Corporate Finance: Leasing

Case Study

Fact Pattern

• A Co is incorporated in British Columbia with its sole office in British Columbia.
• A Co is registered as an "international business" under the International Business Activity Act (IBAA).
• A Co leases an asset to wholly-owned subsidiary, A US Co as a finance lease.
• A US Co leases an asset to a third-party as an operating lease.

Illustration

Analysis

• The lease is a financing lease such that substantially all of the benefits and risks of ownership are with the lessee.
• A Co is carrying on a qualifying business: leasing by means of a finance lease is a qualifying activity.
• A Co is required to become a member of the IFC BC Society in order to remain registered.
• A Co is eligible to claim a refund of its BC corporate income taxes paid in respect of its international business.

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