Welcome to Westport Leasing.

Westport has been a proud member of the Canadian Finance and Leasing Association (CFLA) for over six years. It is the only organization advocating the interests of the asset-based financing, vehicle and equipment leasing industry in Canada.

The Association's 200-plus members cross the financial services spectrum from banks, insurance companies, trust companies and investment dealers to manufacturers' finance companies and independent leasing companies. The customers of this industry are Canadian small, medium and large businesses as well as consumers. The funders of this industry are pension funds, insurance companies, and banks.

This industry is estimated to have over $100 billion in financing in place with Canadian business customers and consumers. About 60% of the industry customers are estimated to be small and medium-sized businesses.

One of the industry's key strengths is the choice it offers on how to maximize the use of capital. Between 20% and 25% of annual new business investment in machinery, equipment and vehicles is financed by this industry.

To raise living standards and improve the quality of life for all Canadians, the economy must become more productive. By facilitating the acquisition of productive assets by Canadian businesses and consumers, the asset-based financing, vehicle and equipment leasing industry is helping Canada work smarter.

CFLA promotes industry growth, development and education. The Association has four general priorities:

Industry advocacy to key publics: Governments, the Media, other Associations in the financial services sector, and the general public;

Member information: timely information to members alerting them of changes likely to impact their businesses;

Professional training: seminars and workshops on the basics of asset-based financing and leasing for member employees; and

Networking: creating opportunities for members to meet and talk business.

CFLA is a national non-profit organization headquartered in Toronto. An elected Executive Committee and Board of Directors, nominated from the Association membership, determines CFLA policies. There are eight policy committees and two steering committees. A full-time professional staff manages CFLA.

CFLA was formed in September 1993 through the merger of the Canadian Automotive Leasing Association and the Equipment Lessors Association of Canada. The Association has grown from 61 members at the time of the merger to 210 members at June 30, 2001.

Asset-Based Financing

Asset-based financing is the financing of equipment and vehicles and of related items or services, primarily by way of lease, but also by secured loan or conditional sales contract. Cash-flow-based credit analysis is a primary financial innovation of this industry. Because a leasing company retains ownership of the leased equipment or vehicle, at least until the end of the lease, it enables a lessee to qualify for use of the asset leased based on its generated cash flow rather than the lessee's credit history, assets or capital base.

CFLA Vision

The Canadian Finance & Leasing Association will be a relevant association. It will be a united, high profile and well managed association. The Canadian Finance & Leasing Association will:

Create unity
Build and retain membership
Project a strong public image
Influence government decision-making
Provide educational services.

Code of Ethics

The Canadian Finance & Leasing Association represents the leading equipment and vehicle leasing and asset-based finance companies in Canada. There are fundamental standards of practice, which should serve as guiding principles for all engaged in the business of leasing and asset-based financing.

At all times conduct our activities with integrity, dignity and professionalism and encourage such conduct by others in the leasing industry.
Maintain respect for keen competition and see no unfair advantage by dishonest or unethical means.
At all times adhere to the specific terms of funding commitments, commission agreements and purchase orders.
Not knowingly make false or misleading statements or withhold information vital to an intelligent business decision concerning any aspect of a leasing transaction.
Disclose all relevant information as to the terms and conditions of the lease, which may effect the lessee's decision.
Treat in a fiduciary capacity all funds received from the lessee, which may be returned to the lessee.
Hold in strict confidence all financial information supplied by the lessee on a confidential basis.
Not make payments directly to an employee of a vendor or business source without that company's knowledge.

Highlights From the Chairman's Report - 2001

CFLA - the industry's electronic meeting place.

This year the Association has moved to a new level. By any measure, this has been a strong year. The membership is at an historic high and continues to grow. The financial position remains sound. Several key lobbying efforts have been successfully concluded … with real, positive bottom-line results for members. These successes confirm the positive trajectory that CFLA has followed since its creation in 1993.

With its new Internet capacity, CFLA has moved to a new level of member service. It is being enabled to become the industry's national electronic meeting place. The Internet is now the principal form of communication between the association and its members. CFLA can now communicate business relevant information instantly to members wherever they may be located.

Changes in government policy, new legislation and regulation, the latest court decisions, legal, accounting and tax commentaries by CFLA professional members - all are regularly e-mailed to Members. Almost 1,000 Member representatives, located across Canada, get this business-relevant information on a timely basis.

The newly launched third generation CFLA Web site will add to our electronic capabilities. This new site has both a public side and a private member only area. The new member only section of the Web site will provide much more news, accessible to every member on a 24 hour / 7 day a week basis.

The Association is committed to enhancing the site to provide unique "Member Only" value-added services. Within a week of an important court judgment being rendered, every Member can read it. When a policy gets changed, all Members will hear of it. When new laws are being developed, each member can contribute an opinion.

Our success has been achieved with many volunteers but only three full-time staff. We are fortunate in the support we receive from CFLA President David Powell, Janet Tricker, CEA, The Director of Membership Services, and Administrative Assistant, Caroline Cortes-Castillo. We thank them for a job well done.

By Nick Logan
From CFLA Annual Report 2000 - 2001

Highlights from the President's Report 2001

CFLA - Advancing the Interests of the Industry. Industry associations generally have three roles: advocacy, information & education, and networking. The priority each association gives each of the different roles reflects the particular needs of it's membership. For CFLA, industry advocacy is the top priority. The primary demand of CFLA members for their association is to advance the interests of the industry. The growth in CFLA membership reflects growth in the industry. With that industry growth come new challenges in the form of a growing list of issues impacting the industry. Looking forward, here are some of the issues where the association is significantly involved.

The "Super-Priority." The Federal government continues to seize leased assets or to demand from lessors the proceeds of sale of repossessed leased assets to compensate the government for employee source deductions and GST not remitted by a customer. CFLA is in discussions with the federal Department of Finance on how to reduce the unfair burden on the industry. This is CFLA's top priority.

Canada Small Business Financing Act (SBLA). After seven years of effort by the Association, the Federal government is moving to establish a pilot project to provide guarantees for capital leases on equipment leased to qualifying small businesses. The implementation target date is April 2002. CFLA is working with Industry Canada on the draft regulations and administrative guidelines for the project.

Disclosure of Cost of Credit to Consumers. Provinces across Canada are adopting laws and regulations to implement the new national harmonized rules for the disclosure of the cost of credit and leasing to consumers. The new law is in effect in Alberta. Legislation has been passed in British Columbia and Ontario, but the regulations have yet to be released. Legislation is expected in Quebec in the fall of 2001. Consultations are underway in Saskatchewan. CFLA will continue its participation in the process.

Capital Tax Repeal. After years of debate, there seems to be growing receptivity both federally and in some provinces to elimination or, at least, a reduction in capital taxes. Capital taxes are undoubtedly a factor inhibiting investment in productive assets. The more Canadians invest in productive assets, the more tax they pay. This tax distinctive runs counter to the stated policy objectives of the government. CFLA will show the impact of the capital tax burden on customers and work with other associations to press for its elimination.

Withdrawal of IT233R. The Canada Customs and Revenue Agency (CCRA, formerly, Revenue Canada) withdrew it's Interpretation Bulletin IT233R Lease Option Agreements - Sale-leaseback agreements in June 2001. Taxpayers (and their advisers) have long looked to IT233R when attempting to determine whether lease payments were payments of "rent" (i.e. made under a true lease) or payments on account of purchase (i.e. the equivalent of a sale) for purposes of the Income Tax Act. The full impact on the membership has still to be determined.

Year 2001 Automobile Tax Deduction Limits. In December of every year, the Federal Department of Finance fixes the amount of the maximum allowable automobile deduction limit on leased vehicles. Since 1997, CFLA has submitted to Finance, an annual survey on the true lifecycle costs for lessors for vehicles coming off lease. As a direct result, the limits on tax deductible vehicle leasing costs have risen from $550 to the current $800 per month and the capital cost ceiling from $25,000 to $30,000.

Ontario ~ Consumer Protection Legislation Changes. Last fall, Ontario circulated proposals to change existing consumer protection legislation. Three concerns arose: (1) The proposed expansion of the definition of "consumer" to an unincorporated individual signing a contract for business purposes. (2) The requirement that a creditor advise a consumer debtor in writing in advance of the creditor's intention to have an asset repossessed. (3) The broad intent to regulate the practices of those businesses "who purchase or are assigned debts resulting from credit that they did not themselves extend to customers."

Quebec ~ Discharge of Lease Registration. When a lease is fully-paid, those administering the Quebec Register of Personal and Moveable Real Rights often refuse to accept a discharge from a lessor who has originated and securitized a portfolio of leases and retained responsibility for servicing the portfolio unless all creditors in the securitization syndicate have given the servicing lessor explicit authority to consent to the discharge on behalf of all such creditors.

Mandatory Reporting of Data on Small Business Financing. Statistics Canada and Industry Canada are developing a data collection and reporting process on small business financing. The first annual mandatory survey of lessors was sent out in February 2001. The results are to be published in October 2001. CFLA is attempting to minimize the compliance burden on the industry.

International GAAP. As part of a general mandate to "harmonize" accounting standards worldwide, the International Accounting Standards Board is seriously considering ending "off-balance sheet financing," that is, the accounting distinction between finance and operating leases. The proposal is to require lessees, both in the private and the public sectors, to record operating leases (including real estate leases) as liabilities on their balance sheet. Lessors would be required to record their assets to reflect the lessee's treatment in a manner as yet unspecified. CFLA is working with leasing associations in the USA, UK, Europe, Australia and Japan on this issue.

Federal Bank Act. In June 2001, after almost a decade of debate, the Federal Bank Act was renewed significantly changing the framework legislation for financial services. The overall objectives of the CFLA position were reflected in the new statute. While the amended Bank Act will not officially expire for more than five years, with continuing change in the financial services sector, further debate is inevitable sooner rather than later. Issues such as bank powers (notably auto leasing and insurance) will likely resurface well before long.

The association can take pride in the accomplishments of the past year. Continued member commitment and participation is the foundation on which future success is built.

By David Powell
CFLA Annual Report 2000 -2001

CFLA Committees

Accounting Committee Objectives

To provide useful and timely information on accounting matters of interest to the asset-based financing, equipment and vehicle leasing industry.
To Provide information and support on issues within the area of interest and expertise of the asset-based financing and leasing industry when requested by the Accounting Standards Committee of the Canadian Institute of Chartered Accountants.
To provide technical support to the Board, Executive and Committees of CLFA as requested.

Automotive Committee Objectives

To establish strong working relationships with all motor vehicle manufacturers to maintain an ongoing dialogue on issues related to legislation, fleet policies, allocations and overall relations with franchised dealers.
To communicate effectively with all members on matters of interest and respond to all members' inquiries on any aspect of their business.
To participate in industry discussions regarding plain language lease agreements, cost of credit disclosure, open-end leases, Federal deduction limits for vehicle leases, and issues being raised as part of Federal financial services sector reform.
To recommend to the Board of Directors, policies and strategies that have evolved from the work of the Committee.

Education Committee Objectives

To serve as a forum for advice and ideas for the CFLA on education seminars, workshops and the Annual General Meeting and Conference.

Legal Committee Objectives

Education and information - to provide useful and timely information on legal matters of interest to the asset-based financing, equipment and vehicle leasing industry.
Advice and Consultation - to serve as a resource available to work with other CFLA Committees and to respond to legal issues which are regarded by members as significant to the industry.

Membership Committee Objectives

To support and build the CFLA membership base.
To plan and implement membership drives and programs as a way of strengthening and developing the current membership base.

Steering Committee Objectives

CFLA has two steering committees: one in Montreal, the other in Vancouver.

To advise CFLA on industry issues, membership and program development in Quebec and British Columbia.

Taxation Committee Objectives

To monitor and assess new taxation matters pertaining to the asset-based financing, equipment and vehicle leasing industry.
To be a resource available to CFLA members with a tax enquiry.
To advise CFLA of its recommendations for changes in Federal and Provincial taxation.
To assist in CFLA representation to government departments regarding specific industry tax matters.
To report to the CFLA membership, new taxation issues and changes which may have a bearing on accounting for taxes.

Technology Committee Objectives

To provide useful and timely information on new technologies of interest to the asset-based financing, equipment and vehicle leasing industry.
To assist in the education of members on the use of new technologies in the asset-based financing, equipment and vehicle leasing industry.
To recommend to the Board of Directors public policy postions on the commercial use of new technologies.

*All above information as supplied by the Canadian Finance and Leasing Association