CRA Webpage, “Excessive interest and financing expenses limitation rules,” 24 September 2024

Information required to be filed with return

Filing your information

You must report your information relating to the rules on the Schedule 130 of your corporation or trust income tax return. …

You may also have to report relevant information on Schedule 130 of your partnership information return if you have IFE or IFR, and have a corporation or a trust as a member.

If your partnership has a corporation or a trust as a member, under the rules you should complete the following steps:

1. Provide each member with detailed calculations of the partnership’s IFE and IFR
2. Provide each member with detailed calculations of the RAIFE and RAIFR of any CFA of the partnership
3. Notify each member in writing of their allocated share for the year of:
   
   • IFE in Canadian exploration expenses, Canadian development expenses, Canadian oil and gas expenses, and foreign resource expenses
   • The income or loss that can reasonably be considered to come from activities funded by a borrowing or other financing that results in exempt interest and financing expenses

Filing approach before Schedule 130 is ready

Schedule 130

… Schedule 130 information is still required even though the form is not available. …

Corporations and trusts

… When you report your foreign accrual property income, you must adjust for RAIFE denied under subclause 95(2)(f.11)(ii)(D)(I) and include amounts in respect of a CFA’s partnership under subclause 95(2)(f.11)(ii)(D)(II).

When you submit your return, send a letter to the CRA that includes the following:

• Calculations of absorbed capacity, ATI, excess capacity, IFE, and IFR. The calculations should include enough details so that a total amount for each paragraph of the relevant definition is shown (refer to subsection 18.2(1))
• A calculation of the proportion in subsection 18.2(2) showing an amount for each variable of the formula
• A calculation of restricted interest and financing expenses for the year, broken down to show amounts restricted under:
  
  • Paragraph 12(1)(l.2)
  • Subsection 18.2(2), and
  • Subclauses 95(2)(f.11)(ii)(D)(I) and 95(2)(f.11)(ii)(D)(II)

If your corporation or trust is a member of a partnership, you must include the share of all relevant partnership amounts when you calculate the corporation or trust’s ATI, IFE, and IFR. …

Partnerships

When you submit your partnership information return for the fiscal year, you must include the details of how the partnership calculated its IFE and IFR (refer to subsection 18.2(1)).

Form of filing EIFEL elections before election forms are available

Election forms

The CRA is preparing forms that will allow you to apply for EIFEL elections. The forms will be available in the near future. …

Number	Title
T2224	Transitional Rules Election
T2225	Group Ratio Rules Election under subsection 18.21(2), and Fair Value Adjustments Election under subsection 18.21(4)
T2226	Election to Transfer Cumulative Unused Excess Capacity under Subsection 18.2(4)
T2227	Excluded Interest Election Under Subsection 18.2(1)
T2228	Specified Pre-regime Loss Election under subsection 18.2(1)
T2229	Election to forgo a foreign accrual property loss under clause 95(2)(f.11)(ii)(E)

…

How to file the election before the forms are available

If you need to file an election before the forms are available, you may send a letter containing the information required under the relevant election provision in the Income Tax Act with the signatures of all taxpayers or partnerships who are party to the election. …

You will need to submit a separate letter for each election.

Waiver of requirement for transferee to file an information return

Information return requirement waived

If you have received capacity in a joint election under subsection 18.2(4), you are required to file an information return under subsection 18.2(6) within 6 months after the end of the calendar year.

However, the CRA is not requiring the filing of this information return at this time.

Election may be useful where the taxpayer has no documentary support for IFE

Specified pre-regime loss election

If you are deducting a non-capital loss in the year, you must be able to support the IFE that is part of that loss because this IFE is added back when calculating your ATI. If the non-capital loss is from a tax year ending before February 4, 2022, you can elect to treat the loss as a specified pre-regime loss. You will then be able to add back 25% of the amount of non-capital loss deducted in the year when determining your ATI. This may apply if, for example, you no longer have documents to support the IFE.

Election avoids inclusion in IFE of the RAIFE included in computing the FAPL

Election to forgo a foreign accrual property loss

If you have a foreign accrual property loss, you can elect to forgo this loss to avoid having to include expenses that gave rise to the loss in your IFE.