Subsection 18.2(1)
Adjusted Taxable Income
A
Articles
Joint Committee, "Excessive Interest and Financing Expenses Limitation Proposals", 5 May 2022 Submission of the Joint Committee
Creation of non-capital loss in carryback or carryforward year (pp. 18-19)
- An example is provided where a portion of a non-capital loss that is...
PWC, "Tax Insights: Excessive interest and financing expenses limitation (EIFEL) regime", Issue 2022-06, 15 February 2022
Double-deductions of non-capital losses
- Item A in the ATI formula is reduced by the non-capital loss and net capital loss generated for the...
B
Articles
Joint Committee, "Excessive Interest and Financing Expenses Limitation Proposals", 5 May 2022 Submission of the Joint Committee
No addback of terminal losses (p. 21)
- Variable B of the ATI formula should include an addback for any terminal loss deduction under s. 20(16)...
Paragraph B(a)
Articles
EY, "Proposed EIFEL rules", Tax Alert 2022 No. 13, 9 March 2022
Interest that is expressly permitted to be capitalized to resource pools is not added back (p. 4)
Variable B adds back a number of amounts so as...
C
Paragraph C(b)
Articles
EY, "Proposed EIFEL rules", Tax Alert 2022 No. 13, 9 March 2022
Circularity issue arising from the FTCs being affected by deductible interest and financing expenses (IFE), which cannot be determined until the...
Paragraph C(e)
Articles
Joint Committee, "Excessive Interest and Financing Expenses Limitation Proposals", 5 May 2022 Submission of the Joint Committee
Need to properly flow through trust attributes to corporate or trust beneficiaries (pp. 24-26)
- Para. (e) of variable C reduces ATI by an amount...
Excluded Entity
Articles
PWC, "Tax Insights: Excessive interest and financing expenses limitation (EIFEL) regime", Issue 2022-06, 15 February 2022
Low de minimis threshold
- The “excluded entity” definition in draft s. 18.2(1), which includes groups of corporations and trusts whose...
Paragraph (b)
Articles
Joint Committee, "Excessive Interest and Financing Expenses Limitation Proposals", 5 May 2022 Submission of the Joint Committee
Other countries use higher and flexible safe harbour limits (pp. 7-8)
- The de minimis exception in para. (a) for a taxpayer which, together with...
Paragraph (c)
Subparagraph (c)(i)
Articles
Joint Committee, "Excessive Interest and Financing Expenses Limitation Proposals", 5 May 2022 Submission of the Joint Committee
“Substantially all” test must be satisfied for each business (p. 9)
- All or substantially all of “each” business of the taxpayer and of...
Subparagraph (c)(ii)
Articles
Joint Committee, "Excessive Interest and Financing Expenses Limitation Proposals", 5 May 2022 Submission of the Joint Committee
Exclusion for FAs even with nominal income (pp. 9-10)
- The exclusion for any foreign affiliate could apply, for instance, to a dormant foreign...
Subparagraph (c)(iii)
Articles
Joint Committee, "Excessive Interest and Financing Expenses Limitation Proposals", 5 May 2022 Submission of the Joint Committee
Reason for specified shareholder exclusion (p. 10)
- It is understood that the policy concern being addressed arises where interest or financing...
Subparagraph (c)(iv)
Articles
Joint Committee, "Excessive Interest and Financing Expenses Limitation Proposals", 5 May 2022 Submission of the Joint Committee
Exclusion for Canadian tax exempts, difficulties for publicly traded debt and level of aggregation (pp. 10-12)
- Regarding the requirement that all...
Excluded Interest
Articles
Joint Committee, "Excessive Interest and Financing Expenses Limitation Proposals", 5 May 2022 Submission of the Joint Committee
Restriction to corps (pp. 14-16)
- The excluded interest provision should be expanded to apply where either or both of the parties to a loan are...
EY, "Proposed EIFEL rules", Tax Alert 2022 No. 13, 9 March 2022
Exclusion of excluded interest from interest and financing revenues/expenses (IFR/IFE) accommodates loss consolidations (p .4)
Excluded interest...
PWC, "Tax Insights: Excessive interest and financing expenses limitation (EIFEL) regime", Issue 2022-06, 15 February 2022
General scope of excluded interest rules
- The “excluded interest” rules depart from the 2021 federal budget proposals (which stated that...
Interest and Financing Expenses
A
Paragraph (d)
Articles
PWC, "Tax Insights: Excessive interest and financing expenses limitation (EIFEL) regime", Issue 2022-06, 15 February 2022
Potential inclusion of amounts under derivatives
- The definitions of interest and financing expenses and revenues, as supplemented by the...
Subsection 18.2(2)
Articles
PWC, "Tax Insights: Excessive interest and financing expenses limitation (EIFEL) regime", Issue 2022-06, 15 February 2022
Unclear whether s. 18.2 applies to computing FAPI
- It is unclear whether the rules apply to computing the income of a foreign affiliate, which is...
John Unger, "Proposed Section 18.2: Limitations on Deducting Costs to Finance Foreign Affiliates", International Tax, CCH, December 2007, No. 37.
Subsection 18.2(3)
Administrative Policy
2008 IFA Round Table, Q. 10.
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Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) | 0 |
Articles
PWC, "Tax Insights: Excessive interest and financing expenses limitation (EIFEL) regime", Issue 2022-06, 15 February 2022
Effect of increasing future recapture
- Draft s. 18.2(3) deems amounts of previously capitalized interest that are otherwise deductible as CCA or...
Subsection 18.2(4)
Paragraph 18.2(4)(c)
Articles
PWC, "Tax Insights: Excessive interest and financing expenses limitation (EIFEL) regime", Issue 2022-06, 15 February 2022
Difficulties for consolidated operation of financial services groups
- S. 18.2(4)(c), which effectively prevents a “relevant financial...
Subsection 18.2(12)
Articles
EY, "Proposed EIFEL rules", Tax Alert 2022 No. 13, 9 March 2022
Effective 30% capacity generated by interest and financing revenues (IFR) from NAL non-resident – even if paid by its Cdn. branch (p. 3)