Jan 2023
Jan 2023
Jan 2023
COURSE : TAXATION 1
COURSE CODE : TAX467
EXAMINATION : FEBRUARY 2023
TIME : 3 HOURS
INSTRUCTIONS TO CANDIDATES
2. Answer ALL questions in the Answer Booklet. Start each answer on a new page.
3. Do not bring any material into the examination room unless permission is given by the
invigilator.
4. Please check to make sure that this examination pack consists of:
QUESTION 1
ii. List FOUR (4) circumstances that cover the issue of ‘error’ or ‘mistake’ made by
taxpayer.
(4 marks)
B. Sammy, an Indian citizen, arrived in Malaysia in 2016 and works as a Dermatologist for
TCH Hospital in Johor Bharu. His periods of stay in Malaysia were as follows:
Notes:
1. From 1 June till 17 June 2017, he went to New Zealand for a holiday with his
family.
2. From 1 June till 14 September 2018, he was in India to take care of his father who
was undergoing a chemotherapy treatment due to cancer.
4. He resigned as Dermatologist for TCH Hospital in Johor Bharu and left Malaysia
permanently on 15 April 2022.
Required:
Determine the resident status of Sammy for the year of assessments 2016 until 2022.
Support your answers with relevant reasons.
(12 marks)
(Total: 18 marks)
QUESTION 2
Puan Jasmin worked as a Marketing Manager with Seroja Sdn Bhd since 1 July 2018. Since
the country was in the pandemic phase due to covid-19 outbreak, the company has suffered
heavy losses. Therefore, Puan Jasmin was terminated from her employment on 31 August
2022 and she received compensation for loss of employment amounting RM80,000 and
RM30,000 as payment for gratuity.
a. Monthly salary of RM6,689 after deducting EPF contribution of 11%, Zakat RM300 and
monthly tax deduction of RM576.
b. Monthly entertainment allowance of RM1,000 and she spent one fourth (1/4) of the
allowances to entertain her client.
d. On 15 July 2019, the company offered 10,000 units of share at RM1.70 per unit, with
the market price of RM2.40 per unit. She exercised the offer on 1 May 2022 when the
market value of the share was RM2.50 per unit.
e. She received a fully furnished bungalow until 31 August 2022. The defined value of the
house was RM3,200 monthly including the cost of furniture RM750. Puan Jasmin was
required to pay a nominal rental of RM1,200 per month. She received a domestic servant
and gardener which the monthly salary paid by the employer were RM700 and RM600,
respectively.
f. A brand-new car, Honda CR-V costing RM171,000 together with a driver were provided
to Puan Jasmin starting from January 2020. The driver received a monthly salary
amounting to RM1,100 per month.
g. The company provided her with credit card facilities with a total bill of RM8,700, where
she spent 20% on private purchases and the balance related to her duties. The annual
membership fee was RM200.
h. When the travelling restrictions has been abolished, in January 2022 she went for her
first vacation to London amounting to RM8,500. The company paid for her second
vacation expenses to Cameron Highland at a cost of RM3,400 in May 2022.
i. She withdrew RM60,000 from the unapproved fund, of which 40% of total withdrawal
was from her contribution.
Required:
Calculate the statutory employment income of Puan Jasmin for the year of assessment 2022.
(Total: 15 marks)
QUESTION 3
A. Describe THREE (3) conditions for ex-convict remuneration which is allowable for
double deduction.
(3 marks)
B. Vicky, a sole proprietor operates Perniagaan Mega Plastik, a food container box shop
in Seremban. The following is the Statement of Profit or Loss for the year ended 31
December 2022:
Notes:
1. Included in the cost of sales were:
RM
Stock obsolescence written-off 8,500
Compensation to Silicon Trading (competitor) to restrict competition 15,000
Goods taken by Ratha Dewi (Vicky’s wife) for her own use at cost of
RM4,500. The market value of the goods was RM7,800. The
transaction has recorded in the cost of sale.
5. Included under finance cost was interest on a loan taken for an investment in CIMB Bank
amounting RM15,000.
8. Other information:
RM
Current year capital allowance 22,600
Unabsorbed business loss brought forward from prior year of
assessment 21,500
Required:
Calculate the statutory business income of Perniagaan Mega Plastik for the year assessment
2022. Indicate ‘Nil’ for any item that does not require any adjustment.
(17 marks)
(Total: 20 marks)
QUESTION 4
A. Briefly explain the expansion of tax relief for “medical expenses for serious diseases” on
mental health examination.
(3 marks)
B. Saleh and Nuha, are Malaysian citizen and tax residents. They have been married for
23 years. They are blessed with two children ages between 20 and 11 years old. The
eldest, Matin is currently pursuing his study in Diploma of Geomatic Science, UiTM
Perlis. The youngest child, Miranda, who is suffering from Autism Spectrum Disorders
(ASDs) and serious neurological disease.
Due to economic problem, Saleh who is working as a Human Resource Manager since
1 July 2005 was retrenched on 31 July 2022. He received a compensation for loss of
employment amounted to RM200,000. Meanwhile, Nuha has been running two
businesses, Boutique and Cafe for over 10 years.
The details of their income and expenses for 2022 are as below:
Saleh
RM
Annual salary (gross) 59,500
Travelling allowance (monthly) 1,000
RM
Monthly rental* 4,000
Advance rental (January 2023) 4,000
Repair of tiles (incurred on 15 July 2022) 2,500
Porch enhancement (incurred on 25 August 2022) 15,000
Quit rent and assessment (yearly) 2,200
* The condominium was rented out effective from 1 April 2022.
Nuha
Boutique Cafe
RM RM
Adjusted income/(loss) (2,000) 15,500
Balancing charge 800 8,200
Capital allowance 1,200 5,000
Unabsorbed capital allowance b/f - 3,000
© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL
CONFIDENTIAL 7 AC/FEB 2023/TAX467
Note: Nuha also received an annual salary (gross) for these businesses amounted
to RM108,000.
2. In August 2022, she received a royalty from book published titled ‘Tycoon and
Future’ amounted to RM45,000.
Required:
Determine the income tax payable by Saleh and Nuha for the year of assessment 2022,
assuming Nuha does not elect for joint assessment.
(22 marks)
(Total: 25 marks)
QUESTION 5
B. Vortex Five Sdn Bhd incurred the following expenditures to construct a factory in Buloh
Kasap, Segamat:
RM
Cost of land 245,000
Legal fee and stamp duty (20% was related to land) 22,000
Consultant fee and building plan 10,000
Architect charges 9,000
Building plan approval 5,000
Cost of demolishing squatter houses 70,000
Construction cost 900,400
Electrical wiring and fittings 34,200
Drainage and irrigation 30,000
The construction works were completed in April 2019. Vortex Five Sdn Bhd only started
to use the building for its production beginning August 2019. The space utilisation of the
industrial building was as follows:
Administration office 8%
Showroom & gallery 7%
Production department 74%
Storage of raw materials 11%
Vortex Five Sdn Bhd closes its accounts on 31 July every year.
On 1 November 2019, the business acquired two units of machines (Alpa-123) costing
RM85,000 each. The machines were used in the production until 31 October 2020. The
machines were breaking down for seven months. During that period the repair work was
carried down. The machine has been used immediately after the repair until today.
A new lorry was acquired on 15 June 2021 costing RM180,000 under a hire purchase
term. The business paid RM50,000 as deposit in June 2021. Beginning 1 July 2021,
Vortex Five Sdn Bhd paid an equal monthly instalment of RM3,500 for 40 months.
Required:
The following tax rates and allowances are to be used in answering the
questions:
Income Tax Rates
(a) Companies 24%
On 5,000 0 0
Next 15,000 1 150
On 20,000 150
Next 15,000 3 450
On 35,000 600
Next 15,000 8 1,200
On 50,000 1,800
Next 20,000 13 2,600
On 70,000 4,400
Next 30,000 21 6,300
On 100,000 10,700
Next 150,000 24 36,000
On 250,000 46,700
Next 150,000 24.5 36,750
On 400,000 83,450
Next 200,000 25 50,000
On 600,000 133,450
Next 400,000 26 104,000
On 1,000,000 237,450
Next 1,000,000 28 280,000
On 2,000,000 517,450
Exceeding 2,000,000 30
Benefits-in kind (BIK) scale rates as per Inland Revenue Board (IRB) guidelines.
The value of the car benefit equivalent to half of the above rates is taken if the
car provided is more than five years old.
Where a driver is provided, the value of benefit is fixed at RM600 per month.
Personal
reliefs
RM
Self 9,000
Disabled self, additional 6,000
Medical expenses expended on parents (maximum) 8,000
Medical expenses expended on self, spouse or child with serious (maximum) 8,000
disease, including:
medical examination up to RM1,000
vaccination up to RM1,000
fertility treatment
Basic supporting equipment for disabled self, spouse, child or (maximum) 6,000
parent
Study course fees for skills or qualifications (up to RM2,000 for (maximum) 7,000
upskilling or self enhancement course
Lifestyle allowance (taxpayer, spouse and children) (maximum) 2,500
Lifestyle,additional (purchase of personal (maximum) 2,500
computer/smartphone/table)
Healthy lifestyle (sports equipment, entrance fee to sport activity, (maximum) 500
etc)
Spouse relief 4,000
Disabled spouse, additional 5,000
Child - basic rate (each) 2,000
Child - higher rate (each) 8,000
Disabled child (each) 6,000
Disabled child, additional-studying full time in higher education (each) 8,000
Childcare (below six years old) (maximum) 3,000
Breastfeeding equipment (maximum) 1,000
Life insurance premiums (private sector) (maximum) 3,000
Contributions to approved funds (EPF) (maximum) 4,000
Life insurance (public service) (maximum) 7,000
Private retirement scheme contributions, deferred annuity (maximum) 3,000
Premiums
Medical and/or education insurance premiums for self, spouse or (maximum) 3,000
child
Deposit for a child into the National Education Savings Scheme (maximum) 8,000
(SSPN)
Contribution to Social Security Organisation (SOCSO) (maximum) 350
Domestic travelling expenses (local tour package, (maximum) 1,000
accommodation& entrance fee)
Rebates
Chargeable income not exceeding RM35,000 RM
Individual – basic rate 400
Additional rebate when wife/husband relief is 400
claimed
Departure levy for umrah travel/religious travel for Flight Class Destination/rate
other religions ASEAN Others
RM RM
Economy 8 20
Business/First 50 150
Zakat/fitrah Amount incurred
Agriculture allowance
Buildings for the welfare of or as living
accommodation for farm employees Nil 20
Other buildings used in the business Nil 10
All other qualifying agricultural expenditure Nil 50