Subsection 18.2(1)
Adjusted Taxable Income
Articles
Josh Jones, Jeffrey Love, "Recent Developments in Asset Management", draft 2023 CTF Annual Conference paper
Issues with computing trust ATI (p. 36)
- The adjusted taxable income (ATI) definition in relation to a trust requires adding back (under Variable...
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...
D
Paragraph D(a)
Articles
Joint Committee, "Summary of Issues Raised with the Department of Finance in Respect of the Excessive Interest and Financing Expenses Limitation (EIFEL) Proposals", 22 March 2023 Joint Committee letter
A(D)(a) should be permitted to be a negative number (p. 7)
- In order to permit the carry back or carry forward of losses sufficient to fully...
Paragraph D(b)
Administrative Policy
3 December 2024 CTF Roundtable, Q.5
Is the computation of “adjusted taxable income” (ATI), defined in s. 18.2(1), iterative if a taxpayer wishes to claim sufficient non-capital...
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 (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...
Paragraph (h)
Articles
Joint Committee, "Summaries of Feedback on the EIFEL Administration", 2 November 2024 Joint Committee Submission to the CRA International and Large Business Directorate
Iterative calculation of ATI where non-capital losses are used (p. 5)
The calculation and application of non-capital losses where the EIFEL...
EY, "Revised EIFEL proposals", Tax Alert 2022 No. 43, 10 November 2022
Potential need to determine pre-EIFEL IFR and IFE (p. 7)
- Given the potential to carry forward losses from pre-EIFEL years, taxpayers may be...
C
Paragraph (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 (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...
Cumulative Unused Excess Capacity
Articles
Joint Committee, "Summaries of Feedback on the EIFEL Administration", 2 November 2024 Joint Committee Submission to the CRA International and Large Business Directorate
Recognition of CUEC when becoming subject to EIFEL (pp. 3-4)
- Schedule 130 should accommodate taxpayers that become subject to the EIFEL rules...
Eligible Group Entity
Articles
Josh Jones, Jeffrey Love, "Recent Developments in Asset Management", draft 2023 CTF Annual Conference paper
Eligible group entity status in bank-controlled ETF group (pp. 31-32)
In the scenario where the asset manager for a mutual fund corporation (MFC)...
Paragraph (a)
Articles
Joint Committee, "Summary of Issues Raised with the Department of Finance in Respect of the Excessive Interest and Financing Expenses Limitation (EIFEL) Proposals", 22 March 2023 Joint Committee letter
Relatedness by virtue of sibling status (p. 3)
- As siblings may (and often will) have limited knowledge of each other’s business affairs, they...
Excess Capacity
Articles
Saira Bhojani, Eivan Sulaiman, "EIFEL Rules", Draft 2022 CTF Annual Conference paper
Application of RIFE first (p. 30)
- A taxpayer’s excess capacity (generally arising where the maximum amount a taxpayer is permitted to deduct in...
Excluded Entity
Articles
Balaji Katlai, Hugh Neilson, "Canadian Inbound Investment: The EIFEL Trap?", International Tax Highlights (IFA Canada), Vol. 1, No. 2, August 2022, p. 7
25% threshold re non-resident equity rights (pp. 7-8)
- From the perspective of a Canadian-controlled private corporation (CCPC) that has an active...
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)
Articles
Josh Jones, Jeffrey Love, "Recent Developments in Asset Management", draft 2023 CTF Annual Conference paper
Timing of applying tests under ss. (c)(ii) to (iv) (p. 30)
- Although ss. (c)(ii) and (iii) do not expressly address when eligible entity status is...
Subparagraph (c)(i)
Administrative Policy
3 December 2024 CTF Roundtable, Q.4
Among the requirements in para. (c) of the definition of “excluded entity” in s. 18.2 is that “all or substantially all of the businesses...
Articles
Saira Bhojani, Eivan Sulaiman, "EIFEL Rules", Draft 2022 CTF Annual Conference paper
Entity-by-entity application of test (p.9)
- The test of all or substantially all of the businesses, undertakings and activities of each eligible...
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
Saira Bhojani, Eivan Sulaiman, "EIFEL Rules", Draft 2022 CTF Annual Conference paper
Exceeding of $5M threshold even where small FA interest or stacking of FAs (p. 9)
- The test of the total fair market value of all property of a...
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
Kyle A. Ross, Trent J. Blanchette, "Issues with the ‘Excluded Entity’ Exception to the EIFEL Rules", Tax for the Owner-Manager, Vol. 23, No. 4, October 2023, p. 4
The third condition in the “domestic exception” in para. (c) of the definition of excluded entity is essentially that (1) no non-resident...
Joint Committee, "Summary of Issues Raised with the Department of Finance in Respect of the Excessive Interest and Financing Expenses Limitation (EIFEL) Proposals", 22 March 2023 Joint Committee letter
Arbitrary nature of the (c)(iii) tests (pp. 4-5)
- The s. (c)(iii) requirements for the “domestic” exception can cause an entity to qualify or...
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...
Clause (c)(iii)(A)
Articles
Saira Bhojani, Eivan Sulaiman, "EIFEL Rules", Draft 2022 CTF Annual Conference paper
Likely requirement to hold a share (pp. 10-11)
- Presumably the position in 2019-0798831C6, that a person must own at least one share of a...
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...
Interest and Financing Revenues
Articles
EY, "Revised EIFEL proposals", Tax Alert 2022 No. 43, 10 November 2022
Various imputed amounts not included (p.6)
- The IFR definition will not be amended to include amounts under ss. 16.1, 17 and 247(2), and draft...
Paragraph (g)
Articles
Saira Bhojani, Eivan Sulaiman, "EIFEL Rules", Draft 2022 CTF Annual Conference paper
Reduction for FAT claims in future years (p. 20)
- The inclusion under para. (g) of the interest and financing revenues definition of the relevant...
Relevant Affiliate Interest And Financing Expenses
Articles
Joint Committee, "Summary of Issues Raised with the Department of Finance in Respect of the Excessive Interest and Financing Expenses Limitation (EIFEL) Proposals", 22 March 2023 Joint Committee letter
No RAIFE carve-out for ss. 95(2)(a) and 95(2)(a)(ii)(D) amounts (p. 14)
- A controlled foreign affiliate’s interest and financing expenses...
EY, "Revised EIFEL proposals", Tax Alert 2022 No. 43, 10 November 2022
Separate flow-up of relevant affiliate IFE or relevant affiliate IFR (p. 4)
- The amounts that would be the interest and financing revenues (IFRs)...
Relevant Affiliate Interest And Financing Revenues
Articles
Joint Committee, "Summary of Issues Raised with the Department of Finance in Respect of the Excessive Interest and Financing Expenses Limitation (EIFEL) Proposals", 22 March 2023 Joint Committee letter
Inappropriate reduction of RAIFR for s. 91(4) deduction for Canadian withholding tax
- It is inappropriate to reduce the relevant affiliate...
Specified Pre-Regime Loss
Administrative Policy
CRA Webpage, “Excessive interest and financing expenses limitation rules,” 24 September 2024
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...
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)
Administrative Policy
CRA Webpage, “Excessive interest and financing expenses limitation rules,” 24 September 2024
Form of filing EIFEL elections before election forms are available
Election forms
The CRA is preparing forms that will allow you to apply for...
Articles
Saira Bhojani, Eivan Sulaiman, "EIFEL Rules", Draft 2022 CTF Annual Conference paper
Requirement for accuracy (p. 34)
- Any over-designation, including an immaterial one, will invalidate a transfer of excess capacity under s....
EY, "Revised EIFEL proposals", Tax Alert 2022 No. 43, 10 November 2022
Transferee can have a different functional currency or be a REIT (p. 7)
- The EIFEL revisions have removed the requirement that cumulative unused...
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(6)
Administrative Policy
CRA Webpage, “Excessive interest and financing expenses limitation rules,” 24 September 2024
Waiver of requirement for transferee to file an information return
Information return requirement waived
If you have received capacity in a joint...
Subsection 18.2(9)
Articles
Saira Bhojani, Eivan Sulaiman, "EIFEL Rules", Draft 2022 CTF Annual Conference paper
Application where share sale but not asset sale (pp. 11-12)
- Where, for example, a Canadian-resident taxpayer has a subsidiary that causes it to...
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)
Subsection 18.2(18)
Administrative Policy
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...