Finance publishes revised excessive interest and financing expenses limitation (EIFEL) rules (with broader “excluded entity” definition)

On November 3, 2022, the Department of Finance released revised draft legislation proposing to implement the “excessive interest and financing expenses limitation” (EIFEL) rules first announced in Budget 2021. Initial draft legislation was released on February 4, 2022 and has been amended following public consultation. Under the latest release, such rules would apply to taxation years beginning on or after October 1, 2023.

One of the more important changes in the latest draft legislation is that the definition of “excluded entity” appears to have been substantially broadened. Consequently, a far greater number of taxpayers may be wholly excluded from the EIFEL rules than were carved out from the initial draft legislation. The specific text of the “excluded entity” definition should be carefully reviewed in this regard.

The federal government also released voluminous explanatory notes accompanying the draft legislation. The full text of the explanatory notes can be found here.

A public consultation in respect of the draft legislative proposals is open until January 6, 2023. Interested parties are invited to send comments to

Prepared by: Morgan Watchorn

Morgan Watchorn is an associate working out of the Vancouver office of Thorsteinssons LLP. Morgan earned her Juris Doctor from Thompson Rivers University. While in law school, she competed in the Bowman National Tax Moot and worked as a teaching… more »