CRA confirms that the s. 95(2)(f.11)(ii)(D)(I) denied FAPI deduction under the EIFEL rules is not reduced by the CFA’s variable B credits

Part 2M of the schedule (Sched. 130) used for EIFEL reporting, computes the amount that is not deductible from FAPI under s. 95(2)(f.11)(ii)(D)(I) principally by multiplying the “Amounts determined for variable A in the definition of IFE [interest and financing expense] for the affiliate” by the non-deductible EIFEL proportion in the s. 18.2(2) formula.

An external stakeholder suggested to CRA that the quoted description was incorrect and should instead refer to any amounts included in the CFA’s relevant affiliate interest and financing expenses (RAIFE). Principally, this would have signified that the quoted amount is reduced by the variable B (income amount) components of the CFA’s RAIFE computation.

The Directorate rejected this suggestion, stating:

The limitation rule of subclause 95(2)(f.11)(ii)(D)(I) does not apply to a net amount of RAIFE totalling all the amounts to be considered in computing a CFA’s IFE, but only to certain amounts included in variable A of the IFE definition.

However, it added a recommendation that the quoted amount instead refer to:

“Amount determined for variable A (excluding amounts under paragraphs (h) and (j)) in the definition of IFE for the affiliate”.

Neal Armstrong. Summary of 30 October 2025 Internal T.I. 2025-1068441I7 under s. 95(2)(f.11)(ii)(D)(I).