Rental based on a factor other than the passage of time. (KPMG LLP)

“Consumer means a natural person who is offered, acquires or uses a good or service primarily for personal, family or household purposes;” Article 810 of the federal-provincial Agreement on Internal Trade (AIT).

A sale agreement for goods by which possession of property is transferred, but ownership passes only after the sale meets certain conditions, such as full payment of the purchase price. A conditional sale is not a lease. (Leasing in Canada [Third Edition], Ralph Selby, FCA, Butterworths, 1999)

[see also Installment Sale]

A conditional sale occurs when possession of property is transferred, but ownership passes only after the sale meets certain conditions, such as full payment of the purchase price. A conditional sale is not a lease. (PricewaterhouseCoopers LLP)

[Compare to Open-end Lease]

A lease where at the end of the lease term, the lessee is not obligated to make any adjustment payments to account for the residual value of the leased property. (Blake Cassels & Graydon LLP)

(Delivery and Acceptance)

A document whereby the lessee acknowledges that the equipment to be leased has been delivered, is acceptable, and has been manufactured or constructed according to specifications. (U.S. Equipment Leasing Association)

Cash-flow-based credit analysis is a primary financial innovation of the asset-based financing industry. Because a leasing company retains ownership of the leased equipment or vehicle, at least until the end of the lease, it enables a lessee to qualify for use of the asset leased based on its generated cash flow rather than the lessee’s credit history, assets or capital base. (CFLA)

A frequently-heard industry term used to describe the sales finance division or subsidiary of a manufacturer. The primary role of the captive is to provide financing to support customers in acquiring the manufacturer’s products.

Tax based on a firm’s taxable capital; tax rate varies among provinces (see also federal Large Corporation Tax) (Leasing in Canada [Third Edition], Ralph Selby, FCA, Butterworths, 1999)

[See Finance Lease; compare Operating Lease]

An accounting term meaning a lease which transfers substantially all of the risks and benefits of ownership of the leased property to the lessee. The criteria set out in the Canadian Institute of Chartered Accountants handbook provide that a lease will be treated as a capital lease if it meets any of the following criteria:

title passes automatically at the end of the lease term;

the lease contains a bargain purchase option (i.e. less than fair market value)

the lease term is greater than 75% of the estimated economic life of the leased property; or

the present value of the minimum lease payments is greater than 90% of the leased property’s fair market value at the inception of the lease.
(Blake, Cassels & Graydon LLP)