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ARTICLE · 23 JUNE 2021

Budget 2021: Proposed Limitations On "Excessive" Interest Deductions

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Budget 2021 proposes significant new limitations on business interest deductibility, commencing January 1, 2023.

CanadaTax
Peter Botz
Peter Botz
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Budget 2021 proposes significant new limitations on business interest deductibility, commencing January 1, 2023. In practice, the proposed interest deductibility limits, in most cases, are not expected to apply to stand-alone Canadian corporations or Canadian corporations that are members of a group with no non-resident members.

While draft legislation is expected to be released for comment only later this year, the proposals, as outlined in Budget 2021, are significantly advanced and build on the government's previously-stated commitment to implement what it sees as "best practices" recommended by the so-called BEPS (base erosion and profit shifting) Action Plan developed by the Organisation for Economic Co-operation and Development in conjunction with the G20.

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The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

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