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A passive non-financial [foreign] entity* (passive NFE) is a non-financial entity of which 50% of its income is passive, and more than 50% of its assets for the last financial year are in the form of passive investments.
(Passive income is derived from investing in assets rather than from activities carried on in the normal course of a trade or business.)
A passive non-financial entity* is:
Examples of passive non-financial entities are family trusts, investment clubs, non-profit entities that are registered not for gain, and entities that own a farm and its only income is rental income, not farming income.
However, if this passive NFE is an entity and is part of a group that is listed and frequently traded on a regulated stock exchange, then it will default to an active non-financial entity.
*For any defined terms please see the Table of terms and definitions.