TUTORIAL 3 SAMPLE EXAM QUESTION

A. Forest Sdn Bhd (FSB) is a resident company involves in tourism business and has been
operating an in-door theme park in Penang since 2005. Due to an overwhelming
response from the foreign tourists to the theme park, the company has decided to
expand its tourism projects by constructing a new out-door theme park. FSB is eligible
to apply for Pioneer Status or Investment Tax Allowance incentives for the construction

B
of the new theme park.

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However, FSB is uncertain whether to apply for Pioneer Status or Investment Tax

B
Allowance for the new theme park project, therefore FSB is seeking your advice on the

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best incentives option.

B
The followings are the forecasted financial information pertaining to the new theme park

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project of FSB for the years ended 31 October:

B
2021 2022 2023

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Promoted business: RM’000 RM’000 RM’000
Adjusted income/(loss) (1,245) 2,040 2,350

B
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Balancing charge 40 - -

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Capital allowances for the year 1,080 650 650
Interest income 10 15 25

B
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Approved donations to state government 8 18 15

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The company is expected to incur the following expenditures for the new out-door
B
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theme park project to be embarked in 2021:

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Land 4,000 - -
B
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Construction of road and other 1,800 - -

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infrastructures
B

Provision of buildings and structural 850 - -

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improvement
Amusement plant and machinery 1,500 - -
B

Planting of trees and plants 780 - -

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Required:
B
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a. Calculate the company’s chargeable income and the amount to be credited to the
exempt income account for the year of assessment 2021 to 2023 under the
B

following tax incentives:

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i. Pioneer Status
B

ii. Investment Tax Allowance

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(18 marks)
B

b. Select the more efficient tax incentive for Forest Sdn Bhd.
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(2 marks)
B

B. Jati Agriculture Sdn Bhd is eligible for Reinvestment Allowance under Schedule 7A of
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ITA 1967.
B

Required:
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Discuss the eligibility criteria that has to be satisfied by Jati Agriculture Sdn Bhd to claim
for reinvestment allowance.
(4 marks)