Q3
a)
The first condition is the claimant must be carrying on a business. Second condition is the capital expenditure must have been incurred by the claimant. The third condition is the plant or machinery must be in use for the purpose of the claimant's business.

b) (i)
Tax authorities such as IRB can withdraw the capital allowances claimed if an asset is sold within 2 years of purchase, then the capital allowances claimed on the plant in the form of balancing charge can be withdrawn in the year of disposal.

C) (i)
The used passenger car which purchesed by Taylor Sdn Bhd is a passenger vehicle. Thus, the qualifying expenditure will be restricted to RM 50,000. Since the car is used the Finance ( No. 2) Act 2000 does not apply which is increases the qualifying expenditure for the car to a maximun of RM100,000.
Para 2(2) states that the qualifying expenditure for motor vehicle ( other than motor vehicle licensed or permitted by the road transport authority for commercial transportation of goods or passengers such as lorry, truck, bus, mini bus, van, station wagon, taxi cab or hire car) is restricted to RM 50,000. The amount of RM 50,000 is computed based on each passenger vehicle and it will be on a cumulative basis if the car is on hire purchase. Commercial vehicles such as lorry, truck, bus, etc are not subject to the qualifying expenditure of RM 50,000.

(ii)
Capital allowances for the car RM RM Accumulated QPE RM
YA 2011
Acquired on 1 Jan 2011
Down payment (cash deposit) 15,000
Principal repaid in one instalment (July) 60,000/24 x 6/12 1,250

Qualifying plant expenditure (QPE) 16,250 16,250
Initial