QUESTION 6

Sutera Sdn Bhd, a manufacturing company located in Sabah, has been in operation
since March 2013. The company manufactures a promoted product and had been
granted investment tax allowance incentives under the Promotion of Investment Act 1986
effective from 1 January 2014.

The forecasted capital expenditure, adjusted income and capital allowances for the three
years are as follows:

Year ended 31 December 2014 2015 2016

RM000 RM000 RM000
Land 180,000 - -
Factory building 90,000 60,000 -
Plant and machinery 30,000 40,000 60,000
Office equipment 8,000 - 10,000
Adjusted income/ (loss) 52,000 (36,000) 80,000
Capital allowances 26,100 33,300 46,300
Rental income 600 600 600

Required:

(a) State the tax relief period for the investment tax allowance incentive available to
Sutera Sdn Bhd.
(2 marks)

(b) For the year of assessment 2014, 2015 and 2016, compute the following:

(i) Chargeable income (if any).

(ii) Amount to be transferred to the exempt income account.
(iii) Amount of unabsorbed business loss to be carried forward to the year of
assessment 2017 (if any).
(12 marks)

(c) Sutera Sdn Bhd ordered a special plant from Australia to be used in a production.
The particulars are as follows:

RM
Cost (FOB) 40,000
Cost of packaging - for export 4,000
Cost of freight - to port of import 1,000
Cost of insurance - to port of import 1,000
Cost of transportation - from port to site 2,000
Note:

The special plant is subject to 20% import duty and 6% Government Service tax.

Required:

Compute the following values for Sutera Sdn Bhd:

(i) The Customs value of the plant;

(ii) The import duty payable; and
(iii) Gst Tax Payable.
(6 marks)
[Total: 20 marks]
ANSWER 6

a) The tax relief period starts from 1 January 2014 31 December 2018 . (2 x
1 = 2 marks)
b)

2013 2014 2015

RM000 RM000 RM000
Adjusted income 52,000/ Nil/ 80,000/
Less: capital allowances 26,100/ (33,300) c/f/ (79,600)/
Statutory income 25,900 / Nil / 400 /
Less: ITA utilized (25,900) / Nil/ 400 /
Less: business loss b/f Nil Nil (35,400 c/f) /
Business income Nil Nil
Rental income 600/ 600/ 600/
Aggregate income 600 600 600
Less: current year loss (600)/ c/f 35,400/
Chargeable income 600/ Nil / 600/

100% of SI 25,900 Nil 400

Set off against:
ITA: 100% x QCE 120,000 / 100,000 / 60,000 /
Brought forward Nil 94,100 194,100
Total ITA available 120,000 194,100 194,100
ITA utilized 25,900 Nil 400
ITA unutilized c/f 94,100 194,100 253,700
Amount credited to EIA 25,900 Nil 400

(24 / x 1/2 mark = 12 marks)

c)
i) The Customs value of the special plant:

RM
Product price 40,000/
Packaging cost 4,000/
Freight cost 1,000/
Insurance 1,000/

Customs value 46,000

(4/ x 1 = 4 marks)

ii) The import duty payable:

= 20% x Customs value

= 20% x 46,000
= RM9,200 /
(1/ x 1 = 1 mark)
iii) GST tax payable:
= 6% x [Customs + import duty]
= 6% x [46,000 + 9,200 ]
= RM3, 312 /
(1/ x 1 = 1 mark)
[Total: 20 marks]