Question

PRINCIPLE OF TAXATION (All the information are stated in the question below)

Question 1

VAG Bhd is a manufacturing company located in Bandar Darulaman, Jitra. Due to higher demand for its products, the company decided to improve its production capacity, which means expansion of the factory, In June 2015, the company began constructing a new factory with the following expenditures:

Expenditures Cost (RM)

Cutting and preparing the land 150,000

Architect fees to design the building 54,000

Cost of preparing plan for approval 16,000

Construction costs (material, labor, etc.) 318,000

Legal charge related to loan application 10,000

Interest on loan for construction 20,000

Drainage and water system 97,000

Roads and parking area within factory compound 33,000

The factory was completed in September 2016 and was brought into use in in the following month for production activity except for 20% and 10% of the areas which were allocated for administrative office and canteen/restroom for the factory workers, respectively. In 2019, the company experienced an economic downturn which forced them to close down and sell the factory at RM1 million on 15 October 2019.

REQUIRED:

Compute the industrial building allowances and balancing charges/allowances (if any) for VAG Bhd for the relevant years of assessment until year of assessment 2019.