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TUTORIAL 4
Question 1
PTR Manufacturing Sdn. Bhd. specialized in the manufacture of printer in Malaysia. It was
incorporated on 1 January 2012 and commenced business on 1 June 2012. It made up its
first set of accounts to 31 May 2013. Since its incorporation, it has incurred the following
expenses for the construction of a factory:
Date
Expenditure
(RM000
)
04.01. 2012
Land
400
15.01. 2012
Piling
50
20.01. 2012
60
01.03. 2012
Architect fees
200
12.03. 2012
10
10.05. 2012
90
01.07.2012
Construction cost
01.02.2013
3,035
160
3,975
The factory was completed on 1 April 2013 and was used in the business from the same
date.
You are required to compute the qualifying building expenditure for the industrial
building available to the company for YA2013.
Question 2
Ratu Sdn. Bhd. has been in business of manufacturing jewellery since 2000. The company
commences construction of a factory building on 1.3.2012 and completed the building on
1.12.2013. Twenty percent of the total floor space of the factory building was used as an
office. The cost of the land and building was as follows:
Date
Expenditure
(RM000)
04.01.2012
Cost of land
200
15.01. 2012
20
20.01. 2012
Architect fees
30
1
01.03. 2012
20
12.03. 2012
Construction costs
850
10.05. 2012
100
1,220
Question 4
Kelly Sdn Bhd, which prepares its accounts to September 30 annually, carries on a shoe
manufacturing business in rented factory up to 31.08.2013. In June 2013, it completed the
construction of its own factory and office premises and commenced manufacturing
operations in its new building on 01.09. 2013. Nine percent of the total floor space of the
factory building was use as an office and showroom. The details of its expenditure for the
year ended 30.09.2013 are as follows:
Expenditure
RM
Land
250,000
1,900
1,000
49,000
2,500
Construction costs
400,000
704,400
1,000
10.04.2008
Architects fees
120
20.05.2008
280
15.06.2008
Construction
800
10.01.2010
The company makes up accounts to year end 31 December. The company did claim initial
allowance for the year of assessment 2011 and annual allowance for all other relevant years
of assessment. The factory was sold during the year to 31 December 2013 for RM 3.5
million (including RM 2 million in respect of the factory site).
You are required to compute the industrial building allowances for each of the
relevant years of assessment and the balancing charge resulting from the sale.
Question 6
Lanyard Sdn Bhd is a manufacturer of watersport equipment and supplies products based
in Kuala Lumpur, which makes up its accounts annually to 30 June. Lanyard Sdn Bhd is also
a contract manufacturer for an overseas company from which it imports raw materials which
it processes and exports.
Details of the fixed assets acquired by Lanyard Sdn Bhd in the basis period for the year of
assessment 2011 are shown below:
Asset description
Qualifying expenditure
RM
Factory building
Warehouse building used solely for import of raw materials
and
1,000,000
300,000
Compute the industrial building allowance for the year of assessment 2012 for the
factory building and warehouse building and the residual expenditure carried forward
to the year of assessment 2013;
Note: Industrial Building Allowance (IA: 10%, AA: 3%); Warehouse (IA: 0%, AA: 10%)
(ii)
Explain the income tax implications of each of the options for the construction of the
warehouse from the perspective of claiming industrial building allowance and advise
which would be more tax efficient.