What the spread is actually worth.
Borrowing at 5% to collect 10% is not a 5% spread. The interest may or may not be deductible, the distribution is taxed by what it is made of rather than as one lump, and the part that is return of capital is not taxed now — it is taxed later. This works all three out.
Marginal rates for 2026, combined federal and provincial, applied to the bracket your taxable income falls in — the distribution is treated as sitting on top of it. A large enough position pushes you into the next bracket, which this does not model. Fund tax characteristics are the last published year, which is not a promise about this one. Yields are trailing, as at 2026-08-10, and a distribution can be cut at any time. Nothing here is tax advice — see the disclaimer, and the CRA's own figures.
What decides it
Where you hold it
Interest is deductible only where the borrowed money is used to earn taxable income. Borrow into a TFSA and there is no deduction — the income is tax-free but the full interest cost is yours. The same trade can be worth having in a margin account and not worth having in a TFSA.
What the distribution is made of
Eligible dividends, capital gains, foreign income and return of capital are taxed at four different rates, and one of them is zero on receipt. Two funds with the same yield can leave very different amounts in your hand.
What is only deferred
Return of capital lowers your cost base, so it comes back as a capital gain when you sell. It improves the spread today and it is not free. Shown separately above for that reason.
Fund data as at 2026-08-10. Rates and limits carry their own source and retrieval date.