s 29F Investment tax allowance for application under section 26E which has been approved under section 27E
(1) Where a company which has been granted approval under section 27E has incurred in the basis period for a year of assessment in respect of an activity relating to in-house research capital expenditure for the purposes of that activity, there shall be given to the company for that year of assessment an investment tax allowance of fifty per cent of that expenditure: Provided that for the purposes of this subsection “capital expenditure” shall not include— (a) capital expenditure as defined under subsection 29(7), 29 A (8), 29 B (7), 29 C (7), 29 D (6), 29 E (6), 29 G (6) or 31E(6); (b) capital expenditure for the purposes of Schedule 7A of the principal Act: and (c) capital expenditure incurred on plant or machinery used directly or indirectly for the purposes of storage, treatment or disposal of scheduled wastes as defined in the Environmental Quality (Scheduled Wastes) Regulations 1989 [P.U. (A) 139/1989]. (2) An allowance for expenditure given under subsection (1)— (a) subject to subsection (4), shall be given only for the year of assessment in the basis period for which that expenditure was incurred; (b) shall be given in respect of expenditure incurred within ten years from the date from which the approval is to take effect: Provided that where a company incurs capital expenditure from the date from which the approval is to take effect referred to in paragraph (2)(b) in relation to a business which it is about to carry on in respect of an activity relating to in-house research, that expenditure shall be deemed to be incurred in the basis period in which it commences to carry on the business. (3) Where an allowance is given to a company under subsection (1) for a year of assessment, so much of the statutory income of the business of the company in respect of an activity relating to in-house research for that year of assessment as is equal to the amount of the allowance (or to the aggregate amount of any such allowance, as the case may be) shall be exempt from tax under the principal Act: Provided that the amount so exempt shall not exceed seventy per cent of the statutory income of that business of the company for that year of assessment. (4) Where, by reason of an insufficiency or absence of statutory income of the business of the company in respect of an activity relating to in-house research for a year of assessment, effect cannot be given or cannot be given in full to any allowance to which the company is entitled under this section for that year in relation to the source consisting of that business, then, notwithstanding subsections (1), (2) and (3), so much of the allowance in question as cannot be given for that year shall be deemed to be an allowance to be given to the company under this section for the first subsequent year of assessment for which there is statutory income from that business, and so on for subsequent years of assessment until the company has received the whole of the allowance to which it is so entitled. (5) Where any income is exempt from tax by virtue of subsection (3), section 23 shall apply to that income (with any necessary modifications) as it applies to income exempt under section 22. (6) For the purposes of this section and subject to subsection (7), “capital expenditure”— (a) in relation to manufacturing based research, means capital expenditure incurred on a factory or on any plant and machinery used in Malaysia in connection with and for the purposes of an activity relating to in-house research; and (b) in relation to agriculture based research, means capital expenditure incurred in respect of— (i) the clearing and preparation of land; (ii) the planting of trial crops; (iii) the provision of irrigation or drainage systems; (iv) the provision of plant and machinery used in Malaysia in connection with and for the purposes of an activity relating to in-house research; (v) the construction of access roads including bridges; and (vi) the construction or purchase of buildings (excluding those provided for the welfare of persons or as living accommodation for persons) and structural improvements on land for the purposes of an activity relating to in-house research. (7) Notwithstanding subsection (6), “capital expenditure” shall not include capital expenditure incurred on buildings (which are used as living accommodation for persons), plant and machinery where such buildings, plant or machinery are provided wholly or partly for the use of a director or an individual who is a member of the management, administrative or clerical staff.