EIFEL Calculator Canada
Calculate the Excessive Interest and Financing Expenses Limitation under s.18.2 ITA. Determine how much of your interest expenses are deductible.
EIFEL Calculator — Interest Deduction Limitation (2026)
Estimate the impact of Canada's Excessive Interest and Financing Expenses Limitation rules on your corporation.
Key Features:
- Adjusted Taxable Income (ATI) computation
- 30% fixed ratio calculation (s.18.2)
- Excess capacity and absorbed capacity inputs
- Deductible vs. restricted IFE breakdown
Who Needs This:
- Corporations with significant interest expenses
- Leveraged businesses and real estate entities
- Multinational groups with cross-border financing
- Tax advisors planning for EIFEL compliance
How this calculator works
We show our assumptions and sources so you can audit the logic.
Calculation steps
- Calculate Adjusted Taxable Income (ATI) from taxable income, IFE, CCA, and IFR.
- Apply the 30% fixed ratio to ATI to determine the base deduction capacity (Variable B).
- Add IFR, received capacity, and absorbed capacity to total deduction capacity.
- Compute the non-deductible proportion: (IFE − Total Capacity) / IFE.
- Determine deductible IFE and restricted IFE (carry-forward amount).
Key assumptions
- ATI uses a simplified formula (Taxable Income + IFE + CCA − IFR).
- The full legislative ATI includes additional adjustments for dividends, NCLs, FAPI, etc.
- The 30% fixed ratio applies for all tax years starting Jan 1, 2024 or later.
- Results are estimates and should be verified with a qualified tax professional.
Sources
- CRA: Excessive Interest and Financing Expenses Limitation Rules
- CRA: Supplemental Instructions for Filing Under the EIFEL Rules
- Income Tax Act, s.18.2 — Excessive Interest and Financing Expenses Limitation
Last updated: February 2026. Based on legislation as enacted (Bill C-59, Royal Assent June 20, 2024).
Publisher
TaxDesk provides Canadian tax tools and educational resources for business owners and finance teams.
Reviewed by TaxDesk Research Team.
Frequently Asked Questions
What are the EIFEL rules?
The Excessive Interest and Financing Expenses Limitation (EIFEL) rules under s.18.2 of the Income Tax Act limit the amount of net interest and financing expenses (IFE) that a corporation or trust can deduct. Deductible IFE is generally capped at 30% of adjusted taxable income (ATI), which approximates tax-EBITDA. The rules were introduced to address base erosion and profit shifting, bringing Canada in line with OECD recommendations.
When did the EIFEL rules come into effect?
The EIFEL rules apply to taxation years beginning on or after October 1, 2023. A transitional 40% fixed ratio applied for tax years starting between October 1, 2023 and December 31, 2023. The permanent 30% fixed ratio applies to tax years starting on or after January 1, 2024. The legislation received Royal Assent on June 20, 2024.
Who is exempt from the EIFEL rules?
Excluded entities include CCPCs (with associated corporations) having taxable capital employed in Canada under $50 million, groups of corporations and trusts with aggregate net IFE of $1 million or less, and certain domestic groups with limited foreign operations meeting specific conditions.
What happens to non-deductible interest under EIFEL?
Non-deductible IFE becomes "restricted interest and financing expenses" that can be carried forward indefinitely and deducted in future years when capacity is available. Additionally, excess capacity can be carried forward for up to 3 years or transferred to eligible group members via a joint election.
What is Adjusted Taxable Income (ATI)?
ATI is the EIFEL equivalent of tax-EBITDA. It starts with taxable income and adds back interest and financing expenses (IFE) and capital cost allowance (CCA), while subtracting interest and financing revenues (IFR). The full legislative computation includes additional adjustments for dividends, non-capital losses, FAPI, and other items under s.18.2(1) of the Income Tax Act.
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EIFEL Calculator
Calculate interest deduction limitation under s.18.2
CurrentBased on enacted legislation (Bill C-59, Royal Assent June 20, 2024). This calculator uses a simplified ATI computation and is for estimation purposes only.
© 2026 TaxDesk. This tool is not affiliated with the Canada Revenue Agency or the Department of Finance.