Taxation on Leasing

Legal owner asset give the right to use for specified period of time

• Lessor

• Lessee

Rental is entering contract with tenant to use asset in long period

• True

• False

Finance lease ____ can claim capital allowances while Operating lease ____ can claim capital allowances

• lessee; lessor

• lessor; lessee

• landlord; tenant

On 1 February 2019, Adam Sdn Bhd leased asset A from a leasing company for 60 months with rentals of RM1,000 per month. The asset was installed in the Adam Sdn Bhd's premise and cannot be used by any other person without altering or dismantling it. The lease rentals for year of assessment 2019 amounting RM12,000 of which RM7,200 relates to the interest portion.

• Non-deemed sale

• Deemed sale

On 1 September 2017, Azim Sdn Bhd, which closes its accounts every 31 December, purchased asset B for RM650,000 and had claimed capital allowance on the asset.

• Non-deemed sale

• Deemed sale

On 1 July 2019, due to cash flow problem, Azim Sdn Bhd sold the asset to UI Sdn Bhd and then leased back the asset for 72 months with rental amount of RMS,500 per month of which RM1,500 is the interest portion throughout the lease term. Azim Sdn Bhd has no right to reacquire the asset.

• Non-deemed sale

• Deemed sale

On 1 October 2019 Fateh Leasing Sdn Bhd leases asset C to Huda Sdn Bhd for 36 months with rentals of RM2,500 per month throughout the lease term. The actual cost of the asset is RM80,000. Huda Sd Bhd has no right to acquire the asset.

• Non-deemed sale

• Deemed sale

Big Baba Sdn Bhd leased asset D for 72 month from a leasing company with rentals of RM9,000 per month. Total lease rental paid for year of assessment 2010 was RM108.000 of which RM16,200 relates to the interest portion. Big Baba Sdn Bhd may purchase the asset for RMI0,000 at the end of the lease term. The asset's original cost amounted to RM555,000.

• Non-deemed sale

• Deemed sale

In operating lease, what is the revenue recognize in lessor's book?

• Interest income

• Lease rental

• Dividend income

• Service income

Leasing company (lessor) which enter the capital allowance is entitled to claim the capital allowances on general plant and machinery used in business

• True

• False