Section 432 — Income Tax Assessment Act 1936: Active income test

(1) Subject to sections 437 and 453, for the purposes of this Part, a company is taken to pass the active income test in relation to a statutory accounting period if, and only if: (a) the company was in existence at the end of the statutory accounting period; and (b) there was no time during the statutory accounting period when the company was in existence when the company was neither a resident of a particular listed country nor of a particular unlisted country; and (c) the company has kept accounts for the statutory accounting period and: (i) the accounts are prepared in accordance with commercially accepted accounting principles; and (ii) the accounts give a true and fair view of the financial position of the company; and (d) the company has complied with the substantiation requirements set out in section 451 in relation to the statutory accounting period; and (e) at all times during the statutory accounting period when the company was in existence and was a resident of a particular listed country, or of a particular unlisted country, the company carried on business in that country at or through a permanent establishment of the company in that country; and (f) the tainted income ratio of the company for the statutory accounting period is less than 0.05. (3) For the purposes of this section, if a company was dormant, within the meaning of Part VI of the Companies Act 1981, throughout a particular period (in this subsection called the dormant period) commencing on the day on which the company was incorporated, the company is to be taken not to have been in existence during the dormant period.