Income Tax Act 2007 section 291

The carrying on of a qualifying activity requirement

Section 291 sets out the requirement that a qualifying company must be carrying on a qualifying activity continuously from the date the relevant shares were issued, and explains what counts as a qualifying activity.

• A qualifying company must have been carrying on a qualifying activity at all times from the issue of the relevant holding — this can be the relevant company itself or any of its qualifying 90% subsidiaries
• Carrying on a qualifying trade counts as a qualifying activity, and so does preparing to carry on a qualifying trade, provided the trade was intended to be carried on by a qualifying company when the shares were issued
• Where the company is still in the preparation stage, it must actually begin the qualifying trade within two years of the shares being issued, and must then carry on a qualifying trade continuously from the end of that two-year period
• If the intention to carry on the trade is abandoned at any point within the two-year preparation window, the requirement can no longer be met on the basis of preparation alone