The appellant appealed a judgment upholding a retail sales tax assessment imposed on payments made to terminate computer equipment leases after repudiation and default.
The court held the payments were negotiated settlement amounts made in the context of potential damages claims and simultaneous lease termination, not rental payments made under an ongoing lease.
Reading s. 2(1) and s. 2(6) of the Retail Sales Tax Act together, the court concluded sales tax is payable only on each rental payment while the lease remains in operation.
The assessment was vacated, the tax and interest paid were to be repaid, and no costs were ordered.
