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Ii a sum received by an individual from his employer

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(ii)A sum received by an individual from his employer by way of a scholarship may have the nature of income if it isattributable to having or exercising his employment. Nevertheless, such a sum is exempt from income tax [paragraph 24,Schedule 6, Income Tax Act 1967].(iii)Although the subsidy appears to have the nature of income because it is intended to replace a loss of earnings (OstimevPontypridd and Rhonda Joint Water Board[28 TC 261] [HL]), it is exempt from income tax [Income Tax (Exemption)(No.22) Order 2006 PU(A)2007/2006].(iv)Individual D’s present gambling activities have more of the nature of windfall gains than a business activity. This canbe seen from the fact that he treats gambling as a hobby and his livelihood comes from a more traditional form ofemployment. However, his plans for the future may lead to his gains being treated as business income if he develops theintention to be a professional gambler. (GrahamvGreen(9 TC 309).)4Tasik Sdn Bhd(a)Because the milling machine was disposed of by Tasik Sdn Bhd within five years of its own acquisition date, any reinvestmentallowance given is deemed not to have been given. Consequently there will now be a clawback of the allowance claimedby Tasik Sdn Bhd in the year of assessment 2007. In view of the fact that there is still a balance of reinvestment allowanceunused, the clawback can be effected by reducing that balance. Tasik is not entitled to the annual allowance for the old millingmachine for the year of assessment 2009 as it was not owned and in use at 31 March 2009. As it is disposed of in a controlledtransfer, the disposal value is equal to the residual value and there is no balancing adjustment.(b)Tasik Sdn Bhd tax payable – year of assessment 2009RMAdjusted business income130,000Capital allowances – working 1(79,600)––––––––Statutory income50,400Reinvestment allowance restricted – working 2(35,280)––––––––15,120Unabsorbed losses brought forward(10,000)––––––––Chargeable income5,120––––––––––––––––
18Working 1 – capital allowancesRMRMNew milling machineDeposit20,000First instalment (164,000 – 20,000) ÷ 364,000Installation charges – not eligible as withholding tax unpaid–––––––24,000––––––––––––––Initial allowance 20%4,800Annual allowance 20%4,800Old milling machine – not eligibleOther assets70,000–––––––79,600––––––––––––––Working 2 – reinvestment allowanceRMBrought forward138,216Clawback in respect of the old milling machineRM150,000 at 60% – withdrawn with effect from theyear of assessment 2007(90,000)––––––––48,216New milling machineDeposit – as above20,000First instalment – as above4,000Installation charges10,000–––––––34,000––––––––––––––60% x RM34,00020,400––––––––68,616Utilised for the year of assessment 2009 – restricted to 70% ofstatutory income of RM50,400(35,280)––––––––Unused33,336––––––––––––––––5(a)Circumstances in which a Labuan Offshore Company will not pay tax at 3% on the whole of its income include:Where the company’s income is derived from offshore business activity none of which is offshore trading activity, in whichcase the income is exempt from tax.

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Generally Accepted Accounting Principles

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