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

Last updated 4 December 2006

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.