Canada’s New EIFEL Regime: A Work Still In Progress

Under the Income Tax Act (Canada) (ITA), interest is generally deductible provided that a taxpayer has a legal obligation to pay interest and the interest is paid or payable on borrowed money used for the purpose of gaining or producing income from a business or property. Interest expense deductions are limited to the lesser of the amount of interest that is paid or payable in the year and a “reasonable amount.” The ITA also contains specific rules that limit the deduction of interest expense, such as the thin capitalisation rules discussed below.

The Austrian Participation Exe…