According to CRA's regulations, the existence of a bargain purchase option will not affect the ability of the lessee to deduct the lease payments from taxable income.

Question

Quizplus · Accepted Answer

According to CRA (Canada Revenue Agency) regulations, the existence of a bargain purchase option can affect the classification of a lease as either a capital lease or an operating lease. If a lease is classified as a capital lease (which might be influenced by the presence of a bargain purchase option), the lessee cannot deduct the entire amount of the lease payments from taxable income. Instead, they can deduct depreciation and interest expense components of the lease payments.

According to CRA's Regulations, the Existence of a Bargain Purchase