answer for tutorial 2 (tax incentive).docx - Question 3...

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Question 3 Zoom Builders Incorporated (Zoom) which carries on the business of manufacturing tiles in Malacca was granted an investment tax allowance for a period of 5 years. It’s tax relief period commenced on 1 January 2013. The company’s projected adjusted income for its manufacturing business and the projected capital expenditure for the four financial years ending 31 December are as follows: 2013 RM 2014 RM 2015 RM 2016 RM Adjusted Income / (loss) (3,000,000) 4,000,000 4,800,000 6,500,000 Capital expenditure: Plant and machinery 1,000,000 800,000 - 1,000,000 Living accommodation - - - Factory building 2,500,000 - 950,000 900,000 Non Business Income: Royalty (translation) 100,000 - - 200,000 Rental income 950,000 650,000 - 350,000 Capital allowance for the year 400,000 400,000 500,000 950,000 Balancing charge for the year 250,000 100,000 - 40,000 Approved donations - - 45,000 80,000 Required: Compute the company’s projected chargeable income and amount to be credited to exempt income account for each of the four financial years. 2013 RM 2014 RM 2015 RM 2016 RM Adjusted Income/(Loss) Nil 4,000,000 4,800,000 6,500,000 +) Balancing charge 250,000 100,000 - 40,000 Less: Current year capital allowance (250,000) (400,000) (500,000) (950,000) Unabsorbed capital allowance - (150,000) - - Statutory Income Nil 3,550,000 4,300,000 5,590,000 Exemption 70% of SI Nil 2,485,000 3,010,000 3,913,000 60% QCE 2013 2,100,000 2014 480,000 2015 570,000 2016 1,140,000 ITA c/f 2,100,000 95,000 0 Exemption 0 2,485,000 665,000 1,140,000 TI (ITA) - 1,065,000 3,635,000 4,450,000 -) Business loss b/f - (1,065,000) (897,000) -
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Non business income: Royalty (100K – 12K) 200K – 12K) 88,000 188,000 Rental income 950,000 650,000 - 350,000 Aggregate Income 1,038,000 650,000 2,738,000 4,988,000 -) Current year business loss (1,038,000) - - - -) Approved donation (restricted) RM45,000 @ RM2,738,000 x 10% RM80,[email protected] RM4,988,000 x 10% - - 45,000 80,000
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