For a lease to be deemed valid by the CRA for tax purposes, the lease should NOT include an option permitting the lessee to purchase the asset at the end of the lease term at a price that is less than the fair market value at that time.

Question

Quizplus · Accepted Answer

For tax purposes, the Canada Revenue Agency (CRA) requires that a lease not include a purchase option at less than fair market value to be considered a true lease, otherwise, it may be classified as a sale or financing transaction.

For a Lease to Be Deemed Valid by the CRA