Corporations and trusts should review the CRA’s latest guidance on the Excessive Interest and Financing Expenses Limitation (EIFEL) rules. These rules generally limit the amount of net interest and financing expenses that may be deducted by affected corporations and trusts. Even corporate groups consisting of all Canadian-resident entities should review the CRA’s welcome new administrative guidance and ensure that they evaluate every corporation and trust in their group to determine their filing and reporting obligations. In particular, the CRA recently revised its EIFEL guidance to:
- Clarify how to determine interest and financing expenses (IFE) and interest and financing revenue (IFR) in certain situations
- Provide details on how taxpayers must file certain elections
- Address other compliance issues, including late-filing penalties, necessary processes that may result from taxpayer errors and additional instructions for EIFEL SCH130 forms.
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