For those investors who have maximized their RRSP contributions and are still looking for other tax deductions, consider borrowing money to invest. There are certain guidelines to follow to make sure that the interest cost can be deductible. The Canada Revenue Agency makes it clear that the investor must have an expectation of profits from the actual investments made in order to qualify for the deduction.
In a low interest rate environment, this type of strategy can be very effective. Consider this example; if you pay an interest rate of 3.5% and you are in the mid tax bracket, the actual net cost to borrow is reduced to 2.25%. There are many investment options to explore that should provide a long term rate of return in excess of your net cost of borrowing. The preferred tax treatment of capital gains and dividend income should be a part of this strategy for your investment portfolio.
A leveraged investment strategy is not for everyone, you need to work with a financial planner who is willing to provide a comprehensive analysis of your particular financial situation and assess your suitability based on your net worth, your income, your available cash flow, etc.
Some investors may have a bias against borrowing to invest because if you listen to the media in general, it appears that all debt it bad. However it is worthwhile to study the pros and cons with an open mind, there is a difference between good debt and bad debt.