CRA reiterates that the lease/purchase distinction is based on legal rather than economic substance

Before noting that a lease of a transport truck was not eligible for a s. 16.1 election, CRA stated:

[T]he determination of whether a contract is a lease or a sale for income tax purposes is based on the legal relationships created by the terms of the particular agreement, rather than the underlying economic reality. In the absence of a sham, a lease is a lease and a sale is a sale.

Neal Armstrong. Summary of 28 April 2015 T.I. 2015-0566011E5 under s. 16.1(1).