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1. Disposal Value as Gross Income [Section 13(1A)]
Presently, the disposal value of qualifying assets vested
in Petroleum Nasional Bhd (Petronas) or the Malaysia-Thailand Joint Authority (MTJA)
is treated as their gross income on a disposal of such assets.
It is proposed that Section 13A of the Petroleum (Income Tax) Act, 1967 (PITA) be
amended whereby the disposal value of a vested asset will no longer be treated as
gross income of Petronas or MTJA if the asset disposed of continues to be used for
petroleum operations by another chargeable person (the acquirer) in another petroleum
agreement under which the acquirer has not incurred qualifying expenditure in respect
of that asset and at the time of the disposal :-
- the disposer of the asset is a company and the acquirer of the
asset is a partnership in which the disposer is also a partner;
- the disposer of the asset and the acquirer of the asset are the
same partnership but operating under separate petroleum agreements;
- the disposer of the asset and the acquirer of the asset are partnerships
and all the partners in the partnership that is disposing of the asset are also partners
in the partnership that is acquiring the asset; or
- the disposer of the asset and the acquirer of the asset are the
same company but operating under separate petroleum agreements.
This amendment is effective from year of assessment 2000.
2. Ministerial Power to Prescribe Rates for Capital
Allowances
Presently, paragraphs 8, 12, 13 and 14 of the Second Schedule
to PITA stipulate specific rates of initial and annual allowances for qualifying
expenditure incurred on plant and machinery, fixed offshore platforms and industrial
buildings.
It is proposed that amendments be made to the aforesaid paragraphs to give power
to the Minister of Finance to prescribe other rates for both initial and annual allowances.
These amendments have effect from year of assessment 1996.
3. Transfers Subject to Control
It is proposed to introduce new paragraphs 21A and 23A
into the Second Schedule to PITA to provide for the transfer of the residual expenditure
of a vested asset under one petroleum agreement to another petroleum agreement where
:-
- the relationship under Section 21A(a), (b), (c) or (d) exists
between the disposer and the acquirer of the vested asset (such a relationship is
similar to that stated in paragraph 1(a), (b), (c) and (d) above);
- the vested asset continues to be used for petroleum operations
by a chargeable person under the second petroleum agreement; and
- the chargeable person has not incurred qualifying expenditure
in respect of the vested asset.
This amendment is effective from year of assessment 2000.
4. Balancing Allowance
It is proposed that subparagraph 41(b) of the Second Schedule
to PITA be amended to provide that the disposer of a vested asset will not be entitled
to a claim for balancing allowance if the asset has vested in Petronas subject to
the control transfer provision of paragraph 22(1) to the Second Schedule.
This amendment is effective from year of assessment 2000.
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