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  • Section 2 - Conditions to be met to satisfy the test



    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    A CFC has to satisfy the following five conditions to pass the active income test:

    • Is it a resident of a foreign country?
    • Does it have a permanent establishment in its country of residence?
    • Does it keep proper records?
    • Can it substantiate your claim that it has met the active income test?
    • Is its tainted income ratio less than 5%?
    Last modified: 05 Dec 2006QC 18000