Excluded entities have the choice of whether or not to compute their CUEC in years in which it is not being utilized

If the maximum amount that the EIFEL regime permits the taxpayer to deduct for a taxation year is not fully utilized, that amount is added to its cumulative unused excess capacity (CUEC) balance, thereby increasing its capacity to make interest and financing expense deductions in any of the three subsequent taxation years.

Both the CUEC definition in s. 18.2(1) and Schedule 130 contemplate that the CUEC balance can accumulate in years in which it is not used irrespective of whether the form is filed for those year. Furthermore, although s. 18.2(18) states that “each taxpayer" shall file a prescribed form containing prescribed information respecting the deductibility of its IFE, CRA guidelines state that an excluded entity is not required to file unless it is a party to an election under the rules.

Thus, an excluded entity appears to have the choice of filing the prescribed form (Sched. 130) for years when the form is not required by CRA. This creates additional costs, but less of a burden in a subsequent year when the CUEC is needed.

Neal Armstrong. Summary of Simon Townsend and Benjamin Wilson, “Excluded Entities for EIFEL: Should CUEC Balances Be Tracked and Filed?,” Canadian Tax Focus, Vol. 15, No. 3, August 2025, p. 2 under s. 18.2(1) - CUEC.