Section 179 — Income Tax Act 2007: Meaning of “qualifying business activity”

Meaning of “qualifying business activity” 179 1 In this Part “ qualifying business activity ”, in relation to the issuing company, means—

a activity A, or b activity B, if it is carried on by the company or a qualifying 90% subsidiary of the company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2 Activity A is—

a the carrying on of a qualifying trade which, on the date the relevant shares are issued, the company or a qualifying 90% subsidiary of the company is carrying on, or b the activity of preparing to carry on (or preparing to carry on and then carrying on) a qualifying trade—

i which, on that date, is intended to be carried on ... by the company or such a subsidiary, and ii which is begun to be carried on by the company or such a subsidiary within two years after that date. 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4 Activity B is the carrying on of research and development—

a which, on the date the relevant shares are issued, the company or a qualifying 90% subsidiary of the company is carrying on, or which the company or such a subsidiary begins to carry on immediately afterwards, and b from which, on that date, it is intended—

i that a qualifying trade which the company or such a subsidiary will carry on ... will be derived, or ii that a qualifying trade which the company or such a subsidiary is carrying on, or will carry on, ... will benefit. 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6 In determining—

a for the purposes of subsection (2)(b) when a qualifying trade is begun to be carried on by a qualifying 90% subsidiary of the company, or b for the purposes of subsection (4)(a) when research and development is begun to be carried on by such a subsidiary, any carrying on of the trade or, as the case may be, the research and development by it before it became such a subsidiary is ignored.

7 References in subsection (2)(b)(i) or (4)(b) to a qualifying 90% subsidiary of the company include references to any existing or future company which will be such a subsidiary at any future time.