Income Tax Act 2007 section 300

Meaning of "qualifying trade"

Section 300 defines what constitutes a "qualifying trade" for the purposes of the venture capital trusts rules, including the treatment of research and development activities.

• A qualifying trade must be conducted on a commercial basis with the aim of making profits, and must not consist wholly or substantially of excluded activities (such as property development, financial activities, and certain other specified trades)
• Research and development activities count as a qualifying trade if they are intended to give rise to a new qualifying trade or to benefit an existing or future qualifying trade
• Simply preparing to carry on research and development does not count as preparing to carry on a qualifying trade — the R&D work itself must actually be under way
• The word "trade" in this section is used in a broader, everyday sense and is not limited to the specific statutory definition found elsewhere in the Act