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Ihc Exercise

Montrose Sdn. Bhd. earns income from interest, dividends from Malaysian and Vietnamese stocks, and rental income from cottages. Over 80% of its gross income is from exempt dividends, qualifying it as an investment holding company under Section 60F(2). To calculate its taxable income and tax payable for YA2021: Interest income is adjusted for interest expenses. Dividend income is exempt. Rental income is adjusted for interest and expenses. Aggregate income is reduced by a fraction of permitted expenses. The resulting chargeable income is taxed at 24%.

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79 views

Ihc Exercise

Montrose Sdn. Bhd. earns income from interest, dividends from Malaysian and Vietnamese stocks, and rental income from cottages. Over 80% of its gross income is from exempt dividends, qualifying it as an investment holding company under Section 60F(2). To calculate its taxable income and tax payable for YA2021: Interest income is adjusted for interest expenses. Dividend income is exempt. Rental income is adjusted for interest and expenses. Aggregate income is reduced by a fraction of permitted expenses. The resulting chargeable income is taxed at 24%.

Uploaded by

premsuwaatii
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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IHC

Lecture Exercise

Montrose Sdn. Bhd. was formed on 1st January 2010 with the objective of letting
cottages in Fraser Hill, Pahang. All its rental properties come with cleaning and
facilities maintenance services.

The following is the statement of profit and loss for Montrose Sdn. Bhd. for the
financial year ended 31st December 2021.

RM RM
Gross income
 Interest 53,000
 Dividend received from shares listed in Bursa
47,000
Malaysia (Malaysian companies)
 Dividend received from Vietnamese listed
86,000
companies
 Rental 41,000
227,000
Less: Expenses
 Interest on loan for shares acquired 7,300
 Interest on loan for deposits placed 8,000
 Interest on loan for properties acquired 21,000
 Fund management fees for shares acquired 20,000
 Rates and assessments 3,950
 Repairs and maintenance on rental properties 5,250
 Management fees 32,000
 Wages and salaries 52,000
 Entertainment expenses 6,500 (156,000)
Net profit before tax 71,000

i. Determine, using the requirement set by Section 60F(2), whether Montrose Sdn.
Bhd. is an investment holding company.

ii. Calculate the aggregate income and income tax payable for Montrose Bhd. for
YA2021.

1
Solution

i. Determine, using the requirement set by Section 60F(2), whether Montrose Sdn.
Bhd. is an investment holding company.

Taxable Exempt
Interest 53,000 -
Dividend - 133,000
Investment income (A) 53,000 133,000 186,000
Rental (with support services) 41,000
B 227,000

� ��……. .
× 100% = × 100% = ………%
� ��……….

Montrose Sdn. Bhd. is an investment holding company (IHC) under S60F(2) as the
80% gross income criterion is satisfied.

ii. Calculate the aggregate income and income tax payable for Montrose Bhd. for
YA2021.

RM RM RM
S4(c) Interest income
Interest income
Less: Interest expense for deposits placed
Adjusted income

Dividend income
 Shares listed in Bursa Malaysia
(Malaysian companies)
 Vietnamese listed companies

Less: Interest on loan for shares acquired


Fund management fees
Adjusted income
Statutory income

S4(d) Rental income


Rental income
Less: Interest on loan for properties acquired
Rates and assessments
Repairs and maintenance
Adjusted income / Statutory income
2
Aggregate income
Less: Fraction of permitted expenses (Note 1)
Chargeable income

Income tax payable @ 24%

Note 1
RM RM
Permitted expenses
Management fees
Wages and salaries

Gross income chargeable to tax


Interest income
Rental income

Aggregate of total income


Interest income
Dividend income
Rental income

Fraction of permitted expenses: The lower of

� ��………….
� × = ��……. × 4 ��…………………
= ��………………. .
4�

5% of B= RM……………….@5%=………………

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