BKAT3033 SPECIALISED TAX

A222
TUTORIAL 3:
ALLOWANCES FOR MINING, PROSPECTING EXPENDITURE, AGRICULTURE
AND FOREST
(DUE: 19 JUNE 2023)

QUESTION 1
GG Mine Bhd (financial year-end 31 December) started to operate a mine on 1 July 2015.
The life of the mine was estimated for eight years.

The expenditures incurred on the mine were as follows:

Date Expenditures RM

1 January 2015 Cost of site 2,800,000

1 January 2015 to 30 June 2015 Testing deposits of minerals 1,000,000

Roads 580,000

Labour quarters 200,000

REQUIRED:

(a) Compute the mining allowances for GG Mine Bhd for the years of assessment 2015
until 2022 and determine the residual expenditure in the year of assessment 2022.

(b) Assume that on 30 June 2022, the company ceased the mining operation, and the mine
was subsequently disposed of on 21 December 2022. The recovered expenditure
received was RM1.3 million. Compute the mining allowances if (i) the company did
not make election and (ii) the company made election under Para 15, Sch 2 of ITA
1967.

QUESTION 2
A. State the types of qualifying agriculture expenditure and their respective agriculture
allowance rates.
B. BF Farm Sdn Bhd (BFF) operates an agriculture business since year 2014 which
produces various types of tropical fruits and makes up its accounts to 31 December
each year. In August 2019, BFF constructed an estate office building amounting
RM90,000 and it was used during the year of assessment 2019. On 30 October 2021,
BFF disposed of the estate including the office to KK Sdn Bhd (financial year-end 30
June) for RM300,000. The disposal value of the estate office was RM50,000.

REQUIRED:

Compute the agriculture allowances and agriculture charge (if any) claimable on the
estate office by both BF Farm Sdn Bhd and KK Sdn Bhd for the relevant years of
assessment until 2022.

QUESTION 3

Log In Sdn Bhd was licensed to extract timber from a forest in Malaysia. The accounts are
prepared by 31 December annually. The following expenditure was recorded related to the
operation:

Date Incurred Expenditure RM

31 October 2019 Construction of road 80,000

30 November 2019 Construction of living accommodation 20,000
30 September 2020 Construction of road 25,000
15 December 2020 Construction of living accommodation 18,000

The company ceased to extract timber and disposed the forest on 30 April 2022.

REQUIRED:

Compute the forest allowances and charges (if any) for the relevant years of assessment,
assuming that an election was made under Paragraph 32 of Schedule 3 of the Income Tax Act
1967.

END OF QUESTIONS