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

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    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