The taxpayer entered into contracts for the leasing to it by finance companies of dump trucks which had a term of 65 months, required it to indemnify the finance companies (which were stated to retain the right of ownership) for any loss resulting from operation of the trucks, provided that the taxpayer could exercise a purchase option in the 60th month at a price slightly less than the total of the outstanding payments for the remaining five months, provided that the taxpayer continued to owe the monthly payment even if it ceased to use the property for any reason including destruction by Act of God, and provided that the taxpayer could not sell or sublet the truck without the consent of the finance companies or use them outside North America.
The majority found that subsection 248(3) was intended to treat beneficial ownership of property in the same way as various forms of ownership recognized in the civil law of Quebec, intimated that Interpretation Bulletin IT-233R, para. 3, described circumstances in which the lessee was the beneficial owner of property and found that the taxpayer in this case had acquired beneficial ownership of the trucks at the inception of the lease given that it had acquired the three incidents of ownership (possession, use and risk). Accordingly, it was entitled to claim capital cost allowance and treat a portion of the lease payments as interest expense.