(a) State, with reasons, whether each of the following expenditures is deductible in arriving at the...

 

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(a) State, with reasons, whether each of the following expenditures is deductible in arriving at the adjusted income of a mining business: (i) Staff entertainment allowance (ii) Hire-purchase interest on lorry (iii) Depreciation of lorry (iv) Tax fees for income tax appeals (10 marks) (b) In 2005, Sam, a businessman, acquired a bungalow lot costing RM500,000 in Selangor with intention to build a nice home for his family. He utilized his savings to settle the down payment of RM100,000. The balance of the acquisition price was financed by a 15-year bank loan. Since then, his business has not been good and the bungalow lot was left vacant. In 2020, Sam was approached by a real estate agent to sell the lot. The price offered was very attractive. He accepted the offer and sold the lot at a gain of RM300,000. This was Sam's first sale transaction of real property. Required: Justify whether the gain of RM300,000 is assessable to income tax. (10 marks) (c) Sooka Sdn Bhd, a manufacturing company with financial year end 31 December, purchased a machine on 1 May 2020 at a cost of RM50,000. The company incurred RM190,000 on site preparation for the installation of the machine in the factory. Required: Determine the qualifying expenditure and compute the appropriate allowances for the year of assessment 2020 under Schedule 3 of the Income Tax Act, 1967. (5 marks) (a) State, with reasons, whether each of the following expenditures is deductible in arriving at the adjusted income of a mining business: (i) Staff entertainment allowance (ii) Hire-purchase interest on lorry (iii) Depreciation of lorry (iv) Tax fees for income tax appeals (10 marks) (b) In 2005, Sam, a businessman, acquired a bungalow lot costing RM500,000 in Selangor with intention to build a nice home for his family. He utilized his savings to settle the down payment of RM100,000. The balance of the acquisition price was financed by a 15-year bank loan. Since then, his business has not been good and the bungalow lot was left vacant. In 2020, Sam was approached by a real estate agent to sell the lot. The price offered was very attractive. He accepted the offer and sold the lot at a gain of RM300,000. This was Sam's first sale transaction of real property. Required: Justify whether the gain of RM300,000 is assessable to income tax. (10 marks) (c) Sooka Sdn Bhd, a manufacturing company with financial year end 31 December, purchased a machine on 1 May 2020 at a cost of RM50,000. The company incurred RM190,000 on site preparation for the installation of the machine in the factory. Required: Determine the qualifying expenditure and compute the appropriate allowances for the year of assessment 2020 under Schedule 3 of the Income Tax Act, 1967. (5 marks)

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Part 1 i No Staff entertainment allowance is not a deductible expense ii No Hirepurchase interest on ... View the full answer