Your interest in a multi-industry foreign company is exempt from FIF taxation if the foreign company is principally engaged in two or more of the following activities:
- construction
- development of real property through capital improvement
- receipt of rental income from commercial real property owned by the company where the management, maintenance and security services for the property are principally provided by the directors or employees of the company or by a wholly owned subsidiary that is principally engaged in providing those services through the directors and employees of that subsidiary
- provision of management services for real property by the directors or employees of the company
- acting as agent in connection with the sale or purchase of commercial real property
- general insurance business of a kind that the company was authorised to carry on under the law of its place of residence
- life insurance business of a kind that the company was authorised to carry on under the law of its place of residence
- activities that allow an exemption under the active business exemption, discussed on pages 4, 5 and 6. [SUBPARAGRAPH 523(b)(ii)]
In addition to being involved in certain activities, the foreign company must be listed on a stock market of any approved stock exchange. The class of shares you hold in the foreign company must be widely held and actively traded on a regular basis on a stock market of an approved stock exchange during the period in which the exemption applies to you. A list of approved stock exchanges is contained at Schedule 12 of the Regulations. See appendix 1 Approved stock exchanges. [SECTION 523]
Exemption for an interest in a foreign holding company of a foreign mixed activity company
Your FIF interest will qualify for the exemption from the FIF measures as a holding company if the following requirements are satisfied. [SECTION 523A]
- Approved stock exchange
Your shares in the holding company are of a class listed on any stock market of a stock exchange approved in Schedule 12 of the Regulations. See appendix 1 Approved stock exchanges.
- Trading requirement
- The class of shares you have in the holding company must be widely held and actively traded on a regular basis on a stock market of an approved stock exchange.
- If the holding company has only one subsidiary, that subsidiary must be wholly owned and have been principally engaged in actively carrying on two or more of the activities mentioned above or in subparagraph 523(b)(ii).
- If the holding company has more than one subsidiary, the principal activities of the wholly owned subsidiaries in the group, taken together as an economic unit, must be the active carrying on of two or more of the activities mentioned above or in subparagraph 523(b)(ii).