{"id":5491,"date":"2019-05-16T11:41:09","date_gmt":"2019-05-16T15:41:09","guid":{"rendered":"http:\/\/caissealliance.absoludev.ca\/?p=5491"},"modified":"2020-04-21T13:59:02","modified_gmt":"2020-04-21T17:59:02","slug":"cash-damming-technique","status":"publish","type":"post","link":"https:\/\/www.caissealliance.com\/en\/business\/management\/cash-damming-technique\/","title":{"rendered":"Cash Damming Technique"},"content":{"rendered":"<p>The cash damming technique lets you reduce your income taxes by gradually converting your personal debt, for which interest is not deductible, into a new debt to cover your business expenses, for which interest is fully deductible.<\/p>\n<p>This tax strategy is for self-employed workers, individual business owners, rental property owners and members of a general partnership.<\/p>\n<div id=\"bodyinfo\">\n<h2>Requirements<\/h2>\n<ul type=\"disc\">\n<li>Be an individual operating an unincorporated business.<\/li>\n<li>Earn high taxable income.<\/li>\n<li>Have substantial personal debts (residential mortgage, auto loan, credit card, etc.).<\/li>\n<li>Have substantial business expenses.<\/li>\n<\/ul>\n<h2>How it works<\/h2>\n<p>Cash damming requires that you use:<\/p>\n<ul type=\"disc\">\n<li>2 separate Personal Chequing Accounts to segregate your gross income from business expenses;<\/li>\n<\/ul>\n<\/div>\n<ul>\n<li data-gc-list-depth=\"1\" data-gc-list-style=\"bullet\">a\u00a0<a href=\"https:\/\/www.caissealliance.com\/fr\/produits\/marge-de-credit-hypothecaire\/\" target=\"_blank\" rel=\"noopener noreferrer\">Versatile Line of Credit<\/a> (line of credit with mortgage insurance on your primary residence).<\/li>\n<\/ul>\n<p>You use your gross income to:<\/p>\n<ul type=\"disc\">\n<li>cover personal expenses;<\/li>\n<li>pay your business debts (if applicable);<\/li>\n<li>pay back your personal debts sooner, the interest of which is not deductible.<\/li>\n<\/ul>\n<p>You finance 100% of your business expenses with the Versatile Line of Credit cash advances. Your Versatile Line of Credit could also facilitate future financing of personal projects (cottage, boat, new car, etc.).<\/p>\n<h2>Example<\/h2>\n<p>An individual in business with a $150,000 mortgage, amortized over 25 years, could save a total of\u00a0<strong>$62,061<\/strong>\u00a0in taxes.<\/p>\n<table>\n<tbody>\n<tr>\n<td><strong>Amortization*<\/strong><\/td>\n<td colspan=\"2\">\n<p align=\"center\"><strong>10 years<\/strong><\/p>\n<\/td>\n<td colspan=\"2\">\n<p align=\"center\"><strong>25 years<\/strong><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"39%\"><strong>Personal debt converted into business debts<\/strong><\/td>\n<td width=\"14%\">\n<p align=\"center\"><strong>Interest<\/strong><\/p>\n<\/td>\n<td width=\"14%\">\n<p align=\"center\"><strong>Tax savings<\/strong><\/p>\n<\/td>\n<td width=\"14%\">\n<p align=\"center\"><strong>Interest<\/strong><\/p>\n<\/td>\n<td width=\"14%\">\n<p align=\"center\"><strong>Tax savings<\/strong><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td>$150,000<\/td>\n<td>\n<p align=\"center\">$49,172<\/p>\n<\/td>\n<td>\n<p align=\"center\">$22,127<\/p>\n<\/td>\n<td>\n<p align=\"center\">$137,913<\/p>\n<\/td>\n<td>\n<p align=\"center\">$62,061<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td>$200,000<\/td>\n<td>\n<p align=\"center\">$65,562<\/p>\n<\/td>\n<td>\n<p align=\"center\">$29,503<\/p>\n<\/td>\n<td>\n<p align=\"center\">$183,884<\/p>\n<\/td>\n<td>\n<p align=\"center\">$82,748<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Cash damming has been accepted by tax authorities since 2002.<\/p>\n<p>See a Caisse populaire advisor to find out if you are eligible and to discuss with you the relevance of this tax strategy, based on your situation and needs.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The cash damming technique lets you reduce your income taxes by gradually converting your personal debt, for which interest is not deductible, into a new debt to cover your business expenses, for which interest is fully deductible. This tax strategy is for self-employed workers, individual business owners, rental property owners and members of a general [&#8230;]<\/p>\n","protected":false},"author":1,"featured_media":9291,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[124],"tags":[],"class_list":["post-5491","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-management"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Cash Damming Technique | Caisse Alliance<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.caissealliance.com\/en\/business\/management\/cash-damming-technique\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Cash Damming Technique | Caisse Alliance\" \/>\n<meta property=\"og:description\" content=\"The cash damming technique lets you reduce your income taxes by gradually converting your personal debt, for which interest is not deductible, into a new debt to cover your business expenses, for which interest is fully deductible. 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