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Digital EIFEL Modeling
EY Digital EIFEL Modeling brings together our deep tax knowledge, a modern digital technology solution and structured process to simplify your EIFEL-related tax compliance and planning.
What EY can do for you
The excessive interest and financing expenses limitation (EIFEL) rules restrict certain taxpayers’ deduction of interest and financing expenses to a percentage of their earnings before interest, taxes, depreciation and amortization (EBITA) computed under tax concepts defined as adjusted taxable income. These rules are for taxation years beginning on or after October 1, 2023 that apply to all corporations, trusts and partnerships.
The EIFEL rules may not apply to certain smaller Canadian-controlled corporations or corporations that may not have foreign operations or foreign investors.
The rules require complex technical analysis on applicability and calculations with many considerations.
Getting started
- How do I identify eligible group entities?
- What other calculations do I need to have before I can perform the EIFEL calculations?
- How do I organize and process the data required to complete the EIFEL calculations?
Considerations
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Tax provisions |
Integrating EIFEL rules into quarter- and year-end tax provisions. |
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Cash flow modeling |
Understanding EIFEL’s impact on taxable income and changes in cash requirements. |
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Group ratio analysis & calculations |
Considering how the group ratio applies to parent and portfolio companies. |
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EIFEL modeling |
How changes in debt and interest rates affect entity and group tax profiles. |
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Transactions |
EIFEL modeling on post-acquisition and during due diligence. |
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Tax compliance |
Incorporating EIFEL calculations into the tax return preparation process. |
There are many other complexities, among them:
Consolidated financial analysis, FAPI calculations, capitalized interest, partnerships, lease calculations, hedging analysis, loss carryforwards, excluded entity analysis and others.
With our nimble process, technical knowledge and digital modeling solution, our tax professionals are ready to help support your EIFEL modeling needs.