The new excess interest and financing expense rules (“EIFEL” for short) are set out in draft legislation released by Finance on February 4, 2022. The EIFEL rules do not apply to an “excluded entity”, which includes: (1) Canadian-controlled private corporations…
Novation and withholding tax
CRA technical interpretation 2018-0757501E5 (September 29, 2020) states that the novation of a debt with accrued but unpaid interest results in the payment of the interest. The author notes that, if this is right (and he questions whether it is),…
Non-arm’s length interest
The shareholders of Opco loaned it money to permit it to acquire inventory. The loans were unsecured and bore interest at 10% yearly. The Court of Quebec, in light of the Quebec equivalent of section 67 of the ITA, denied…
Borrowing from RRSP to loan to Opco
If the technical requirements of the Income Tax Act (Canada) are met, a taxpayer can mortgage her house to her RRSP and then deduct the interest on the loan from the RRSP, if the loan proceeds are on-loaned to Opco.…
Interest on debt to acquire land; bad debts
Per Lyons J in Kokai-Kuun Estate v R, 2015 TCC 217: a taxpayer cannot add to the cost of vacant land interest and property taxes paid in respect of the land where it was acquired for “investment” purposes but never…