Exercises On Employment Income

ACN3411 – TAXATION 1
EXERCISES ON EMPLOYMENT INCOME
Q.1
State the circumstances referred to in Section 13(2) of the Income Tax Act under which
employment income is deemed derived from Malaysia.
Q.2
Malik is a captain of a well-known restaurant in Kuala Lumpur. In the year 2023 besides
receiving the normal monthly salary, he also received the following:
a. Free food from the restaurant valued at RM1,200

b. 3 pair of suit worth RM6,000 provided by the management. He is required to wear
them on duty
c. Tips amounting to RM800 from customer who shop at the restaurant.
d. RM300 from the management for being ‘worker of the year’
e. A reward of RM5000 from a customer for the safe return of documents left
behind at the restaurant.
f. A lucky draw prize in the form of a return air ticket for two to Paris worth
RM4000. The draw was made during the company’s annual dinner.
Explain with reason, whether the above receipts are liable to tax.
Q.3
Mr. Allan Das signed a contract of service in Thailand with a multi national company.
The terms of his contract are:
 He is stationed in Malaysia to render services to the company’s clients;

 He is required to spend one month a year in Singapore to develop the company’s
business;
 He is entitled to one month leave in each year;
 His monthly salary is RM20,000 payable in Thailand.
Mr. Allan DAs came to Malaysia on 1 st January 2023 for an employment contract for 5
years. He was away for a holiday in Singapore from 1st October 2023 to 11 October 2023.
He was on leave from 15 December to 28 th December 2023. His income for the year
ended 31st December 2023 are as follows:
Salary RM20,000 per month

Entertainment allowance RM1,000 per month
Yus/2024 1
Required:
Explain whether Mr. Allan Das is liable to Malaysian tax? If so, state the gross income on
which Malaysian tax is chargeable.
Q. 4
En. Ali has been working with Puncak Niaga Bhd since 1 st May 2015. His service was
terminated on 31st October 2023 under the Voluntary Redundancy Scheme, He was paid
RM76,000 as compensation for loss of job. His salary and allowances during the year
were as follow:
Salary RM6,000 per month

Traveling allowance RM600 per month
Required:
Determine the total income from employment which is liable to tax in year 2023.
Q. 5
Mr. Musa aged 53, is the factory Manager of Best Motor Sdn. Bhd. which manufactures
electronic components for the local market and for export. He has been working with
Best Motor Sdn. Bhd. for the past 15 ½ years. Mr. Musa opt for early retirement on 31
October 2023 and was received RM350,000 gratuity from his employer. Other details of
his remuneration for the year 2023 are as follows:
RM
Salary 12,000 per month
Incentive bonus 1 ½ month salary
Traveling allowance RM1000 per month
Air passage for him and 3 of his family members:
Kuching 2,500
Pulau Redang 1,800
Padang, Indonesia 5,600 (includes RM900 for
hotels)
Rental of fully furnished accommodation 7,500 per month (inclusive of
(1/5 of the accommodation is used to entertain the RM1,500 for furniture)
company’s guest)
Utility paid by company 4,000
Dental expenses for him and his family 2,500
Car (6 years old) 150,000 (cost when new)
Fuel 4,800
Yus/2024 2
In addition to the above, the company also provided Mr. Musa with a driver (salary
RM1,000 per month) and a servant (salary RM850 per month). The company also paid
for his life insurance premium amounting to RM4,500 per year.
During the year the second child was hospitalized in Subang Jaya Medical Center. The
hospitalization costs amounting to RM8,800 was paid by the company.
Required: Compute the gross employment income of Mr. Musa for the year assessment
2023.
Yus/2024 3
Q.6
Miss Aliya was employed as a Marketing Executive of TwinTech Sdn. Bhd since 1 June
2010. She was promoted to Marketing Manager on 1 July 2013 and was transferred to a
holding company SyberTech Sdn. Bhd.
Miss Aliya resigned from the company on 30th November 2020 at the age of 45 to start
her own business. She was paid gratuity amounting to RM70,000. The company granted
her a paid leave up to 31 January 2021. Her remunerations for 2020 are as follows:
 Salary RM6,000/month
 Leave pay RM6,000/month
 Bonus RM15,000
 Entertainment allowance RM1,500/month
 Servant provided by the employer up to 30 November 2020 RM500/month
 Medical expenses paid by the employer RM5,500
 Air Passage to UK RM5,000
 A Proton Perdana car (costing RM132,000) provided by the employer includes fuel
 Fully furnished accommodation provided by the employer up to 30 November 2020
 Rental paid by the employer RM 3,000 per month (excluding RM500 per month for
furniture)
Other information:
1. Miss Aliya spent RM15,000 on entertainment of which it is agreed by the IRB

that 1/3 is private in nature
2. Rental paid to employer for the house provided was RM600 per month
You are required to calculate the total income from employment for Y/A 2020.
Answer:
Miss alia tax computation for YA 2020
SEC 4 (a)..Business income…..
SEC. 4 (b)..Employment income

Sec 13(1) a
 Salary…11 * 6000 66,000
 Paid leave..2*6000 12,000
 Bonus… 15,000
 Entertainment allowance …1500 * 11 16,500
 Gratuity…… 70,000
Exempted …1,000 * 10 years (10,000) 60,000
Gross income sek 13(1)a 169,500
Yus/2024 4
Sec. 13(1)b…BIK
 Servant……400* 11 4,400
 Medical exempted
 Leave passage to UK….5,000
Exemption………….max(3,000) 2,000
 Car..(cost 132,000).. 2500 *11/12……
 Fuel…….1,500 *11/12………………………
 Furniture…3,360 *11/12…………………._________ XXXXXX
Sec 13(1)c.. Accomodation

 30% @ 169,500 = 50850 *11/12= 46,613….
 Defined value…3,000 *11 = 33,000
Lower…………………………………………………………………………….33,000
Gross income……………………………………………………………… 212,567
Less Allowable expenses:
 Entertainment …2/3 *15,000……. (10,000)
 Rental paid to employer…500 *11…(5,500)………(xxxxxxxx)
Adjusted income from employment……………………………….197,067
Other: Investment income

Sec 4 (c)….dividend and interest
Sec 4 (d) rental and royalty
Sec 4(e) pension and annuity
Yus/2024 5

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ACN3411 – TAXATION 1

EXERCISES ON EMPLOYMENT INCOME

a. Free food from the restaurant valued at RM1,200

 He is stationed in Malaysia to render services to the company’s clients;

Salary RM20,000 per month

Salary RM6,000 per month

1. Miss Aliya spent RM15,000 on entertainment of which it is agreed by the IRB

SEC. 4 (b)..Employment income

Sec 13(1)c.. Accomodation

Other: Investment income

Sec 4(e) pension and annuity

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