Tax strategies
Are you an unincorporated self-employed worker, a member of a general partnership or an unincorporated rental property owner with significant personal debts or expenses and a large tax bill to pay?
Then National Bank can help you optimally manage your finances and benefit from substantial tax savings!
Your financial partner has developed easy-to-use financing solutions1 specifically suited to tax strategies like “cash damming.”2
Cash damming
Cash damming is a tax strategy that lets you take advantage of the interest deductibility rules by gradually converting personal debt (the interest on which is not deductible) into business debt (the interest on which is fully deductible).
How it works
- You use your business income to cover your current expenses and gradually repay your personal debts.
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You borrow money to cover your business expenses.
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You can deduct the interest on the borrowed money.
- You save on taxes.
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Without cash damming you have to pay your current expenses and personal debts from yournet business income. The interest payable on your personal debts is, of course, not tax deductible.
Interested in cash damming?
In light of the growing number of tax rules governing interest deductibility, you must have your accountant or tax specialist validate the appropriateness and advantages of using this technique in your specific situation.
Your accountant or tax specialist can determine:
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Whether you qualify for cash damming
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How much you could save with this technique
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What business expenses qualify for financing
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Whether the financial structure proposed by National Bank for cash damming is optimal for you
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How your tax strategy will be affected by changes to tax legislation
Your National Bank advisor will propose:
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A financial structure to make it easy to manage your cash damming strategy
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A financing solution that will allow you to reduce interest charges on the money you borrow, while enjoying optimal tax savings.
To know more about cash damming, don’t hesitate to contact your advisor.
1 Subject to credit approval by National Bank.
2 This tax strategy is supported by the Singleton decision rendered by the Supreme Court of Canada in 2001 and by documents published by Canadian tax authorities since October 2002. The Canada Revenue Agency has clearly indicated that cash damming is consistent with the wording of paragraph 20(1)(c) of the Income Tax Act concerning interest deductibility, since the borrowed monies are used for specific and, presumably, “eligible uses.”
3 Subject to credit approval by National Bank. For financing exceeding 75% of the value of your home, on condition that a loan insurer (approved by National Bank) accepts to insure your loan. Some conditions apply.
TM National Bank All-In-One Banking is a trademark of National Bank.
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