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Hi Ryan, Thanks for sharing your thoughts! You’re absolutely correct that when funds are withdrawn from an RRSP, they are subject to income tax. However, the strategy we outlined-commonly referred to as an RRSP Meltdown-doesn’t eliminate the need to pay taxes but focuses on minimizing the overall tax burden in a structured and strategic way. The approach combines carefully planned RRSP withdrawals with strategies like borrowing to invest (using tax-deductible interest) and reinvesting the withdrawals to reduce the net tax impact over time. This can help optimize cash flow and preserve access to government benefits, such as OAS, for individuals whose RRSP balances might otherwise create unintended tax consequences in retirement. It’s definitely not a way to avoid taxes but rather a method to manage them more effectively in specific situations.

Hi David, Thank you for sharing your thoughts and for engaging with our video. I appreciate your perspective, and you’ve raised some important points about the intention of RRSPs and the importance of ethical tax planning. You’re absolutely right-strategies like this aren’t a one-size-fits-all solution, and they must align with both financial goals and personal values. While the approach we shared can be effective for some individuals, it’s critical to weigh all options carefully and ensure compliance with CRA guidelines. Consulting a knowledgeable accountant, as you mentioned, is an essential step to avoid unintended consequences. I also completely agree with your point about RRSPs being a valuable tool for deferring taxes until retirement-this works well for many Canadians who expect to be in a lower tax bracket later in life. It sounds like you’ve carefully considered your own situation, which is exactly what we encourage everyone to do. Thank you again for watching and sharing your perspective. It’s these kinds of thoughtful discussions that help others make informed decisions about their financial planning. Warm regards,

@ Thanks for your thorough, well written and quick reply. I am always interested in learning about new ways to invest and manage money.

Yes of course

Hi Mahmoud, Great to hear that you’re starting to explore trading stocks at such a young age! It’s an exciting way to learn about financial markets and build long-term wealth. In Canada, whether you need to pay taxes on your stock trading depends on a few factors: Capital Gains: If you sell a stock for more than you paid for it, the profit (known as a capital gain) is taxable. Only 50% of the gain is taxable, and it gets added to your total income for the year. Dividends: If the stocks you own pay dividends, those are also taxable. Canadian dividends often come with a tax credit, which can help lower the amount you owe. Student and Low-Income Status: Since you’re a high school student, your total income is likely low. If your income falls below the basic personal amount (about $15,000, depending on your province), you may not owe any taxes, even if you have capital gains or dividend income. Registered Accounts (Optional): In the future, consider using a Tax-Free Savings Account (TFSA) once you turn 18. Investments made in a TFSA grow tax-free, so you wouldn’t owe taxes on gains or dividends in that account.

@ But I am on Welfare right now. Does that affect me, because I’m on welfare?

Hi @saublesurfer8197, Great question! There’s no correction needed-money withdrawn from a Tax-Free Savings Account (TFSA) is indeed not subject to tax. One of the key benefits of a TFSA is that both the contributions and the growth within the account (including interest, dividends, and capital gains) can be withdrawn tax-free at any time. That said, it’s worth noting that withdrawals from a TFSA will free up contribution room equal to the amount withdrawn, but this room is only available starting the following calendar year. Over-contributing to a TFSA can lead to penalties, so it’s essential to stay within your allowable limits. If you have any follow-up questions, feel free to ask!

Our apologies as we are updating our site details. Reach out to us at info@precedencewealth.com and we would be happy to share a full breakdown! Sorry again for the inconvenience.

Hi Robert, Thank you for sharing your concerns. I understand why the concept might initially raise some questions, and I appreciate the opportunity to clarify. First, you absolutely do not need to be 100% invested in equities to benefit from a tax-deductible investment strategy. Our approach is centered on diversification and mitigating risk. We prioritize not being overly tied to public markets and often incorporate alternative investments that generate steady returns without the volatility of equities. This balanced approach ensures our clients' portfolios are designed for long-term sustainability and resilience, not speculative growth. You mentioned concerns about fees, so I’d like to address that directly. Our firm is a fiduciary, which means we are legally and ethically obligated to act in our clients' best interests at all times. This includes offering transparent, competitive fees, and avoiding conflicts of interest. In fact, we pride ourselves on having some of the lowest fees in the industry, contrary to your assumption. Lastly, our goal is to partner with individuals who value collaboration and are open to thoughtful, evidence-based financial planning. It’s clear from your comments that our approach might not resonate with you, which is completely okay. We believe in working with people who share a positive outlook and mutual respect, and we wish you the best as you find a path that suits your goals. Thank you for taking the time to engage. If you ever have more questions or would like further clarification, I’d be happy to provide more information. Best regards,

I completely understand why this might raise concerns-it’s a complex concept that can seem unconventional at first glance. Rest assured, strategies like these can be legitimate and beneficial when structured correctly and with proper guidance. It’s always a good idea to approach these arrangements with caution and ask all the questions needed to feel confident.

We would borrow funds to invest in a non-registered portfolio. The income generated by this portfolio is typically very tax-efficient, with returns being mostly return of capital or, in some cases, capital gains. Tax-Deductible Interest: The interest on the borrowed funds is tax-deductible, which helps offset the taxes owed on RRSP withdrawals. RRSP Withdrawals: We would strategically withdraw money from your RRSP to make the interest payments on the loan. This effectively reduces or even eliminates the tax on your RRSP withdrawals. Growth in Non-Registered Account: The non-registered investments continue to grow, providing a more tax-efficient source of retirement income. This approach can be scaled to fit your needs, starting small and building up over time. It allows us to gradually transfer wealth from your RRSP to a non-registered account, offering more control and potentially lower taxes on your retirement income. info@precedencewealth.com

Thank you! 😊

The money is earned inside the TFSA… not a contribution 😊

“You don’t invest into your own your mortgage per se but rather a pooled of mortgages inside a special purpose mortgage investment corporation.”

Hi Jim, You bring up a good point about RRSPs (Registered Retirement Savings Plans) and RRIFs (Registered Retirement Income Funds). The required minimum withdrawals in a RRIF can limit flexibility, particularly as people grow older and want more control over their retirement funds. Many find that retaining funds in an RRSP allows for greater adaptability. However, current regulations mandate RRSP-to-RRIF conversion by age 71, which does impose minimum withdrawals.

Recall that the TFSA grows only by the interest earned on the private mortgage(s) in which it invests into. There is not a “transfer” or moving of assets from the non-registered to the TFSA whatsoever within this strategy’s sequence of cash flows. Hopefully that help clarify. Should you have any further questions, feel free to send another comment/message or reach out to us directly and we can discuss more about these specific details. info@precedencewealth.com

Thank you for your comment. Your initial assessment of the cash flows required is inaccurate. The only forced transaction required within this strategy is the liquidation of RRSP assets to initially fund the strategy. However, this has since been adjusted as well and is no longer required. Therefore, currently no other assets are required to be sold. The non-registered assets are eligible to continue to grow without being disrupted as long as the client desires. Recall that the TFSA grows only by the interest earned on the private mortgage(s) in which it invests into. There is not a “transfer” or moving of assets from the non-registered to the TFSA whatsoever within this strategy’s sequence of cash flows. Hopefully that help clarify.

You can convert to cash, or any other investment, inside your RRSP or RRIF. Ivthink his point is that, once you have it in cash, you can borrow it. ???

Hi David, Thank you for your message! I'm glad to hear that the information was helpful for you. I understand how important it is to have clear guidance, especially when it comes to investments. Regarding your question, our minimum portfolio size is $250,000. This threshold allows us to provide the comprehensive attention and services that our clients deserve. If you're open to it, I would be happy to discuss your current situation and explore how we can support you in achieving your financial goals. Feel free to reach out if you have any more questions!

You just have to have a Canadian residence order to carry the TFSA mortgage. But you can unwind the strategy at anytime.

Hi Vivian, I appreciate your perspective! The term "magic" can definitely come across as misleading, and I understand why it might raise concerns. It’s important to me that we communicate clearly and transparently. Thank you for bringing this to my attention-I’ll consider how to phrase things more appropriately moving forward. Your feedback is invaluable!

Perhaps it’s more useful to say, “Any sufficiently advanced planning is worth understanding.”

Hi @raymondfranke154, You’re absolutely right-it’s not a strategy for everyone, and we understand your concerns about CRA scrutiny. This type of strategy does require a comfort level with potential reviews from the CRA, especially as it may draw more attention. In your particular case, we strongly recommend not pursuing this approach. It’s essential to choose a strategy that aligns with your situation and risk tolerance, and it sounds like this one doesn’t fit your comfort level. Thank you for your thoughtful feedback!

You do not need contribution room inside your TFSA as the asset, or mortgage in this case, is inside your TFSA. Therefore, the borrowing to invest provides tax deductible interest which indirectly is earned inside your TFSA within this strategy. The payments, however, are funded from your RRSP withdrawals, which otherwise would be taxable, but are offset by the interest deductibility from the borrowing to invest :)

Investing in growth stocks is not usually advisable for borrowing to invest strategies for this very reason. A more tax efficient strategy is to use special purpose mutual funds that are built around a corporate class structure. Although, mutual funds are not very efficient vehichles for investing due to their higher fees, because of the tax treatment of corporate class structures, they are far more superior for these types of strategies. Other structures offer return of capital distributions as the majority of their income paid to investors which is also enticing. The important thing here is to have a careful consideration to the requirements set forth by CRA. When conducted propertly these strategies are able to provide very special results.

No, our Tax Deductible Mortgage Strategy is our sophisitcated and advanced version of the "Smith Maneuver." This strategy is a special structure is an advanced version of a "RRIF Meltdown Strategy." Although, the strategy has been revised since this video was released to ensure it fully complies with CRA's guidelines.

You're assets are not 'locked-in'. Rather this is a strategy of coordinated cash flows to provide a favorable tax and fiancial planning result.

Private mortgage pools are not backed by CDIC. Only GIC's are. However, the investments inside the special purpose MIC's are of the highest quality and are double collaterized. Meaning that the investors are protected by both the property the mortgage is secured by, as well as the investment proceeds that are used to invest. Double protection in other words. Hope that helps clarify further.

It is available to all Canadian investors who are accredited. As long they have a property in Canada that has adequate equity.

Have we ever met?

Funny thing is I bet you used leverage to buy your first house…

Here is a brief overview that may help.. # 1. Take the assets in your RRSP & TFSA and sell them to CASH, but they are still being held inside these structures respectively. #2 Now we Invest the CASH from inside your RRSP & TFSA into a Special Purpose Mortgage(MIC) Mortgage Investment Corp. Then you borrow from another MIC corp at those prescribed rates and that’s what creates the tax deductible interest. #3. After we invest your RRSP & TFSA CASH into the MIC, The actual mortgage proceeds are then re-lent to you and invested into NON-REGISTERED INVESTMENTS. #4. Now we begin to withdraw the money out of your RIF which is taxable income. #5. We then make your mortgage payments to the MIC. #6. You will be paid a 3% distribution from your RRSP and a 15% distribution from your TFSA. - The interest on these MIC payments is tax-deductible - The exact amount that is pulled out of your RRSP that is normally taxable is completely offset. For more information, and to speak with our lead advisor Todd McLay send me an email at info@precedencewealth.com

@@precedenceprivatewealth2872 Thanks for your reply. I have not reach retirement but I'm in 50s. I still trying to understand because new to me.

Why would you suggest you can only earn low interest inside your TFSA? Investors are able to invest into any type of security they choose... Stocks, Bonds, Mutual Funds, ETF's, REITs, Private Equity, etc.

You’re better off taking an amortized term where the interest rate is much lower. Principle payments are required, but it at least builds up equity rather than paying additional interest expense. Also, it is important to acknowledge that the after tax value is what needs to be considered. For example, 4.5% interest rate would provide an after tax cost of 2.7% at a 40% tax bracket. That is a very low threshold to match with the investment portfolio. Hope that helps clarify. Reach out with African questions if needed.