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



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    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.

    Summary of Part 2

    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? (See 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.

    Last modified: 05 Dec 2006QC 18000