Methodology · Canada
What every published figure was computed under
Smith Manoeuvre — sm-2026.1
- Mortgage compounding. Canadian fixed mortgage: semi-annual compounding, monthly factor (1 + r/2)^(1/6) − 1.
- Facility. HELOC compounds monthly (annual rate / 12).
- Refund timing. Tax refunds are credited monthly at the marginal rate. In reality they arrive with the annual return — a timing difference this projection smooths.
- Fair baseline. Invest the identical out-of-pocket outlay (HELOC interest net of refund) at the same return, with no borrowing. Net advantage is the strategy net worth minus this baseline fund — leverage priced against its alternative.
- Not modeled: Investment-income taxation along the way (dividends, distributions, realized gains); Account, fund, and borrowing fees; Rate changes and prepayment changes over the projection horizon; Accelerated variants (refund-prepay, dividend-prepay); Québec abatement and province × bracket tax detail (single flat marginal rate is used).
Bands this projection is re-run at
| Assumption | Low | High |
|---|---|---|
| HELOC rate | −1.50 pt | +1.50 pt |
| Investment return | −2.00 pt | +2.00 pt |
Cash damming — dam-2026.1
- Mortgage compounding. Canadian fixed mortgage: semi-annual compounding, monthly factor (1 + r/2)^(1/6) − 1.
- Facility. Line of credit compounds monthly (annual rate / 12).
- Refund timing. Tax refunds on deductible LOC interest are credited monthly at the marginal rate — the same smoothing as the Smith Manoeuvre model.
- Fair baseline. Plain amortization of the same mortgage with no dam. The advantage is total interest saved: baseline mortgage interest minus the dam scenario net interest (mortgage + LOC interest, less refunds).
- Not modeled: Investment-income taxation along the way (dividends, distributions, realized gains); Account, fund, and borrowing fees; Rate changes and prepayment changes over the projection horizon; Accelerated variants (refund-prepay, dividend-prepay); Québec abatement and province × bracket tax detail (single flat marginal rate is used).
Bands this projection is re-run at
| Assumption | Low | High |
|---|---|---|
| Line of credit rate | −1.50 pt | +1.50 pt |
What a version bump means
An assumption set's version changes when a modelled convention changes — a compounding rule, the refund-timing treatment, the fair-baseline definition, an entry in the not-modelled list, or a re-run band. The version is stamped into every projection the engine produces, so a figure quoted from this site can always be traced to the exact set that produced it, and a set is reviewed on the same terms as the site methodology itself.
These sets are published under site methodology version v1.1, whose one-engine rule is what puts them here. The methodology index carries the changelog for both.
Cite this page
- Permanent URL
- https://acru.ca/methodology/assumptions/
- Methodology version
- v1.1
- Last reviewed
- Suggested citation
- ACRU. “Assumption sets.” acru.ca, methodology v1.1, last reviewed 2026-08-16. https://acru.ca/methodology/assumptions/
Everything here is educational arithmetic under stated assumptions, not financial, tax, or investment advice. Interest deductibility depends on your circumstances and on maintaining adequate records; consult a qualified tax professional before implementing a leveraged strategy.