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ARTICLE · 08 JUNE 2022

Canada Confirms Intention To Institute New Interest And Deductibility Rules

Davies Ward Phillips & Vineberg LLP
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The Department of Finance (Canada) (Finance) released draft legislation on February 4, 2022 that would limit the deduction of "interest and financing expenses" to a fixed percentage of earnings...

CanadaFinance and Banking
Marc André Gaudreau Duval
Marc André Gaudreau Duval
Marc Pietro Allard
Marc Pietro Allard
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Overview

The Department of Finance (Canada) (Finance) released draft legislation on February 4, 2022 that would limit the deduction of "interest and financing expenses" to a fixed percentage of earnings before interest, taxes, depreciation and amortization (EBITDA) for Canadian income tax purposes (EIFEL rules). Following a consultation period during which the department received more than 60 submissions, Finance confirmed (during the International Fiscal Association Canada Tax Conference held on May 17, 2022 [IFA Conference]) that it would be proceeding with the implementation of the proposed EIFEL (excessive interest and financing expenses limitation) rules in substantially the same form as initially proposed, with a few notable proposed changes that are being considered.

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