The excessive interest financing and expense limitation (EIFEL) rules limit excessive interest and financing expenses by affected corporations, trusts, and partnership.

The following supplemental instructions may assist corporations, trusts or partnerships to fulfil their filing obligations under the rules. Follow each section below that applies to your corporation, trust or partnership.

For general information on the rules, refer to: Excessive interest and expense limitation rules.

For additional information on the rules, refer to: Explanatory Notes Relating to the Income Tax Act and Other legislation .

General instructions

Keeping records

You are required to keep records of detailed calculations supporting all amounts reported on Schedule 130 and election forms.

For more information on your responsibilities and the requirements associated with keeping records, refer to: Keeping records.

Incorporating relevant amounts from your T5013 slips

If your corporation or trust is a member of a partnership, for instructions on how to incorporate the relevant amounts from your T5013 slip when completing your Schedule 130, refer to: T5013-INST Statement of Partnership Income - Instructions for recipient.

If your partnership receives a T5013 slip with an amount in a box relevant for determining the EIFEL under subsection 18.2(2), it must provide a letter to its members informing them of their portion of each such amount. For a listing of the relevant box numbers, refer to: T5013-INST Statement of Partnership Income - Instructions for recipient.

Instructions for T2SCH130 Excessive Interest and Financing Expenses Limitation (2023 and later tax years)

Part 1C – Information on borrowings and other financings and related derivatives

Column 2: Report the greatest total amount of borrowing or other financing outstanding at any time in the tax year.

In the case of a public offering or a syndicated financing (other than a private placement), report an estimated breakdown of the amounts between Canadian arm’s length and non-resident arm’s length parties.

Column 3: Report the greatest total of the notional amount of derivatives entered in respect of a borrowing or other financing outstanding at any time in the tax year.

Columns 2 and 3: For additional clarification, the term “borrowing or other financing” refers to any borrowing or other financing of your corporation, including a borrowing or other financing that is non-interest bearing and one that is the subject of an election under the definition of excluded interest in subsection 18.2(1).

Columns 4, 5 and 6: The CRA will accept when reporting for tax years ending in 2023 and 2024, an estimated breakdown of the information required.

Part 1D – Information on loans and other financings and related derivatives

Column 2: Report the greatest total amount of loans or other financings owing to or provided by your corporation at any time in the tax year.

Column 3: Report the greatest total of the notional amount of derivatives entered in respect of loans or other financings owing to or provided by your corporation at any time in the tax year.

Columns 2 and 3: For additional clarification, the term “loans or other financings” refers to any loan or other financing owing to or provided by your corporation, including loans or other financings that are non-interest bearing and ones that are the subject of an election under the definition of excluded interest in subsection 18.2(1).

Columns 4 and 5: The CRA will accept when reporting for tax years ending in 2023 and 2024, an estimated breakdown of the information required

Part 2B - Capitalized interest financing expense (IFE) in the cost of depreciable assets

Column 3: Report the net adjustment to the IFE in the undepreciated capital cost of the class of assets as a result of the following:

• Acquisitions
• Adjustments
• Transfers
• Dispositions

This amount can be positive or negative, depending on whether the net adjustment results in an increase in the IFE in the capital cost of the class of assets (positive amount) or a decrease in the IFE in capital cost of the class of assets (negative amount).

Column 4: For additional clarification, adjust column 2 “IFE in undepreciated capital cost (UCC) at the beginning of the year” by the amount reported in column 3 and report the result in column 4. Add a positive amount in column 3 to the amount reported in column 2. A negative amount in column 3 will reduce the amount reported in column 2.

Part 2C – IFE included in resource deductions

Column 4: For additional clarification, adjust column 2 “IFE in the opening balance” by the amount reported in column 3 and report the result in column 4. Add a positive amount in column 3 to the amount reported in column 2. A negative amount in column 3 will reduce the amount reported in column 2.

Part 2I - Cumulative Unused Excess Capacity (CUEC)

Amalgamations: When there has been an amalgamation of two or more corporations (referred to as a “new corporation” and the “predecessor corporations”) under subsection 87(1), report in columns 1, 2 and 3 the total of the amounts of the predecessor corporations for each of the preceding years pursuant to paragraph 87(2.1)(a.1).

Wind-ups: If a subsidiary has been wound up in circumstances described in subsection 88(1.1), report in columns 1, 2 and 3 the aggregate of the amounts of both the parent and the subsidiary corporation for each of the preceding years pursuant to subsection 88(1.11).

Amounts allocated on form T2224 Transitional Election Under the Excessive Interest and Financing Expenses Limitation Rules:

If your corporation or any of its eligible pre-regime group entities have a ratio of permissible expenses of 40% in the first tax year in which the rules apply, report the amount of group net excess capacity allocated in part 2, section 4 of the T2224 form in part 2I as follows:

• Report the amount in column 271 of the T2224 form in row 3 of column 122 of Part 2I
• Report the amount in column 272 of the T2224 form in row 2 of column 122 of Part 2I
• Report the amount in column 273 of the T2224 form in row 1 of column 122 of Part 2I

The amounts allocated in part 2, section 5 of the T2224 form are used when completing Part 2I in the two tax years following the first tax year in which the rules apply.

If your corporation and all of its eligible pre-regime group entities have a ratio of permissible expenses of 30% in the first tax year in which the rules apply, report the amount of group net excess capacity allocated in part 3, section 4 of the T2224 form as follows:

• Report the amount in column 371 of the T2224 form in row 3 of column 122 of Part 2l
• Report the amount in column 372 of the T2224 form in row 2 of column 122 of Part 2l
• Report the amount in column 373 of the T2224 form in row 1 of column 122 of Part 2l

Part 2J - Restricted interest and financing expenses (RIFE) under paragraph 111(1)(a.1)

Include in the amount reported on line 128 “RIFE from previous tax years” any of the following adjustments:

• Amalgamations – see paragraphs 87(2.1)(a) and (b)
• Wind-ups – see subsection 88(1.1)
• Loss restriction events – see subsection 111(5)

Instructions for T3SCH130 Excessive Interest and Financing Expense Limitation

Part 1 – General Information

Information on borrowing and other financing and related derivatives:

Second column from the left:

• Report the greatest total amount of borrowing or other financing outstanding at any time in the tax year.
• In the case of a public offering or a syndicated financing (other than a private placement), report an estimated breakdown of the amounts between Canadian arm’s length and non-resident arm’s length parties.

Third column from the left: Report the greatest total of the notional amounts of derivatives entered into in respect of a borrowing or other financing outstanding at any time in the tax year.

Second and third columns from the left: For additional clarification, the terms “amounts borrowed or other financing” in the second column and “borrowing or other financing” in the third column refer to any borrowing or other financing of your trust, including a borrowing or other financing that is non-interest bearing.

Fourth, fifth and sixth columns from the left: The CRA will accept when reporting for tax years ending in 2023 and 2024, an estimated breakdown of the information required.

Information on loans and other financing and related derivatives:

Second column from the left: Report the greatest total amount of loans or other financing owing to or provided by your trust at any time in the tax year.

Third column from the left: Report the greatest total of the notional amount of derivatives entered into in respect of loans or other financing owing to or provided by your trust at any time in the tax year.

Second and third columns from the left: For additional clarification, the term “loans or other financing” used in the second and third columns refers to any loans or other financing owing to or provided by your trust, including loans or other financing that are non-interest bearing.

Fourth and fifth columns from the left: The CRA will accept when reporting for tax years ending in 2023 and 2024, an estimated breakdown of the information required.

Table for a trust is a member of a partnership that has IFE: For additional clarification, the heading in the second column from the left should be read as “Partnership account number (if the partnership is non-resident, leave blank)”.

Part 2A – Interest and financing expenses (IFE)

• Line IV: For additional clarification, the narrative in the bracket should be read as: Amount I from the table in part 1(6).
• Line above “Variable B of IFE”: The amount reported on this line should represent the total of the following:
  • The amounts from box 249 of the T5013 slips
  • Any relevant amounts from non-resident partnerships

Part 2B - Capitalized IFE in the cost of depreciable assets

Column 3: Report the net adjustment to the IFE in the undepreciated capital cost of the class of assets as a result of the following:

• Acquisitions
• Adjustments
• Transfers
• Dispositions

This amount can be positive or negative, depending on whether the net adjustment results in an increase in the IFE in the capital cost of the class of assets (positive amount) or a decrease in the IFE in the capital cost of the class of assets (negative amount).

Column 4: For additional clarification, adjust column 2 “Portion of opening undepreciated capital costs (UCC) that is IFE” by the amount reported in column 3 and report the result in column 4. Add a positive amount in column 3 to the amount reported in column 2. A negative amount in column 3 will reduce the amount reported in column 2.

Part 2C – Capitalized IFE in resource deductions

Column 4: For additional clarification, adjust column 2 “Portion of balance at end of previous year that is IFE” by the amount reported in column 3 and report the result in column 4. Add a positive amount in column 3 to the amount reported in column 2. A negative amount in column 3 will reduce the amount reported in column 2.

Part 2D -Interest and financing revenues (IFR)

Second line above “Variable A of IFR”: Report the total of the following:

• The amounts from box 248 of the T5013 slips
• Any relevant amounts from non-resident partnerships

Line I.1: For additional clarification, the narrative in the bracket should be read as: Amount I from the table in Part 1(5).

Third line above “Variable B for IFR”: Report the total of the following:

• The amounts from box 250 of the T5013 slips
• Any relevant amounts from non-resident partnerships

Line above “Variable B for IFR”: For additional clarification, the narrative on the line should be read as: Amounts included in Variable A of IFR that are exempt from tax under Part I of the Income Tax Act.

Part 2H - Cumulative unused excess capacity (CUEC)

Amounts allocated on T2224 Transitional Election Under the Excessive Interest and Financing Expenses Limitation Rules:

If your trust or any of its eligible pre-regime group entities have a ratio of permissible expenses of 40% in the first tax year in which the rules apply, report the amount of group net excess capacity your trust was allocated in part 2, section 4 of the T2224 form in part 2H as follows:

• Report the amount in column 271 of the T2224 form on the line for excess capacity in part 2H of Schedule 130 in the column titled “First previous year”
• Report the amount in column 272 of the T2224 form on the line for excess capacity in part 2H of Schedule 130 in the column titled “Second previous year”
• Report the amount in column 273 of the T2224 form on the line for excess capacity in part 2H of Schedule 130 in the column titled “Third previous year”

The amounts allocated in part 2, section 5 of the T2224 form are used when completing part 2H in the two tax years following the first tax year in which the rules apply.

If your trust and all of its eligible pre-regime group entities have a ratio of permissible expenses of 30% in the first tax year in which the rules apply, report the amount of group net excess capacity your trust was allocated in part 3, section 4 of the T2224 form as follows:

• Report the amount in column 371 of the T2224 form on the line for excess capacity in part 2H of Schedule 130 in the column titled “First previous year”
• Report the amount in column 372 of the T2224 form on the line for excess capacity in part 2H of Schedule 130 in the column titled “Second previous year”
• Report the amount in column 373 of the T2224 form on the line for excess capacity in Part 2H of Schedule 130 in the column titled “Third previous year”

Part 2K – Excess IFE under subsection 18.2(2)

Line U: For additional clarification, the narrative in the bracket should be read as: Amount I from the table in Part 1(6).

Instructions for T5013SCH130 Partnership Interest and Financing Expenses and Interest and Financing Revenues

Part 1B - Information on borrowings, loans and other financings

Table for a partnership that has a borrowing or other financing:

Column 2:

• Report the greatest total amount of borrowing or other financing outstanding at any time in the tax year.
• In the case of a public offering or a syndicated financing (other than a private placement), report an estimated breakdown of the amounts between Canadian arm’s length and non-resident arm’s length parties.

Column 3: Report the greatest total of the notional amount of derivatives entered into in respect of a borrowing or other financing outstanding at any time in the tax year.

Columns 2 and 3: For additional clarification, the terms “amounts borrowed or other financing” in the second column and “borrowing or other financing” in the third column refer to any borrowing or other financing of the partnership, including a borrowing or other financing that is non-interest bearing as well as one that is the subject of an election under the definition of excluded interest in subsection 18.2(1).

Columns 4, 5 and 6: The CRA will accept when reporting for tax years ending in 2023 and 2024, an estimated breakdown of the information required

Table for a partnership that has a loan or other financing:

Column 2: Report the greatest total amount of loans or other financings owing to or provided by the partnership at any time in the tax year.

Column 3: Report the greatest total of the notional amount of derivatives entered into in respect of loans or other financings owing to or provided by the partnership at any time in the tax year.

Columns 2 and 3: For additional clarification, the term “loans or other financings” used in these two columns refers to any loans or other financings owing to or provided by your corporation, including loans or other financings that are non-interest bearing as well as ones that are the subject of an election under the definition of excluded interest in subsection 18.2(1).

Columns 4 and 5: The CRA will accept when reporting for tax years ending in 2023 and 2024, an estimated breakdown of the information required

Part 3 - Capitalized IFE in the cost of depreciable assets

Column 3: Report the net adjustment to the IFE in the undepreciated capital cost of the class of assets as a result of the following:

• Acquisitions
• Adjustments
• Transfers
• Dispositions

This amount can be positive or negative, depending on whether the net adjustment results in an increase in the IFE in the capital cost of the class of assets (positive amount) or a decrease in the IFE in capital cost of the class of assets (negative amount).

Column 4: For additional clarification, adjust column 2 “IFE in undepreciated capital cost (UCC) at the beginning of the fiscal period” by the amount reported in column 3 and report the result in column 4. Add a positive amount in column 3 to the amount reported in column 2. A negative amount in column 3 will reduce the amount reported in column 2.

Part 4 - Interest and financing revenues (IFR)

Line 141: For additional clarification, line 141 should be read as: Amounts included in amount A of Part 4 that are exempt from tax under part I of the Income Tax Act.

Part 5 - Allocation to members of the partnership

When completing part 5 and filling out T5013 slips, do not allocate amounts to persons or partnerships that have been deemed to be members under subsection 18.2(12).

Instructions for election forms

T2224 Transitional Election Under the Excessive Interest and Financing Expenses Limitation Rules

For the transitional rules to the legislation, refer to: Subsection 7(2) of Bill C-59.

If the result of a calculation required in one of the columns is negative, the amount entered into the column should be “0”.

Although the transitional rules specify that the election is a joint election made by a taxpayer and its eligible pre-regime entities, the CRA will also accept this election when it is made by a taxpayer that is a standalone entity. When making this election as a standalone entity, answer “No” to the question on line 020: Is the filer an eligible pre-regime group entity filing this election on behalf of one or more other taxpayers?

If an election is made under the transitional rules, you may also, for any of the three pre-regime years, make a:

• T2225 Group Ratio Rules Election under subsection 18.21(2) and Fair Value Adjustments Election under subsection 18.21(4), and
• T2228 Specified Pre-regime Loss Election under subsection 18.2(1)

For instructions on how to include the allocated group net excess capacity, determined in Part 4 of the T2224 election, in the Schedule 130, refer to Part 2I of the supplemental instructions to the T2 Schedule 130 or Part 2H of the supplemental instructions to the T3 Schedule 130.

T2225 Group Ratio Rules Election under subsection 18.21(2) and Fair Value Adjustments Election under subsection 18.21(4)

Part 2 - Fair Value adjustments election

Paragraph 18.2(4)(a) specifies that the election is a joint election made by all Canadian group members. However, we will accept this election when it is filed by a Canadian resident taxpayer who is a standalone entity.

Part 3, Section 6 - Elected allocated group ratio amount under subsection 18.21(2)

Subsections A & B: Each Canadian group member must complete the table in the subsection, even if that group member has no allocated group ratio amount.

T2227 Excluded Interest Election Under Subsection 18.2(1)

Box 100 of the T2227 form requests a “description of debt” for interest paid or payable, and box 200 requests a “description of the property” for a lease financing amount paid or made payable. We will accept, in these boxes, a description that provides sufficient detail to allow us to separately identify the particular debt or property.

T2228 Specified Pre-regime Loss Election under subsection 18.2(1)

A separate election must be filed for each tax year in which an amount, deducted under paragraph 111(1)(a), is to be treated as a specified pre-regime loss.

Part 2 – Information required:

If there are 2 or more loss years, including a short year, ending in the same calendar year, the non-capital losses of those years should be added together and the total reported in column 201 in the row corresponding to the calendar year of origin.