Leases and taxes Leasing is a very important source of financing for certain companies' needs, including corporations and small- to medium-sized businesses. This is because, depending on the type of lease, the Canada Revenue Agency (CRA) allows the lessee to deduct the lease payments and the lessor can deduct interest payments on any debt used to finance the asset leased. Under the Income Tax Act, when a purchase option is exercised, the amount deemed to have been claimed by the lessee as CCA is based on the following: The fair market value of the asset at the time of purchase The option purchase price plus all lease payments paid under the agreement The difference between the purchase price and CRA's deemed cost