Income Tax Act — I-3.3 (a)
interest and financing expenses of a taxpayer for a particular taxation year means the amount determined by the formula A − B where A is the total of all amounts (other than an amount that is included in exempt interest and financing expenses), each of which is (a) an amount that (i) is paid in, or payable in or in respect of, a year as, on account of, in lieu of payment of or in satisfaction of, interest (other than excluded interest for the particular year or an amount that is deemed to be interest under subsection 137(4.1)), (ii) would, in the absence of this section, be deductible (other than under a provision referred to in subparagraph (c)(i)) by the taxpayer in computing its income for the particular year, and (iii) is not described in any other paragraph in this definition, (b) an amount that, in the absence of this section and on the assumption that it is not deductible under another provision of this Act (other than any of the provisions referred to in subparagraph (c)(i)), would be deductible in computing the taxpayer’s income for the particular year under any of subparagraphs 20(1)(e)(ii) to (ii.2) and paragraphs 20(1)(e.1) to (f), (c) the portion of an amount, if (i) the amount, in the absence of this section, would be deductible in computing the taxpayer’s income for the particular year and is claimed by the taxpayer under paragraph 20(1)(a) or subsection 66(4), 66.1(2) or (3), 66.2(2), 66.21(4), 66.4(2) or 66.7(1), (2), (2.3), (3), (4) or (5), and (ii) the portion can reasonably be considered to be attributable to an amount paid or payable on or after February 4, 2022 that either (A) is described in subparagraph (a)(i), or (B) would otherwise have been deductible in a taxation year under a provision referred to in paragraph (b), but for the application of another provision of this Act, (d) the portion of an amount that would, in the absence of this section, be deductible in computing the taxpayer’s income for the particular year under subsection 20(16), to the extent that the portion can reasonably be considered to be described in subparagraph (c)(ii), (e) an amount that is paid or payable by the taxpayer in a year or that is a loss or a capital loss of the taxpayer for a year, as the case may be, under or as a result of an agreement or arrangement, if (i) the amount would, in the absence of this section (A) be deductible (other than under subparagraph 20(1)(e)(i)) in computing the taxpayer’s income for the particular year, or (B) in the case of a capital loss, reduce the amount determined under paragraph 3(b) in respect of the taxpayer or be deductible in computing the taxpayer’s taxable income for the particular year (except to the extent it has already been included under this paragraph for a previous year), (ii) the agreement or arrangement is entered into as or in relation to a borrowing or other financing that the taxpayer or a person or partnership that does not deal at arm’s length with the taxpayer enters into, whether currently or in the future, and absolutely or contingently, and (iii) the amount can reasonably be considered to increase (or be part of) the cost of funding with respect to the borrowing or other financing (including as a result of any hedge of the cost of funding or of the borrowing or other financing) of the taxpayer or a person or partnership that does not deal at arm’s length with the taxpayer; (f) a particular amount that (i) is in respect of an agreement or arrangement that gives rise to, or can reasonably be expected to give rise to, an amount that (A) is included in computing a taxpayer’s interest and financing expenses for a taxation year under paragraph (e), or (B) reduces the taxpayer’s interest and financing expenses for a taxation year under the description of B, (ii) would, in the absence of this section, be deductible by the taxpayer in computing its income for the particular year, (iii) is not deductible under any of the provisions listed in paragraph (b), and (iv) is an