For a lease to be deemed valid by the CRA for tax purposes, the lessee must NOT be required to purchase the asset from the lessor during or at the termination of the lease.

Question

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For a lease to be considered a true lease for tax purposes by the Canada Revenue Agency (CRA), the lessee should not have an obligation to purchase the asset at the end of the lease term. If there's a requirement to purchase the asset, it may be considered a sale or a financing transaction rather than a lease.

For a Lease to Be Deemed Valid by the CRA