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?
Yes |
Go to question 2. |
No |
The CFC has failed the active income test. Tick Fail at question 5 of summary sheet 2. |
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?
Yes |
Go to question 3. |
No |
The CFC has failed the active income test. Tick Fail at question 5 of summary sheet 2. |
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?
Yes |
Go to question 4. |
No |
The CFC has failed the active income test. Tick Fail at question 5 of summary sheet 2. |
4. Has the CFC complied with the substantiation requirements in chapter 4?
Yes |
Go to question 5. |
No |
The CFC has failed the active income test. Tick Fail at question 5 of summary sheet 2. |
5. Is the tainted income ratio less than 0.05?
Yes |
The CFC passes the income test. Tick Pass at question 5 on summary sheet 2. |
No |
The CFC has failed the active income test. Tick Fail at question 5 of summary sheet 2. |
To work out the CFC’s tainted income ratio, use worksheet 2.