.
This is the advanced sibling to WealthPath.
New to Canadian mortgage + investing math? Start with WealthPath. Already have TFSA and RRSP maxed and want to leverage home equity deductibly? Keep reading.
Eligibility screener
Profile check against income, MTR, equity, horizon, and temperament before you commit time.
Projection engine
Month-by-month simulation: portfolio, HELOC balance, refunds, net wealth delta vs. the non-Smith counterfactual.
Tax-cycle simulator
Internalize the monthly re-advance loop on a Year 1 view before you commit 25 years.
Compliance ledger
The audit-trail discipline that keeps your deduction safe. HELOC draws, brokerage deposits, trades, slips, reconciliation. CSV export.
Setup plan
A personalized checklist: which re-advanceable product fits you, which accountant questions to ask, which forms to file.
Variant planner
Accelerated vs basic, capitalized interest, Debt Swap, Smith/Orr cash damming for self-employed and landlords.
[ Projection chart: portfolio vs. HELOC vs. net delta, 25 years ]
Portfolio Y25
560K
HELOC Y25
330K
Net delta
+230K
Base case: 250K mortgage, 5% rate, 6.5% HELOC, 7% return, 47% MTR Quebec, 25-year horizon, accelerated Smith with capitalized interest.
The blunt filter question
If your portfolio dropped 40% next year and your HELOC stayed the same, and your spouse asked what you planned to do, what would you say?
"Keep buying on schedule" means you are probably suitable. "I would sell to sleep at night" means you are not. There is no wrong answer.
Household income 150K or more
Marginal tax rate 40% or higher
TFSA and RRSP substantially used
Home equity that keeps total secured debt at or under 65% of value
Investment horizon 20 years or longer
Can hold through a 40% drawdown without panic-selling
Willing to document every month for 25 years
Unused TFSA or RRSP room (fill those first)
Approaching retirement drawdown
Single earner with concentrated employment risk
Cannot commit to monthly record-keeping
No accountant familiar with ITA 20(1)(c)
Short horizon, under 15 years
Would sell during a market drawdown
How is this different from WealthPath?
WealthPath answers "should I pay down my mortgage or invest?". Smith answers "can I do both at the same time, and what does it cost in complexity, risk, and CRA exposure?". WealthPath is for any Canadian homeowner. Smith is for the semi-professional investor with registered accounts already maxed.
Is this financial advice?
No. This is an educational and planning tool. The Smith Manoeuvre permanently alters your debt structure, leverages your home, and involves ongoing CRA obligations. Engage a fee-only planner and an accountant with prior ITA 20(1)(c) work before implementing.
Is this legal?
Yes. The Smith Manoeuvre uses paragraph 20(1)(c) of the Income Tax Act, which has been stable for decades. CRA has never challenged the strategy itself, only sloppy implementations. Governing authority: Income Tax Folio S3-F6-C1.
Does my data leave my browser?
No. Projections and the compliance ledger run in your browser. You decide whether to export or share anything.
What if I live in Quebec?
The strategy still works in Quebec but runs more slowly in the early years because of the s. 336.1 investment-expense limitation. We compute Quebec-specific cash flows and deduction carryforward.
Start with the eligibility screener (two minutes). Or skip straight to the projection engine if you already know you are suitable.