THIS QUESTIONS INVOLVED MALAYSIA TAX ACT :

a) Ace Sdn Bhd own the entire paid-up share capital of a newly incorporated company, Dee Sdn Bhd. On 1 December 2015, Dee took over from Ace its manufacturing business and assets and commenced to carry on the business. The assets taken over from Ace included: Cost to Dee RM Cost RM Acquisition by Ace in the basis period for YA Machinery 1 - General 200,000 280,000 2014 On 1 June 2016, Dee purchased additional machinery 2 to expand its manufacturing capacity at a coat RM300,000 and put it into use immediately. Ordinary share capital for the two companies exceeded RM2.5 million.

Required: Briefly explain why Dee Sdn Bd did not qualify for reinvestment allowance for the year of assessment 2016. (2 marks)

b) In the year to 30 November 2019. Dee will incur the following capital expenditure: Date Item Purchase (RM) 1 January 2019 New production line to automate manufacturing 500,000 1 July 2019 Grinding machine for factory use (from Ace cost in YA 2018 RM30,000) 20,000 No additional plant was acquired for the financial years 2017 and 2018.

Required: State with reasons, whether Dee qualifies for reinvestment allowance for the year of assessment 2019 covering the following: i) The time when the qualifying period commences ii) The time when the qualifying periods ends. (3 marks)

c) For the year of assessment 2019, Dees capital allowance and adjusted income are RM525,000 and RM244,200 respectively. Dee Sdn Bhd also received rental income of RM50,000 and donation to an approved institution amounted RM75,000.

Required: Compute the Chargeable Income of Dee Sdn Bhd for the year of assessment 2019 (12 marks)

d) Dee Sdb Bhd incurred additional capital expenditure on plant and machinery of RM1 million for the expansion of its existing business for the year ended 30 November 2022.

Required: Explain to the directors of the company whether its qualifying period for reinvestment allowance is extended accordingly. (3 marks) (Total: 20 marks)