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To be eligible for the active business exemption, you must establish that the foreign company was principally engaged in one or more eligible activities. [section 496]
All business activities(including the provision of services) that are not named in Schedule 4 of the ITAA 1936 are eligible activities (for a complete list, refer to the ITAA 1936). Mining and agriculture, for example, are eligible activities. However, being named in Schedule 4 does not necessarily make activities ineligible activities - see Appendix 2: Business activities that are not eligible activities for more information.
There are two methods for establishing whether a foreign company is principally engaged in eligible activities:
- the stock exchange listing method, and
- the balance sheet method.
If both of the methods can be applied, you may choose which one to use. [section 498]
Also see Appendix 2: Business activities that are not eligible activities for more information.
Last modified: 27 May 2005QC 17512