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4.

0 CIRCUMSTANCES WHERE BUILDINGS ARE


Qualifying building expenditure(QBE) (para 3, Sch 3) 4.2 building for living accommodation of
TO BE TREATED AS AN IB
employees
QBE is capital expenditure incurred on the 4.1 building used for staff welfare [para 65(1)]
construction / purchase of a building which is used 4.2.1 Farm [para 65(2)]
at any time after its construction/purchase. When there is an existing IB, any additional
 A building provided for the welfare of
building exp. incurred will be treated as IB exp.
persons/ as living accommodation,
employed in connection with the working
INDUSTRIAL BUILDING(IB) (para 63, Sch 3) of a farm.
Def include: 4.2.2 Construction of employees’ quarters
INDUSTRIAL [para 42(1)]
a) A factory BUILDING
b) A dock, wharf, jetty/ other similar building ALLOWANCE  An IB use in a business & add. building is
c) A warehouse let out to public (IBA) constructed for living accommodation of
d) Buildings use in utilities business/
emp. employed.
telecommunication services
 Initial allowance (IA)- 40%
e) Building used in the working of mine/farm
f) Mil, workshop,  Employees- factory workers only
4.3 School/educational institution & technical training
4.2.3 Manufacturing, hotel/ tourism project,
(para 42B)
approved service projects [para 42A(1)]
FACTORY (para 64)  A person constructed/ purchased a building
approved by minister of education/higher  A person carrying on a business, &
Def: education for the business. incurred expenditure on the construction/
 Treated as IB purchase of a building for living
a) A building consisting of a mil, workshop/ accommodation of emp. The building will
 No IA but AA – 10% on the capital exp. for 10Y
other building for the housing of be deemed as an IB.
machinery/ plant used in manufacture of 4.4 Licensed private hospital, maternity home & nursing  No IA BUT annual allowance (AA) – 10% of
any product/ the subjection of goods/ home (para 37A)
materials to any process/ the generating qualifying expenditure
of power used for the purposes of that  Capital exp. incurred on the construction,
4.2.4 Child care facilities (para 42A(2)]
manufacture/ process alteration/renovation for the purpose of carrying
on a business (licensed under the provision of any  A person carrying on a business incurred
b) A building used incidental to the written law/ approved by director general of exp. on construction/ purchase of a
manufacturing business. health). building as child care facility.
 Treated as qualifying building exp.
 The building will be treated as IB
c) A building used for the storage of raw 4.5 Research (para 37B) (Treated as IA)  No IA BUT AA – 10% of qualifying exp.
material, fuel/ stores for the
manufacture / processing the goods.  A building/ part of used for research approved by
Minister within the meaning of ss 34(1)(a) & 34B(4)
Meanings of within the same curtilage: a
 Research by an approved research co. /institute
building attached or adjacent to/ within the
(s 34B)
same enclosure as the other building.
 Research by a R&D Co. /a contract R&D Co. (as
defined in s 2 of PIA 1986)
BUILDING TO BE TREATED AS
INDUSTRIAL BULDING
4.6 Storage of goods for export (para 37C)

 A building used by a person solely for the


purpose of storage of goods for export/ 4.12 Old folks care centre Qualifying building expenditure (QBE)
imported goods to be processed &  Qualifying building exp. incurred for the purpose Capital outlay incurred on the building &
distributed/ re-exported qualifies for AA - of business approved by Social Welfare incidental cost related to business. It
10% of qualifying building exp. Department – IB includes the following:
 No IA  The building can be constructed/ purchased a) Architect’s fees
4.7 Public road & ancillary structures (para 67A)  No IA but AA – 10% for each year for 10 YAs. b) Cost of preparing plans
c) Cost of clearing the old site including
 A person incurs capital exp. on the 4.13 BioNexus status company (BSC) the demolition of any existing building
construction, reconstruction/ any public d) Cost of construction
 Qualifying building exp. incurred by a BSC for the
roads – recoverable through toll collection e) Interest expense
purpose of first approved business undertaken by
 Treated as qualifying IB exp. BSC/ expansion project shall be given AA – 10%
f) Incidental expenditure on work
 IA – 10% & AA – 6% g) Cost of installing fittings
 The IBA should be withdrawn in the YA the h) Legal charges, stamp duty
4.8 Building used in approved service project building is disposed.
(para 37E) *the cost of the land & legal fees relating
4.14 Privatisation project & private financing scheme to the acquisition of the land would not
 A building used solely for the purpose of the  Building constructed by a resident for the business
qualify as IBA.
provision of services & modernization of purpose.  Interest expense on loan borrowed to
operations.
 IA – 10%, AA – 6% construct building
 Qualified as IBA  Part of QBE.
4.15 Kindergarden  Interest paid during the year – not
4.9 Building used for hotel (para 37F)
capitalised
 Building constructed/ purchased by an individual/
 Hotel registered with the Ministry of Tourism  It is a deductible revenue expenses.
co. for the purpose of business & registered with
& Culture Malaysia (MOTAC). the Ministry of Education Malaysia- IA
 Used solely for the purposes of hotel- IB.  Constructed building
 AA – 10%  The GBE include:
4.10 Airport  Balancing charge (BC) will be computed on a) Cost of construction of building
disposal of IB. disposed within 2y from the date of b) Subsequent capital exp.
 Capital exp. on the construction, acquisition. c) Initial repairs of building
reconstruction, extension in relation to an
airport – IB 4.16 Tun Razak Exchange (TRX)

4.11 Motor racing circuit (para 37H)  Which is constructed/ purchased by Tun Razak
Exchange Marque Status Company for the purpose
 Capital exp. on the construction, of qualifying activity used in TRX – IA
reconstruction as approved by Minister – IB  AA – 10%
IB Annual allowance (para 16, Sch 3)
75% rule (para 67)
Rental income on IB
YES Capital exp. incurred on preparing, NO
Is the rented out portion ≤
AA is given to a person who:
Where an IB in relation to para:
cutting, tunneling
10% of totalinfloor
order
areato
of prepare site a) Has incurred QBE on the construction/
the whole building ?
for the business. 37A private hospital, maternity home, nursing
the Whole part used as IB is purchase of IB
building iS IB
Formula eligible for IBA b) The owner of the building at the end home
of basis period
Plant & machinery (P) 37B building used for research/ training:
c) The building was in use as an IB for the
Add: cost of preparing, cutting (L) purpose of business. i. Approved by Minister
Contrasted building ii. Approved by research co./ institute
(E) iii. R&D co.
If L ≥ 75% of E, then E will be treated as QBE  AA- 3% on the QBE computed on a iv. Contract R&D Co.
straight – line basis.
If L ≤ 75% of E, then P will be the Qualifying 37C building used for storage of goods for
plant exp. L would not be given any tax relief. export/ storage of imported goods for
processed & distributed/ re-exported

37E building used in approved service sector


Purchased industrial building Industrial building allowance
37F hotel
 Purchase price – QBE 37G airport building, runway/ ancillary
Part of building used as IB structures

 If part of building/ extension to a 10% rule on IB 37H motor racing circuit


building used as IB. The whole
42A(1) living accommodation for emp.
building will be treated as IB if the
exp. on the construction of that part 42A(2) child care centre -
of building is not- use < 10% of the constructed/purchase
cost of constructing the building.
42B school/educational institution approved
Initial allowance (para 12, 13)
by Minister of Education
 IA of 10% on a straight line-basis of
42C building used for purpose of industrial,
the QBE would be given to a person
if all the following condition technical/vocational training approved by
fulfilled: Minister
a) He incurred QBE on the Building constructed for Government use (para 67B,
construction/ purchase of an IB. 16A, Sch 3)
b) The building used/ about to be used IBA:
as an IB for the purpose of business.
c) Person owned the building at the  IA- 10%
end of basis period.  AA- 6%

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