TUTORIAL 1

QUESTION 1

Oriental Sdn Bhd, a resident company located in Shah Alam, Selangor manufactures and sells
two products, Product X and Product Y. Product X is a promoted product. Oriental Sdn Bhd is
uncertain whether to apply Investment Tax Allowance or Pioneer Status. Below is the
forecasted information pertaining to Product X and Product Y:

Year of Assessment 2017 2018 2019 2020 2021

RM'000 RM'000 RM'000 RM'000 RM'000

Product X

Adjusted income/(loss) 5,000 (800) 7,000 6,500 (950)

Capital allowance (650) (380) (1,000) (1,500) (400

Qualifying capital expenditure incurred:

Land 1,700 Nil 1,000 Nil Nil

Factory Building 1,200 800 1,600 Nil 800

Plant and machinery 600 600 1,500 2,000 2,200

Office equipment 200 400 100 Nil 300

Product Y

Adjusted income (loss) Nil 770 (4,000) 300 400

Capital allowance Nil 250 90 60 70

Rental income 70 90 100 90 120

Required:
1. Compute the amount of income tax payable and the exempt income available to
Oriental Sdn Bhd for years of assessment 2017 to 2021 should the company apply for
Pioneer Status.

2. Compute the amount of income tax payable and the exempt income available to
Oriental Sdn Bhd for years of assessment 2017 to 2021 should the company apply for
Investment Tax Allowance.

3. Based on your computation above, state and explain whether Oriental Sdn Bhd should
apply for Investment Tax allowance or Pioneer Status

END OF TUTORIAL QUESTION