TUTORIAL QUESTIONS – REIT

QUESTION 3 -JUL 2025

Ban Hock Property Trust (BHPT) is an approved real estate investment trust (REIT) and listed
on Bursa Malaysia. BHPT derived rental, dividend and interest income from several
investments in Malaysia and overseas. The statement of income and expenditure for the year
ended 31 December 2024 is provided below.

Income and gains: Note RM

Rental Income (Malaysia) 1 1,215,000
Dividend Income (Taiwan) 24,000
Interest Income (Malaysia) 2 49,500
1,288,500
Expenses:
Quit rent and assessments 49,000
Repairs and maintenance of buildings 3 51,000
Interest expense 4 32,000

Professional fees 5 61,000

Salaries and allowances 114,000
Net profit before tax 981,500

Additional information:

1. BHPT acquired two properties (Property A and B) in Klang Valley in early 2024. The
property A has been let out to tenant in April 2024 while property B is still vacant.
Property A and other industrial properties are rented out to tenants who used the
property as industrial building.

Properties Year of Acquisition Cost (RM)

Property A 2024 2,000,000
Property B 2024 1,800,000
Other industrial properties 2023 18,000,000

2. Interest income consisted of interest received from unapproved debentures (taxable)

and bonds issued by Pengurusan Danaharta Nasional Berhad, which amounted to
RM29,500 and RM20,000, respectively.

3. In 2024, repairs and maintenance expenses were incurred for properties A and B,
which amounted to RM6,000 and RM 10,000, respectively.

4. In 2023, BHPT borrowed RM400,000 from a local bank. The interest expense of the
loan facility is RM32,000 per year. RM90,000 was used for investment in unapproved
funds, while RM310,000 was for investment in Pengurusan Danaharta Nasional Bhd
(PDNB).

5. Professional fees comprise an accounting fee of RM18,000, a legal fee of RM 26,000

and secretarial and tax filing fees amounting RM17,000.

6. BHPT distributed 92% of its total income to individual unit holders on 30 November
2024, with no further distributions made to the unit holders thereafter.

Required:
a. Calculate the total income of BHPT for the year of assessment 2024. Write ‘Nil’ where
no adjustment is required. Start your answer from net profit before tax.
(12 marks)

b. Discuss the tax implications of the distribution of total income to unit holders of BHPT.
(5 marks)

c. Recommend a strategy on how BHPT can potentially reduce its tax liability through
investment in property B.
(3 marks)
(Total: 20 marks)

QUESTION 3 – FEB 2025

Master REIT is a real estate investment trust in Malaysia, listed on Bursa Malaysia since
2016. Its properties are spread across Malaysia, primarily rented to businesses in the retail
and manufacturing sectors. Below are the income and expenses for the financial year ending
31 December 2024 for Master REIT.
Notes RM RM
Income
Rental income 1,200,000
Interest income from local banks 154,000
Dividend income (Singapore – remitted) 56,000
Gains from the realisation of shares 23,000 1,433,000

Less: Expenses
Property manager’s fees 72,000
Interest expense on loan 1 120,000
Quit rent and assessment 31,500
Maintenance of properties 2 232,000
Depreciation 55,000
Dinner with potential tenants 1,400
Cash donation to a public university 20,000
Secretarial and tax filing fees 10,100
Properties’ insurance 17,000
Audit fees 18,000 577,000
Net profit before taxation 856,000

Notes:

1. One-third of the interest expense on loan was related to the purchase of shares while
the remaining amount was to acquire properties.

2. Maintenance of properties include cost of installing automatic doors for disabled

employees amounted to RM20,000.

3. The current year's capital allowances and industrial building allowances (related to
rental income) amounted to RM80,000 and RM35,000, respectively.
 4. Master REIT distributed 80% of its total income to unit holders on 31 October 2024,
with no further distributions made to unit holders thereafter.

Required:

a. Determine the income tax liability of Master REIT for the year of assessment 2024.
Start your answer with net profit before taxation and indicate ‘Nil’ where no
adjustment is needed.
(12 marks)

b. Assuming Master REIT distribute RM550,000 of its total income to its unit holders for
the year of assessment 2024. Calculate the income tax payable for the year of
assessment 2024 and contrast the tax treatment if Master REIT is an unlisted REIT.
(5 marks)

c. Explain to Master REIT's management on strategies to reduce its tax effect by utilizing
industrial building allowances for its real estate assets.
(3 marks)
(Total: 20 marks)

JULY 2024 - QUESTION 4

Kristal Property Trust (KPT) is a Malaysian Security Commission-approved Real Estate

Investment Trust (REIT) that closes its accounts on 30 June each year. It was incorporated in
2015 with a paid-up capital of RM5 million. For the year ended 30 June 2023, it produced the
following statement of accounts:

Kristal Property Trust

Statement of income for the year ended 30 June 2023
Note RM RM
Rental income 557,000
Dividends (Vietnam – remitted) 11,000
Interest income from Bon Simpanan Malaysia 25,000
Gains from the realization of shares 37,000 630,000

Less: Expenses
Interest on loan 1 75,000
Depreciation 30,000

Quit rent and assessment 25,000

Repairs and maintenance 2 54,000
Property manager’s fees 33,000
Entertainment 3 52,000
Professional fees 4 28,000
Insurance premium on buildings rented out 34,500
Donations 5 54,500 (386,000)

Net profit before taxation 244,000

Additional information:

1. One-third of the interest on the loan was related to the purchase of debentures while the
remaining amount was incurred to earn rental income.

2. Repairs and maintenance expenses include:

RM
• Cost of installing a ramp to provide access for disabled 5,000
employees
• Annual maintenance cost of a new factory in Bukit 15,000
Kemuning Industrial Park which was not yet rented out. The
cost of the factory was RM700,000.

3. Entertainment expenses comprised of:

• Gifts without a business logo for a customer’s annual dinner 8,000

• Hari Raya gifts to employees 25,000
• Foods and beverages during sales promotion campaigns 19,000

4. Professional fees included secretarial and tax filing fees of RM18,000.

5. The donation consisted of:

• Business zakat 9,500

• Contribution to Perpustakaan Negara Malaysia under 25,000
Section 34(6)
• Cash donation to MERCY Malaysia (approved institutions) 20,000

6. For the year of assessment 2023, KPT was entitled to a capital allowance of RM23,400
on assets used in carrying on its business operations.

Required:

a. Determine the total income of KPT for the year of assessment 2023. Start your answer
with the net profit before taxation and indicate ‘Nil’ where no adjustment is needed.
(12 marks)

b. Assuming KPT had distributed RM210,000 of its total income to its unit holders for the
year of assessment 2023. Compare the tax implications of the distribution if:

i. KPT is a listed REIT

ii. KPT is an unlisted REIT
(5 marks)

c. Recommend how KPT may minimize its tax effect from renting out the new factory.
(3 marks)
(Total: 20 marks)
JAN 2024 - QUESTION 4

Prime REIT is a real estate investment trust in Malaysia and has been listed on Bursa
Malaysia since 2018. Prime REIT’s real properties are located all over Malaysia and the real
properties are mainly rented by retail and manufacturing industries. The following are the
income and expenses for the year ended 31 July 2023 for Prime REIT.

RM RM
Income
Gross rental income - Sec 4(a) 1,000,000
Gross interest income – local banks - Sec 4© - exempt 175,000
Gross dividend income – pioneer status company - Sec 4© 82,000
- exempt
Gains from disposal of motor vehicle – NBI (Not taxable 29,000 1,286,000
(CR)

Less: Expenses
Manager’s remuneration - A 60,000
Interest expense on loan to acquire shares -NA / Dvd sec 4c 17,100
Interest expense on loan to acquire new real properties - A 52,000
Maintenance of properties - A 132,000
Depreciation - NA 40,000
Dinner with potential tenants - NA 1,000
Cash donation to a public university – NA / deduct under AI 20,000
Professional fees - A 30,000
Provision for specific doubtful debts - A 20,000
Properties’ insurance -A 27,000
Audit fees - A 15,000 414,100
Net profit before taxation 871,900

Additional information:

1. Information on disposal of a motor vehicle during the year of assessment 2023:

 The disposal value is RM60,000
 Residual expenditure is RM40,000 BC = 20k
 The accumulated capital allowance is RM160,000.

2. The current year's capital allowances and industrial building allowances (related to rental
income) amounted to RM60,000 and RM15,000, respectively.

3. Prime REIT distributed 85% of its total income to unit holders on 15 September 2023.
There was no subsequent distribution of total income to the unit holders after the initial
distribution. NO EXEMPTION

Required:

a. Determine the income tax liability of Prime REIT for the year of assessment 2023. Start
your answer with net profit before taxation and indicate ‘Nil’ where no adjustment is
needed.
(12 marks)
b. Contrast the tax treatment of the total income derived from REIT by comparing those
listed on Bursa Malaysia with those unlisted on Bursa Malaysia. Consider the
perspectives of both the REIT and non-resident company unit holders.
(5 marks)

c. Explain to the management of Prime REIT ways to minimize its tax effect via application
of industrial building allowance for its real properties.
(3 marks)
(Total: 20 marks)

QUESTION 4 – JUL 2023

Harta Hijau Trust Fund (HHTF) is an approved real estate investment trust, listed on Bursa
Malaysia. HHTF’s main income is derived from the letting of properties and investment in fixed
deposit. HHTF’s statement of income and expenditure for the year ended 31 December 2022
is provided below:

RM RM
Income:
Rental Income (Gross) 5,800,000
Interest (Fixed Deposit in a local bank - AHB Bank) 200,000
6,000,000
Expenses:
Property insurance, quit rent and assessment 35,000
Audit and accounting fees 2,500
Tax consultation fees - tax planning purposes 10,000
Donation (in-kind) to One Home Care Centre (Note 1) 5,000
Cash endowment contribution (Note 2) 15,000
Property manager’s fee 72,000
Depreciation 350,000
Operating cost 65,000
Realised loss on sale of unquoted shares 10,500 (565,000)
Net profit before tax 5,435,000

Additional information:

1. One Home Care Centre in Likas, Sabah, is an approved organisation.

2. Cash endowment is contributed to University Sabah Foundation College.

3. For the year ended 31 December 2022, HHTF claimed capital allowances and industrial
building allowances amounting to RM210,000 and RM280,000, respectively.

Required:

a. Assuming that HHTF had distributed RM5,000,000 of its total income to its unit holders
for the year of assessment 2022. Calculate the chargeable income and income tax
payable of HHFT for the year of assessment 2022.

Note: Your computation should start with the ‘Net profit before tax’ figure, indicating
‘NIL’ where no adjustment is needed.
(12 marks)
b. Based on your answer in (a) above, explain how the distribution of income from HHTF
 will be taxed for the following type of unit holders:

i. Resident individuals
ii. Resident companies.
Note: Your answers should include the rate of tax applicable.
(5 marks)
c. Advise HHFT regarding its responsibility related to the distribution of real estate
investment trust income to the unit holders, assuming that the total income of HHFT is
exempted from tax in accordance with Section 61A of the ITA 1967
(3 marks)
(Total: 20 marks)

QUESTION 4 – FEB 2023

Bina Tegas Property Trust (BTPT), is an approved real estate investment trust (REIT) which
involves letting out offices, factories and staff accommodation in Serdang Industrial Park. The
following is the Statement of Profit or Loss for BTPT for the year ended 31 December 2022:

Note RM’000 RM’000

Gross rental income 445,000
Rental operating expenses 1 (78,000)
Loss on disposal of shares 2 (21,500)
Interest income 3 20,200
Dividend income 4 21,150
386,850
Expenditure:
Manager’s salary (155,000)
Donation 5 (38,000)
Provision for doubtful debt (general) (22,000)
Trustee’s fee (21,000)
Professional fees (7,000)
Stationery (165)
Depreciation 6 (31,300) 274,465
Profit before taxation 112,385

Additional information:

1. Rental operating expenses also include the followings: -

RM
Entertainment for BTPT employees 30,000
Dinner for potential clients 10,000
Wedding gift for BTPT director’s second marriage 4,000

2. Disposal of shares refers to the selling of shares from a local company. The loss has
not been realized.

3. Interest income derived from fixed deposit placed at various banks in Malaysia is
RM10,200. The balance is received from a government secured bond.

4. Dividend income is from investment in shares of companies listed on Bursa Malaysia.

The investment in shares is financed with a loan which charge interest amounted to
 RM21,250. The interest amount was deducted in the BTPT Statement of Profit and
Loss as part of business operating expenses.

5. Donation consists of the following:

i. RM20,000 worth of mineral water to a political party.
ii. RM18,000 cash donation to Majlis Perbandaran Petaling Jaya.

6. Capital allowances for the year of assessment 2022 was RM25,000. However, it was
wrongly included as part of depreciation.

Required:

a. Determine the total income of Bina Tegas Property Trust (BTPT) for the year of
assessment 2022. Write `NIL’ where no adjustment is required.
(12 marks)

b. Explain two circumstances under which the tax treatment of REIT is different from the
normal tax treatment of business sources in other sectors.
(5 marks)

c. For the year of assessment 2022, BTPT (a listed REIT) has managed to distributed
RM180,000 of its total income to its unit holders. Advise the management of BTPT
about the difference in the tax treatment if BTPT only managed to distribute
RM150,000 of its total income to the unit holders for the year of assessment 2022.
(3 marks)
(Total: 20 marks)

QUESTION 4 – JULY 2022

Menara Property Trust (MPT) is an approved real estate investment trust (REIT) and listed on
Bursa Malaysia. The statement of income and expenditure for the year ended 31 December
2021 is provided below.

Income and gains: Note RM

• Rental Income (gross) 908,000
• Dividend Income (single tier) 25,500
• Interest Income received from:
- Unapproved debentures (taxable) 19,000
- Bonds backed by government 10,000
• Gains from realization of securities 41,000
1,003,500
Expenses:
• Repairs and maintenance of buildings 1 56,000
• Tax compliance services 14,000
• Quit rent and assessments 28,000
• Salaries and allowances 90,000
• Interest expense 2 38,000
• Donations 3 128,000
Net profit before tax 649,500

Additional information:
1. In 2021, MPT acquired a new factory in Shah Alam costing RM700,000 which was not
yet rented out. An annual expense of RM13,000 was incurred in maintaining the
property. The amount was included in the repairs and maintenance expenses.

2. MPT obtained a RM500,000 loan facility from a local bank in 2021. A total amount of
RM300,000 was used to acquire the new factory in Shah Alam, while the remaining
RM200,000 for investment in unapproved debenture. The interest expense from the loan
facility was RM38,000 for that year.

3. Donations comprised of RM105,000 contributions to local school libraries, claimed under

paragraph 34(6)(g). The remaining RM23,000 was approved cash contribution for sports
activity claimed under subsection 44(11B).

4. In the previous year of assessment, MPT’s deductible expenses exceeded its rental
income by RM55,000. The total costs of property buildings acquired three years ago
were RM10,000,000.

Required:

a. Calculate the total income of MPT for the year of assessment 2021. Write ‘Nil’ where no
adjustment is required. Start your answer from net profit before tax.
(12 marks)

b. MPT distributed RM290,000 of its total income to its individual unitholders on 28

December 2021. Discuss the tax implications of the distribution to a listed and non-listed
REIT.
(5 marks)

c. Based on the information provided, suggest three (3) means how MPT may benefit from
renting out the new factory.
(3 marks)
(Total: 20 marks)

QUESTION 4 – FEB 2022

Saradise Property Trust (SPT) is an approved real estate investment trust (REIT) listed on
Bursa Malaysia. The income statement for the year ended 31 December 2021 is provided
below:

Income Note RM
Rental income 1,480,000
Interest income from debentures 1 200,000
Dividend from Taiwan 50,000
Revaluation surplus 20,700
1,750,700
Expenditure
Trustee’s fee 2 (36,000)
Professional fees for tax appeal (18,000)
Realized loss on sale of quoted shares (3,400)
Contribution of books to National Public Library [sec 34(6)(g)] (12,000)
Interest on loan 3 (40,000)
Profit before tax 1,641,300
Additional information:

1. Debenture was approved by the Securities Commission.

2. The trustee was paid RM20,000 to manage the business.
3. A quarter (¼) of the interest on a loan was related to the purchase of debenture while
the remaining amount was incurred to earn rental income.
4. The total income distributed to unitholders amounted to RM1,200,000.

Required:

a. Calculate the total income of SPT for the year of assessment 2021. Write ‘Nil’ where no
adjustment is required. Start your answer from profit before tax.
(10 marks)

b. Discuss the differences in the tax treatment of the following items under REIT, in
comparison with the normal treatment of a business source.

i. the excess of deductible expenses over income

ii. the excess of capital allowances
(5 marks)

a. Advise the management of SPT on the following:

i. the taxability of its total income for the year of assessment 2021.
ii. the tax implication of distributing another RM200,000 to its unitholders on 15
February 2022.
iii. the deduction of withholding tax to a resident company unit holder, assuming that
the total income of SPT qualifies for exemption.
(5 marks)
(Total: 20 marks)

QUESTION 3 – FEB 2021

Imperial Resident, an approved REIT that is listed in Bursa Malaysia receive rental income
from letting out of a hotel. The hotel has 47 guest rooms and located 47 miles from Kuala
Terengganu. The Statement of Profit or Loss of Imperial Resident for the year ended 31 March
2020 is as follows:

RM RM
Rent from hotel building 1,968,000
Interest income from Singapore banks 230,000
Interest income from bonds issued by the government 125,000
Dividend Income from Cas Ligas Bhd 75,000
2,398,000

Less:
Depreciation 290,000
Tax fees 18,000
Manager’s fees 72,000
Repairs and maintenance 93,000
Renovations 87,000
 Interest on loan (related to purchase government bonds) 20,000
Fire insurance 35,000
Donation to National Kidney Foundation (approved) 18,000
Cash donation to Public Library (S44(8)) 25,000
(658,000)
Profit before tax 1,740,000

Additional information:

1. Capital allowance for the year of assessment 2020 is RM85,000.

Required:

a. Explain the tax treatment of the following items under REIT

i. Rental income
ii. Capital allowance
iii. Business loss
(5 marks)

b. Calculate the total income of Imperial Resident for the year of assessment 2020.
(10 marks)

c. Advise the management of Imperial Resident on the tax implications

i. If it proposes to distribute RM1,400,000 from the total income to its unit holders
on 25 May 2020
ii. If it proposes to distribute another RM100,000 to its unit holders on 20 June
2020
(5 marks)
(Total: 20 marks)
QUESTION 3 – JULY 2021

Sutera Desa REIT (SDR), is an approved real estate investment trust (REIT) which derives
rental income from letting out number of factories in Klang Valley since 2010. To expand the
business, five (5) new factories were acquired in Serdang on 1 September 2017 for RM3
million. The cost includes RM0.5 million related to the cost of land. The factories were let out
starting on 1st September 2019.

The income and expenses related to SDR for the year ended 31 August 2020 is as follows:

RM
INCOME
Rent from factories in Klang Valley 2,500,000
Rent from factories in Serdang 1,500,000
Interest from approved debenture 300,000
Dividends 40,000

EXPENSES
General expenses (allowable) 350,000
Trustee’s fees 70,000
Maintenance and repairs 120,000
Secretarial fees 10,000
Tax filing 12,000
Donation 45,000
Management fees 150,000
 Interest expenses 20,000
Depreciation 80,000
Business zakat 70,000

Note :

1. Capital allowance for investment in Klang Valley is RM75,000. Capital allowance for
factories in Serdang is not yet computed.

2. The total income distributed to unitholders on 10 October 2020, amounted to

RM1,500,000.

3. Interest expenses is wholly related to approved debenture.

Required:

a. Compute the total income of SDR for the year of assessment 2020. Indicate ‘nil’ for
item not taxable or deductible.
(10 marks)

b. Based on the amount of total income distributed to the unitholder, determine the
chargeability of SDR to tax for the year of assessment 2020. Provide detail
computation to support your answer.
(5 marks)

c. Assuming that SDR is having several types of unitholder, briefly explain its
responsibility with regard to the distribution of the dividend and the consequence of
non-compliance with the regulation. Supports your answer with related section of
Income Tax Act 1967.
(5 marks)
(Total: 20 marks)

QUESTION 3 - 2020

A. State whether the following expenses are deductible or non-deductible against the
rental income received by a real estate investment trust (REIT) upon commencement
of its business:

i. Legal fee for establishing the REIT prior to an approval by the Securities
Commission
ii. Administrative expenses prior to the commencement of REIT
(2 marks)

B. Green Property Trust Fund (GPTF) is an approved real estate investment trust, listed
on Bursa Malaysia. GPTF received income from the letting of properties and
investment in fixed deposit. GPTF’s statement of income and expenditure for the year
ended 31 December 2019 is provided below:

RM RM
Income
Rental Income 4,900,000
Interest (Bon Simpanan Malaysia issued by Bank Negara) 200,000
5,100,000
Expenses
Property insurance, quit rent and assessment
- Penang 51,000
- Shah Alam 20,000
Property manager’s fee
- Penang 62,000
Maintenance cost
- Penang 52,000
- Shah Alam 13,000
Interest on loan 17,200 (215,200)
Net profit before tax 4,884,800

Additional information:

1. GPTF owns a factory building in Penang which was let out to a manufacturing
company since 2012. A new factory building in Shah Alam was purchased in
September 2018 which will be rented out in the year 2020.

2. Interest on loan amounting to RM17,200 is related to the purchase of Bon

Simpanan Malaysia issued by Bank Negara Malaysia.

3. For the year ended 31 December 2019, GPTF claimed capital allowances and
industrial building allowances. Capital allowances for the year of assessment
2019 were RM20,000 (Penang) and RM15,000 (Shah Alam). The costs of the
factories are provided below.

Penang (RM) Shah Alam (RM)

Cost of factory 2,000,000 1,500,000

Required:

a. Calculate the total income of GPTF for the year of assessment 2019.

Notes: Your computation should start with the ‘Net profit before tax’ figure,
indicating ‘NIL’ where no adjustment is needed.
(8 marks)
b. Explain the reason(s) for your treatment of the following items:

i. interest on loan (RM17,200)

ii. capital allowances – Shah Alam (RM15,000)
iii. maintenance costs – Shah Alam (RM13,000)
(4 marks)

c. Assuming that GPTF had distributed 95% of its total income to its unit holders
for the year of assessment 2019. Advise the management of GPTF on the
differences between a listed and a non-listed REIT pertaining to the following
matters:

i. the taxability of its chargeable income

ii. deduction of tax under section 109D
(6 marks)
(Total: 20 marks)