Computation of Chargeable Income of Alumin Sdn Bhd for the Year of Assessment 2015

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Under the tour promotions incentive, distributors and retailers who achieve specified targeted sales of the company’s products would be given an all-paid overseas trip plus the company would also sponsor the cost of opening a new department or a new branch that is linked to the sale of its products under and sponsorship programmes, These incentive is to encourage the product’s sales.

While for sales promotions, the form of paying for shelf space, exhibition booths, and fair participation fees at various exhibitions where the distributors and retailers participate and the company’s products are highlighted s definitely for the purpose of promotion.

Citing the PR No. 4/2015, from the year of assessment 2014, entertainment as defined under section 18 of the Income Tax Act 1967 also includes provision of entertainment incurred for the purpose of promotion which is in connection with a business carried on and with or without any consideration and paid whether in cash or in kind. Therefore, the tax treatment for promotional expenses which have an entertainment element is allowed a deduction of 50% or a deduction of 100% if the expense falls under provisos (i) to (viii) of paragraph 39 (1)(l) of the Income Tax Act 1967.

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QUESTION 3.

August 2007.

The transfer of land from Executor to Martin is not liable to RPGT. The transaction is considered as no gain no loss transaction under Para 3(a), Schedule 2 RPGT Act 1976.

April 15, 2012.

Transfer of land from Martin to Matex Sdn Bhd also fall under no gain no loss transaction as it is a transfer to a controlled company for a consideration consisting of at least 75% of shares in that company and the balance in a money payment.

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Thus, no RPGT is imposed. But the shares acquired on the transaction becomes chargeable assets and will be subject to RPGT upon future disposal.

Upon the new acquisition, MSB is required to recheck their status whether they are real property company or not.

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MSB becomes a RPC on April 15, 2012 as the company satisfy the 75% requirement.

[Para 34 A (6) (b)]

The RPC status of a company only affects the shareholders. A shareholder who acquires shares in RPC would be deemed to have acquired a chargeable asset and the disposal of such shares would be deemed to be disposal of chargeable asset even though at the time of disposal, the company had ceased to be a RPC.

The acquisition price of MSB’s shares for Martin and Alex before April 15, 2012 is:

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November 30, 2015.

Disposal of shares by Martin and Alex on this date is subject to RPGT because the shares are chargeable assets.

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