ARTICLE · 23 JUNE 2025

EIFEL Tips And Traps Every Business Should Know For 2025 And Beyond

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The new excessive interest and financing expense limitation (EIFEL) rules have been in effect for corporations and trusts with taxation years beginning on or after Oct. 1, 2023.

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Executive summary

The new excessive interest and financing expense limitation (EIFEL) rules have been in effect for corporations and trusts with taxation years beginning on or after Oct. 1, 2023. For many corporations and trusts, these rules have been in effect starting in their 2024 taxation years. Any corporate and trust tax filings will need to address some possibly unintuitive EIFEL considerations, such as inadvertent business relationships resulting in additional compliance, iterative loss utilization calculations, as well as needing to consider the interest component of leases.

The new excessive interest and financing expense limitation (EIFEL) rules comprise a new set of Canadian tax legislation which restricts the ability to deduct interest expense for tax purposes. The stated purpose of these rules is to comply with recommendations put forth by the Organisation for Economic Co-operation and Development via Action 4 of their base erosion and profit

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