The DIY Smith Manoeuvre: Why TikTok/YouTube Isn’t a Tax Plan

A cautionary tale of interest deductions gone wrong (and how not to end up on CRA’s radar)

It starts innocently enough.

You stumble across a TikTok with a smooth-talking creator promising you can turn your mortgage into a tax-deductible loan, retire earlier, and beat the banks at their own game, all with just five easy steps. Then you hop onto Reddit, see a few threads that say “it’s easy—just open a HELOC and invest!”, and before you know it, you’re elbows-deep in bank accounts, loan balances, and index funds, convinced you're about to outsmart both the CRA and your mortgage.

But before you hit that “buy” button on your first investment using borrowed funds, take a breath. And read this.

The Smith Manoeuvre Isn’t a Hack — It’s a Tax Strategy

The Smith Manoeuvre is a powerful financial strategy when implemented properly. It’s a methodical way to convert your non-deductible mortgage interest into deductible investment loan interest. But let’s be clear: this isn’t a TikTok/YouTube life hack. It’s not a “get rich quick” scheme. It’s a long-term debt conversion plan that lives and dies by the CRA’s rules.

When you DIY this strategy without understanding those rules, especially using snippets of advice from social media—you’re stepping into dangerous territory. Here’s why:

Why DIY’ing the Smith Manoeuvre Could Cost You (Big Time)

1. You Might Deduct Interest You’re Not Allowed To

The CRA is very clear: you can only deduct interest on money borrowed to earn income from a business or investments. If you mix personal and investment uses (say, you buy ETFs and also renovate your kitchen from the same HELOC), that deductibility goes out the window, and so might your refund.

2. One Wrong Move = CRA Review

The CRA doesn’t play around. If you claim large interest deductions without proper supporting documentation, or worse, on funds used improperly, they can (and do) reassess taxpayers. You may end up owing back taxes, interest, and penalties. The savings from skipping the consulting fee? Gone. Plus more.

3. Your Bank Might Set You Up to Fail

Some banks don’t structure their readvanceable mortgages correctly for the Smith Manoeuvre. Others might lump your credit back into a single loan, making it impossible to track what money went where. A Smith Manoeuvre-certified advisor will help you choose the right setup. Reddit will not.

4. Record-Keeping Is Not Optional

Doing this right means knowing exactly how much of your HELOC is used for investing, tracking every transaction, and keeping clear records. Most DIYers don’t realise this until it’s too late, and neither will TikTok/YouTube influencers who skip that part in their 30-second explainer.

A Word About the Naysayers

You might come across people online who rant about how the Smith Manoeuvre is a scam, that it doesn’t work, or that it blew up their finances. Nine times out of ten, they’re folks who tried it themselves (without professional guidance) and ran into trouble with the CRA. It’s not that the strategy doesn’t work; it’s that it wasn’t implemented properly. Like trying to perform your own dental surgery, it technically can be done, but should it?

The Bottom Line: Don’t Be Penny-Wise and CRA-Foolish

The Smith Manoeuvre can absolutely work. In fact, it’s been used by thousands of Canadians for over two decades to build wealth and reduce tax. But it only works if it’s done right.

Paying for professional guidance may feel like an expense up front, but compared to the risk of audits, penalties, or losing your entire deduction, it’s a bargain. The best strategies are the ones that actually work, not just the ones you read about in the comments section.

So, before you TikTok/YouTube your way to a CRA reassessment, consider calling a certified Smith Manoeuvre advisor. Your future self (and your accountant) will thank you.

Ready to make the Smith Manoeuvre work for you, not against you?

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