Capital Allowance 1 Q3

Q.
a. Capital allowance is an allowance allowed by the Inland Revenue Board to replace the fixed asset depreciation from the gross business income. Explain two (2) following components of capital allowances.

i. Initial allowance
ii. Yearly allowance
(10 marks)

b. Income arising from property, movable or immovable, situated in Malaysia is taxable under section 4(d) of the Income Tax Act 1967. Rental income has always been considered as a non-business source.

Using appropriate examples, explain what the deductible expenses from rental income are.
(15 marks)

(25 marks, 2011 Q3)