INVESTMENT HOLDING COMPANY QUESTION 1 Lycra Holdings Sdn Bhd (‘the company’) is a Malaysian resident incorporated investment holding company. The company owns a retail lo

INVESTMENT HOLDING COMPANY
QUESTION 1
Lycra Holdings Sdn Bhd (‘the company’) is a Malaysian resident incorporated investment holding
company. The company owns a retail lot located at Subang Jaya, Selangor and derives rental
income from the property. Besides, the company also invests in fixed deposits, equities and bonds.
Its closes its accounts to 31 December annually.
The company has produced the following results for the financial year ended 31 December 2020.
Income
RM
RM
Distribution from unit trusts (gross)
430,000
Rental received from retail lot (without management and
support services)
500,000
Fixed deposit interest from Public Bank Bhd.
220,000
Fixed deposit interest from Bank of Singapore (foreign
source)
340,000
Dividend received from equities (gross; single-tier)
330,000
Management fees received
60,000
Commission received
70,000
Gain from realization of investment
300,000
2,250,000
Less: Expenses
Directors’ salaries
156,000
Staff salaries, wages and allowances
200,000
Interest expense (incurred on loan for equities investment)
150,000
Secretarial, audit and accounting fees
50,000
Postage
1,000
Telephone charges, printing and stationery costs
10,000
Electricity and water bill
130,000
Quit rent and assessment (retail lot)
6,000
Repair and maintenance (retail lot)
180,000
Management fees (retail lot)
30,000
Fire insurance (retail lot)
16,000
929,000
Net profit
1,321,0002
Required:
Calculate the chargeable income and tax payable for Lycra Holdings Sdn Bhd for the year of
assessment 2020 if the company is not listed in Bursa Malaysia. Assumed that the income tax rate
is 24%.
QUESTION 2
Diamond Holdings Berhad (DHB) is tax resident company in Malaysia and carries on activities
mainly in the holding of investments (unlisted). The income statement of the company for the year
ended 31 December 2020 shows the following:
Note
RM
RM
Gross income
Interest income
1
309,000
Rent
2
450,000
Dividend
3
189,000
Gains from the sale of
investment
123,000
1,071,000
Less: Expenses
Directors fees
95,000
Entertainment for directors
56,000
Salaries, wages and allowances
188,000
Management fees
54,000
Maintenance expenses of
properties
2
145,800
Audit and accounting fees
56,000
Depreciation
102,000
(696,800)
Profit before taxation
374,200
Notes:
1)
The company received this interest income from its debenture loan. No exemption given
to this interest income.
2)
The rental income is in respect of letting out properties and no support or maintenance
services are provided. The maintenance expenses of RM145,800 is incurred wholly for the
rented properties.3
3) Dividend income consist of single-tier dividend from Malaysia and dividend received from
Singapore amounting to RM100,000 and RM89,000 respectively.
Required:
(i)
Based on the information given, determine whether DHB is an investment holding company
for the year of assessment 2020. State your reasons.
(ii)
Based on your answer in (i), compute the income tax payable of DBH for the year of
assessment 2020.
(iii)
Compute the income tax payable of DBH if the company is listed in the Bursa Malaysia.