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  • Part 2 - Is the CFC largely exempt because it is primarily engaged in a genuine active business?

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    Part 2 deals with the normal operation of the active income test. Special rules for banks, other financial institutions and insurance companies are not included.

    Section 1

    What is the purpose of the active income test?

    Section 2

    Is the CFC a resident of a foreign country?

    Does the CFC have a permanent establishment in its country of residence?

    Does the CFC keep proper records?

    Have the substantiation requirements been met? (Refer to chapter 4 part 2 for a description of these requirements.)

    Section 3

    Is the tainted income ratio less than 5%?

    Section 4

    Explanation of the terms used in this part.

    Section 5

    Tainted income ratio for listed country CFCs for statutory accounting periods commencing before 1 July 1997.
    Last modified: 05 Dec 2006QC 17522