Terengganu Batik Sdn Bhd (TBSB) is a manufacturer of batik fabrics and textiles. Operating in Marang,...

    

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Terengganu Batik Sdn Bhd (TBSB) is a manufacturer of batik fabrics and textiles. Operating in Marang, Terengganu since 2010, it is fully owned by Arjuna, a Malaysian tax resident. Over the years, TBSB had acquired the following assets: i. A new acre of land in town of Marang, Terengganu was acquired on 15 January 2022. New factory was constructed in this new land to increase production capacity of the business, due to high demand of the products locally and internationally. The following expenses have been incurred in the construction project. Expenditure Land cost Legal and professional fees (refer to Note) Architect and design fees Local authority approval fees Clearing and demolition of existing building on the land RM 310,000 18,000 9,500 1,600 4,000 Construction costs Interest on bank loan for construction Plumbing, wiring and drainage Cost of internal road 370,000 15,000 22,000 20,670 Note: 40% was paid for the legal fee for land acquisition, 10% was for securing a bank loan for factory construction, and the balance was for the contract agreement with the contractor) The factory construction was completed on 30 August 2022 and commencing its operation on 15 September 2022. ii. On 25 February 2022, a cutting machine (heavy machinery) was acquired and installed in its factory for RM160,000. The installation, which required alteration to the factory building, amounted to 10% of the total cost. iii. A security system was acquired on 3 May 2022 for RM6,000. However, the firm would like to install new security system, hence it was disposed on 10 April 2023 for RM4,200. iv. A new lorry (commercial vehicle) was purchased in 1 March 2023 on the following hire-purchase terms. Acquisition price Cash deposit Term of repayment The monthly instalments commenced from April 2023. RM 78,000 18,000 40 months v. Five-unit shelves at cost of RM200 per unit was purchased on 1 June 2022. The shelves are classified as small value assets (SVA) since their life span are within 4 - 10 years. 4 Required: a) b) State the conditions that must be satisfied in order to qualify for both capital allowances and industrial building allowances. Compute the capital allowances, industrial building allowance and balancing adjustment (if any) applicable to TBSB on each of the above assets for all relevant years of assessment (YA 2022 & 2023). Terengganu Batik Sdn Bhd (TBSB) is a manufacturer of batik fabrics and textiles. Operating in Marang, Terengganu since 2010, it is fully owned by Arjuna, a Malaysian tax resident. Over the years, TBSB had acquired the following assets: i. A new acre of land in town of Marang, Terengganu was acquired on 15 January 2022. New factory was constructed in this new land to increase production capacity of the business, due to high demand of the products locally and internationally. The following expenses have been incurred in the construction project. Expenditure Land cost Legal and professional fees (refer to Note) Architect and design fees Local authority approval fees Clearing and demolition of existing building on the land RM 310,000 18,000 9,500 1,600 4,000 Construction costs Interest on bank loan for construction Plumbing, wiring and drainage Cost of internal road 370,000 15,000 22,000 20,670 Note: 40% was paid for the legal fee for land acquisition, 10% was for securing a bank loan for factory construction, and the balance was for the contract agreement with the contractor) The factory construction was completed on 30 August 2022 and commencing its operation on 15 September 2022. ii. On 25 February 2022, a cutting machine (heavy machinery) was acquired and installed in its factory for RM160,000. The installation, which required alteration to the factory building, amounted to 10% of the total cost. iii. A security system was acquired on 3 May 2022 for RM6,000. However, the firm would like to install new security system, hence it was disposed on 10 April 2023 for RM4,200. iv. A new lorry (commercial vehicle) was purchased in 1 March 2023 on the following hire-purchase terms. Acquisition price Cash deposit Term of repayment The monthly instalments commenced from April 2023. RM 78,000 18,000 40 months v. Five-unit shelves at cost of RM200 per unit was purchased on 1 June 2022. The shelves are classified as small value assets (SVA) since their life span are within 4 - 10 years. 4 Required: a) b) State the conditions that must be satisfied in order to qualify for both capital allowances and industrial building allowances. Compute the capital allowances, industrial building allowance and balancing adjustment (if any) applicable to TBSB on each of the above assets for all relevant years of assessment (YA 2022 & 2023).

Answer rating: 100% (QA)

a To qualify for both capital allowances and industrial building allowances in Malaysia certain conditions must be satisfied Capital Allowances The as... View the full answer