How to Account for a Factory which Rent Out in Accounting and Tax?

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What Happens to My Factory When I Rent It Out as I cannot tahan the impact on Covid 19?

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Here it goes, sharing with you on ''How to Account for a Factory in Accounting and Tax?''

Accounting implication - Classification

The property would be classified under investment property as their change their intention of holding this building.

Accounting implication - Measurement

The property will be valued at cost, as the client has no intention to determine the market value of the building, due to undue cost or effort

Tax implication- Rental income

The rental income derived from the building will be treated as s4(d) income. as the client does not actively provide maintenance to the tenant. However, the first rental income starts from xxx 2021.

Tax implication-Expenses related to building

According to the PR 12/2018, expenses in respect of a period before the real property is let out are not deductible and have to be adjusted proportionately.

After rented out:

The expense which is allowed a deduction from income of letting of the real property charged to tax under paragraph 4(d) of the ITA is the direct expense that is wholly and exclusively incurred in the production of income under subsection 33(1) of the ITA.

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