Question 9
Quasar Sdn Bhd, a resident company, ventured into the production of a promoted product, and wishes
to apply for pioneer status or investment tax allowances under the Promotion of Investments Act
1986. The company's operation is located in Perak. Its accounting year ends on 31 December each
year.
Below are the projected data pertaining to the five years ending 31 December.
2017 2018 2019 2020 2021
RM RM RM RM RM
Statutory Income 90,000 nil 150,000 120,000 90,000
Adjusted loss -60,000
Qualifying Capital Expenditure 75,000 120,000 70,000 40,000 50,000
Rental income 4,000 4,000 4,000 4,000 4,000
Required:
(a) Assuming that the company chooses to apply for pioneer status; compute:
(i) The tax exempt income available to Quasar Sdn. Bhd for the relevant years of assessment
and
(ii) The tax payable by Quasar Sdn Bhd for each relevant year of assessment, assuming the
rate of tax is 24% for each relevant year.
(b) Assuming that the company chooses to apply for investment tax allowances; compute:
(i) The investment tax allowances available to Quasar Sdn. Bhd. For the relevant years of
assessment.
(ii) The amount that can be credited to the exempt income account in each relevant years of
assessment and
(iii) The tax payable by Quasar Sdn Bhd for each relevant year of assessment, assuming that
the rate of tax is 24% for each relevant year.
Based on the computations made in (a) and (b) above, advise Quasar Sdn Bhd as to whether it should
apply for investment tax allowances or pioneer status.