As with the definition of ‘premium’ (see 10.3 above), the answer depends on the statutory context in which the term is used.

For the purpose of applying the lease premium rules, a ‘short-term lease’ is a lease whose effective duration is 50 years or less (ITTOIA 2005, s. 276(6); CTA 2009, s. 216). The legislation goes on to provide a set of rules for determining this figure. Under these provisions, the length of the lease is not necessarily the same as the term for which it is actually granted, but may be shortened or extended depending on the circumstances.

The importance of determining the effective duration of the lease is twofold:

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