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AWM > Tax Strategies > IRIS

The IRIS Financial Strategy

Enhance the performance of your non-registered investments through the means of a collateral loan… in addition to maximizing your investment income and final estate.

Knowledgeable investors understand that borrowing to invest is an effective way to reduce income taxes because, under certain circumstances, the loan interest is deductible from returns. However, for it to be beneficial to the investor the following condition must be respected:

Investment rate of return ≥ Loan interest rate

Chances are, however, that this condition cannot be respected. That's where the IRIS financial strategy comes in and becomes an effective tool in helping investors meet this condition and increase after-tax returns on their investments.

The IRIS financial strategy can play a central role in your overall plan as it can be used to substantially increase the value of the non-registered portion of your investment portfolio. Investors with significant non-registered investments should therefore be particularly interested by this concept, as it can prove a highly effective tool in helping to grow one's savings.

The IRIS financial strategy generates additional net returns on your investments.

Example:

Returns	Inside the contract	+8% X Loan balance
Interest	Paid at start of year Added to loan balance	-2% X Loan balance -8% X Loan balance
Deductions	Tax return on interest paid (based on 46% taxation rate)	+4.6% X Loan balance
Result	Competitive advantage	+2.6% X Loan balance
	…plus insurance coverage at a low cost.

 

Investors should consult their tax, legal or accounting advisor to maximize the strategy's interest deduction potential.

(All of the above information is subject to errors and omissions.)