Income Tax Act 2007 section 738

Meaning of "commercial transaction"

Section 738 defines what counts as a "commercial transaction" for the purposes of the transfer of assets abroad exemption in section 737.

• A relevant transaction qualifies as commercial only if it is carried out in the course of, or with a view to setting up, a genuine trade or business
• The transaction must be on arm's length terms — that is, terms that unconnected parties would agree between themselves
• The transaction must also be one that unconnected parties dealing at arm's length would actually enter into
• Investment management activities only count as a trade or business where the person carrying out the activity and the person for whom it is done are unconnected and dealing at arm's length