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    Week 11Q

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    xinghe666
    One Glove Sdn. Bhd. is a large glove manufacturer in Malaysia. For the year ended 30 June 2021: 1. The company reported a profit before taxation of RM4,870,000 from revenue of RM32,800,000. 2. Certain income and expenses require explanation regarding their tax treatment, including rental income from a warehouse, a donation of gloves, bank loan interest, renovation costs, and training costs for non-employees. 3. The tax advisor is asked to compute the tax payable for the year of assessment 2021, and explain the tax treatment of the specified income and expenses.

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    Week 11Q

    Uploaded by

    xinghe666
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    One Glove Sdn. Bhd. is a large glove manufacturer in Malaysia. For the year ended 30 June 2021: 1. The company reported a profit before taxation of RM4,870,000 from revenue of RM32,800,000. 2. Certain income and expenses require explanation regarding their tax treatment, including rental income from a warehouse, a donation of gloves, bank loan interest, renovation costs, and training costs for non-employees. 3. The tax advisor is asked to compute the tax payable for the year of assessment 2021, and explain the tax treatment of the specified income and expenses.

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    One Glove Sdn. Bhd. is a large glove manufacturer in Malaysia. For the year ended 30 June 2021: 1. The company reported a profit before taxation of RM4,870,000 from revenue of RM32,800,000. 2. Certain income and expenses require explanation regarding their tax treatment, including rental income from a warehouse, a donation of gloves, bank loan interest, renovation costs, and training costs for non-employees. 3. The tax advisor is asked to compute the tax payable for the year of assessment 2021, and explain the tax treatment of the specified income and expenses.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    5 views3 pages

    Week 11Q

    Uploaded by

    xinghe666
    One Glove Sdn. Bhd. is a large glove manufacturer in Malaysia. For the year ended 30 June 2021: 1. The company reported a profit before taxation of RM4,870,000 from revenue of RM32,800,000. 2. Certain income and expenses require explanation regarding their tax treatment, including rental income from a warehouse, a donation of gloves, bank loan interest, renovation costs, and training costs for non-employees. 3. The tax advisor is asked to compute the tax payable for the year of assessment 2021, and explain the tax treatment of the specified income and expenses.

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    Week 11

    Question 1
    One Glove Sdn. Bhd. is one of the largest manufacturers of gloves in Malaysia. The paid-up share capital of
    the company as at 1 July 2020 was RM20 million. Mr. Chong is the founder of the company and he owns 30 %
    of the company’s shares.

    The company’s income statement for the year ended 30 June 2021 is as follows:

    Notes RM'000 RM'000

    Turnover 32,800
    Less: Cost of goods sold 1 10,300
    22,500
    Add: Other income 2 3,400
    25,900
    Less: Expenses:
    Advertising and promotion 3 330
    Bank loan interest 4 3,000
    Professional fees 5 1,392
    Staff benefits 6 15,364
    Miscellaneous 7 289
    Business travelling expenses 655
    21,030
    Profit before taxation 4,870

    N
    o
    1. t Cost of goods sold
    e This includes: RM’000
    s Depreciation of assets 5,450
    : Raw materials used in an approved research project premium 225
    Insurance paid for insuring imported raw materials 240
    Unrealised foreign exchange loss for the purchases of raw materials 32

    2. Other income
    RM’000
    Compensation under a restrictive covenant from a competitor 150
    Fixed deposit interest income 2,050
    Rental income from a warehouse in Malacca (The maintenance and support 1,200
    services have been actively and comprehensively provided on this property)
    3,400

    3. Advertising and promotion


    RM’000
    Advertisements in newspapers 130
    Donation of gloves to the Ministry of Health (Note) 200
    330
    Note: The market value of the gloves donated is RM500,000.
    4. Bank loan interest
    The company is undertaking an expansion project in view of the huge demand for its products. The
    bank loan interest is in respect of a bank loan of RM50 million to finance the following:

    RM’ Million

    Installation of new production lines 10


    Acquisition of a competitor, a glove manufacturer (still in the planning stage) 40
    50

    5. Professional fees
    RM’000
    Tax due diligence fee for the acquisition of a glove manufacturer 60
    Statutory audit fee 32
    Renovation costs on factories (see Note 8) 1,300
    1,392

    6. Staff benefits
    RM’000
    Salaries and wages 14,200
    Leave passages to Sabah for performing staff 24
    Construction of childcare centre (see Note 8) 250
    Staff training costs (Note) 890
    15,364
    Note:
    This amount included practical training cost of RM60,000 in relation to the
    company’s business. It was provided to non-employees who are tax residents.

    7. Miscellaneous
    RM’000
    Entertainment on launching of new products 15
    Annual general meeting expenses 42
    Maintenance expenses of the warehouse in Malacca (see Note 2) 192
    Lease rental of machineries 40
    289

    8. Additional information:
    RM’000
    Current year capital allowances and industrial building allowance (Note) 2,650

    Note:
    This amount excluded capital allowances for qualifying capital expenditure in
    the above Income Statement.
    Required:

    (a) Compute the tax payable of One Glove Sdn. Bhd. for the year of assessment 2021. You are to
    indicate ‘nil’ in your computation for every item that does not require any tax adjustment.
    (18 marks)

    (b) Explain the income tax treatment for the following income and expenses:

    (i) Rental income and its related expenses from the warehouse in Malacca (Note 2 & 7);
    (4 marks)

    (ii) Donation of gloves to the Ministry of Health (Note 3); (2 marks)

    (iii) Bank loan interest (Note 4); (2 marks)

    (iv) Renovation costs on factories (Note 5); (2 marks)

    (v) Cost of practical training provided to non-employees (Note 6). (2 marks)


    [Total: 30 marks]

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