Highlights Of Draft Tax Legislation To Implement Certain Budget 2021 Measures

On February 4, 2022, the Government released draft legislation to implement various measures (Proposals), including some significant measures originally announced on April 19, 2021 (Budget Day) as part of the Liberal Government's fifth budget (Budget 2021). For our earlier commentary on Budget 2021, see our prior bulletin, "Highlights of Canada's 2021 federal budget".

What you need to know

• Excessive interest and finance expenses limitation (EIFEL): In response to recommendations in the Organisation for Economic Co-operation and Development's (OECD) Base Erosion and Profit Shifting (BEPS) Action 4 report, the Proposals introduce the new EIFEL rules that deny an interest deduction for the portion of "net" interest and financing expenses that are considered to be "excessive" by the rules. The new rules will generally apply to Canadian-resident corporations and trusts, and non-resident corporations and trusts that have taxable income in Canada, subject to