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How it Works


                    



The Tax Deductible Mortgage Plan is one of the most powerful financial tools available to Canadian Homeowners. TDMP makes it easy for you to take advantage of this advanced financial strategy without any of the hassle.



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The Monthly Cash Flow Cycle

TDMP's fully automated Cash Management Solution guarantees your cash flows will happen on time, in the right order and the correct amounts, month after month and year after year. So you can rest easy and let TDMP take care of all the work!


        Week 1: Fixed Monthly Distributions
        Week 2: Mortgage Pre-Payments
        Week 3: Line of Credit Advancements
        Week 4: Interest & Wealth Contributions



The Cash Flow Portfolio

Mortgage Freedom can be achieved years ahead of schedule by accelerating the pay down of your mortgage with the Cash Flow Portfolio.

The Cash Flows generated from the portfolio are used to make extra pre-payments to your mortgage every month. The available principal is then re-advanced from the Investment Line of Credit and put toward eligible purposes. This is known as Cash Damming*.

Cash Flows can originate from one or more of the following sources:

        Investment Distributions
        Unused Personal Cash Flows
        Unincorporated Business Expenses
        Real Estate Rental Expenses


Your TDMP Advisor will help you structure your portfolio for maximum tax efficiency, allowing you to pay off your mortgage years ahead of schedule without affecting your current monthly cash flows!



What is Cash Damming?

Cash damming is a term Canada Revenue Agency (CRA) first defined in an Interpretation Bulletin IT-533, published on October 31, 2003 to help individual Taxpayers determine under what circumstances interest would be tax deductible.  Paragraph 16 of ITC-533 introduces Cash Damming as: 

“Taxpayers may segregate (typically in separate accounts) funds received from borrowed money and funds received from other sources (e.g., funds received from operations or other sources and that are otherwise not linked to money previously borrowed). This technique, commonly referred to as cash damming, readily allows taxpayers to trace borrowed money to specific uses.”

The Canadian Income Tax Act (ITA) Section 20 (1) (c) provides that interest generated on money borrowed to invest for the purpose of generating income is tax deductible.

Therefore, if you borrow money to purchase an income generating investment (e.g. mutual funds), the interest expense will be tax deductible regardles of where the money was borrowed from or what security was used for the loan (i.e. whether unsecured investment loan or mortgage money is irrelevant to ITA).

*CRA Cash Damming Rules are complex. TDMP strongly advises to consult with licensed Advisors before attempting to implement any advanced financial strategy.



Creating an Audit Trail

Creating a clear audit trail is the key to protecting your refunds. TDMP's setup process and automated Cash Management system ensures CRA Compliance in the event of an audit. 


                  Watch the video to learn more...            
     

                   



TDMP Clearing Account

Every TDMP customer is required to open a new chequing account ("TDMP Clearing Account") which is used exclusively for Cash Damming. Under TDMP, all tax deductible cash flows (e.g. line of credit re-advances, carrying charges and investments) are automatically processed through the TDMP Clearing Account.

This provides a bullet proof audit trail for CRA and guarantees perpetual entitlement to the mortgage tax refunds - as long as investments qualify under ITA rules and funds are never co-mingled by the homeowner.



TDMP Tax Services

A complimentary Annual Compliance Review is included with your Plan. You may also choose to take advantage of TDMP's discounted Tax Packages. 




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