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Question 5 a) State, with reasons, whether the business expenditure incurred in the following circumstances are deductible for tax purposes: i) Provision for warranty claims charged to profit or loss account by an electrical appliances manufacturer ii) Expenses incurred by a company for holding a family day for the staff and their families. iiiCost incurred by a trading company in constructing a new and improved roof for its office building. The cost of repairing the old roof would have been higher. iv) Insurance premium in respect of insurance policies against fire and loss of profits by a manufacturing business. v) Fines imposed on a transport company for repeated offences of overloading. Such practice is necessary to increase the profitability of the company. vi) Incorporation expenses of RM4,000 incurred by a company incorporated in Malaysia with an authorized share capital of RM250,000. (12 marks) b) Woody Utara Bhd, a wood manufacturer, purchased a plant from Soney Corporation of India for RM8 million. The terms of the agreement dictated that Soney Corporation would provide technical assistance in relation to installation of the plant. Although there were no charges imposed by the company, Woody Utara Bhd had to incurred RM8,000 being accommodation charges for a period of one month to an engineer from Soney Corporation. Required: Discuss whether withholding tax will be applicable to the payments made to Soney Corporation. (6 marks) c) Critically discuss in what circumstances plant and machinery can be treated as an industrial building and whether it will always qualify for industrial building allowance. (7 marks) Question 5 a) State, with reasons, whether the business expenditure incurred in the following circumstances are deductible for tax purposes: i) Provision for warranty claims charged to profit or loss account by an electrical appliances manufacturer ii) Expenses incurred by a company for holding a family day for the staff and their families. iiiCost incurred by a trading company in constructing a new and improved roof for its office building. The cost of repairing the old roof would have been higher. iv) Insurance premium in respect of insurance policies against fire and loss of profits by a manufacturing business. v) Fines imposed on a transport company for repeated offences of overloading. Such practice is necessary to increase the profitability of the company. vi) Incorporation expenses of RM4,000 incurred by a company incorporated in Malaysia with an authorized share capital of RM250,000. (12 marks) b) Woody Utara Bhd, a wood manufacturer, purchased a plant from Soney Corporation of India for RM8 million. The terms of the agreement dictated that Soney Corporation would provide technical assistance in relation to installation of the plant. Although there were no charges imposed by the company, Woody Utara Bhd had to incurred RM8,000 being accommodation charges for a period of one month to an engineer from Soney Corporation. Required: Discuss whether withholding tax will be applicable to the payments made to Soney Corporation. (6 marks) c) Critically discuss in what circumstances plant and machinery can be treated as an industrial building and whether it will always qualify for industrial building allowance. (7 marks)

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