Industrial Building Allowance & Deductible Expenses Q5

Q.
a) The Income Tax Act 1967 specifically provides that certain special building qualify as industrial buildings and thus, qualify for industrial building allowance (IBA). IBA is granted to a person who incurs qualifying capital expenditure on the construction or purchase of an industrial building or structure for use in a qualifying trade. Explain what are industrial buildings and the types of expenditure that qualify for IBA. (10 marks)

b) Miss Dee rented her condominium uit to Mr Boon for a period of 2 years effective from January 2011. The tenant, Mr Boon was introduced to Miss Dee by an estate agent and she paid the agent a fee of RM3,500. Mr Boon requested Miss Dee to install new air-conditioning unit and water heater which costed her an amount of RM5,000. In addition, Miss Dee also has paid RM3,800 to the Condominium Manager for sinking fund and service charges due for the year 2011.

Explain to Miss Dee what are deductible expenses and whether all the above costs are deductible from rental income in determining the income from the letting as provided by the Income Tax Act 1967. (15 marks)

(25 marks, 2012 Q5)