There are no general exemptions based on whether the CFC is undertaking substantial activities. However, there are substance-based exceptions from certain specific rules in Canada&#39;s CFC regime that otherwise include a CFC&#39;s active business income in its CFC income. Very generally, if a CFC carries on an active business the principal purpose of which is to earn income that is of a type that is generally passive in nature (e.g., interest or royalty income), then the income is subject to the CFC rule, unless among other requirements the CFC carries on the business principally with arm&#39;s length persons and it employs more than five full-time employees in the active conduct of the business. There are also exceptions from the &quot;base erosion&quot; rules, which exceptions generally apply where more than 90 percent of the CFC&#39;s gross revenues from the specific activity to which a given base erosion rule applies (e.g., the lending of money to Canadian residents) derives from transactions with arm&#39;s length non-residents.