Smith Manoeuvre calculator
A free calculator for Canada: see whether the Smith Manoeuvre (also spelled Smith Maneuver) is worth it for your situation. Enter what you'd borrow, your interest rate, and your marginal tax rate, and the table shows the return you need to break even after the tax deduction — the core of the leveraged-investing math.
Annual interest
$6,000
After-tax cost
$3,300
Effective rate: 3.30%
| Market return | Portfolio gain | Annual profit |
|---|---|---|
| breakeven3.30% | $3,300 | $0 |
| 6% | $6,000 | +$2,700 |
| 9% | $9,000 | +$5,700 |
| 12% | $12,000 | +$8,700 |
| 15% | $15,000 | +$11,700 |
This assumes the full deduction applies at your marginal rate. If your deductible interest exceeds the portion of your income in the top bracket, part of the saving falls to a lower rate. Taxes on investment income are not included. This calculator is educational, not tax advice.
How the calculator works
When you borrow to invest in Canada, the interest is generally tax-deductible. So if you borrow at an interest rate of R and deduct that interest at your marginal tax rate T, your effective after-tax borrowing cost is R × (1 − T). You come out ahead whenever your investment return beats that break-even rate. The table shows your annual profit — portfolio gain minus after-tax borrowing cost — across a range of market returns.
It's an estimate to help you decide, not a projection of guaranteed results. Taxes on your investment income aren't included, and it assumes the full deduction applies at your marginal rate.
More reliable than a Smith Manoeuvre spreadsheet
A spreadsheet is fine for the one-time “is it worth it?” question above. But once you actually start, the deductible portion of your debt changes with every borrow, purchase, sale, distribution, and capitalized interest charge — and that's where spreadsheets quietly break. The Deductible Interest Tracker keeps the deductible amount correct from your real transactions.
- The Smith Manoeuvre, explained — how the whole strategy works
- How interest deductibility works — the CRA tracing rule (Income Tax Folio S3-F6-C1)
- Interest capitalization — paying interest by borrowing more
- The full Guide — every scenario, explained