Summary sheet 3: Active income test

Use this summary sheet to determine whether a CFC passes the active income test.

1. Was the CFC resident in a particular listed country or unlisted country at all times during the CFC’s statutory accounting period?

2. Did the CFC, or a partnership in which the CFC was a partner, have a permanent establishment in the CFC’s country of residence at all times during the period?

3. Has the CFC, and every partnership in which it was a partner, kept accounts according to commercially accepted accounting principles which give a true and fair view of its financial position?

4. Has the CFC complied with the substantiation requirements in chapter 4?

5. Is the tainted income ratio less than 0.05?

To work out the CFC’s tainted income ratio, use worksheet 2.