Words and Phrases - "concurrent lease"

The Lessor, who has leased Equipment to third-party consumers (the “Lessees”), periodically requests that the Trust concurrently lease the Equipment. When this occurs, the Trust makes a prepaid rent payment (equaling XX% of the aggregate net present value of the discounted cash flow from the lease) which is partly advance to the Lessor and partly held back by the Trust as cash collateral. The remainder is the deferred rent. The Trust claims ITCs for the HST paid on the prepaid rent. The Lessor, as agent for the Trust, remits the HST paid by the Lessees and pays to the Trust the full amount of the lease payment collected on behalf of the Trust – a portion of which is then paid by the Trust to the Lessor as deferred rent.

A master concurrent lease agreement (the MCLA) between the Trust, as Concurrent Lessee, the Lessor and the Administrative Agent covers the lease by the Lessor to the Trust, as the Concurrent Lessee, of Equipment covered by the Designated Eligible Leases. The Lessor and the Trust made an election pursuant to ETA s. 177(1.1).

After noting that

A concurrent lease is a lease of the reversion, that is, a lease of the lessor's interest in a property that is already subject to a lease. In effect, under a concurrent lease, a concurrent lessee is interposed between the lessor and lessees of the underlying lease.

CRA stated:

Pursuant to subsection 136(1) a supply of the use or right to use tangible personal property by way of lease, license or similar arrangement is deemed to be a supply of tangible personal property. As the MCLA provides for the Equipment covered by the Designated Eligible Leases to be concurrently leased by the Lessor to [the Trust as] the Concurrent Lessee, the supplies by the Lessor to [the Trust as] the Concurrent Lessee under the MCLA are taxable supplies of tangible personal property.

The HST collected on the taxable supply made to the Lessee is accounted for by the Lessor as agent for the Trust (Concurrent Lessee) by virtue of the election under subsection 177(1) between the Trust (Concurrent Lessee) and the Lessor, and […] the MCLA.

The Lessor also remits the HST payable by the Trust (Concurrent Lessee) with respect to the Prepaid Rent.