AC/JAN 2024/TAX467

UNIVERSITI TEKNOLOGI MARA

FINAL EXAMINATION

COURSE TAXATION 1
COURSE CODE TAX467
EXAMINATION JANUARY 2024
TIME 3 HOURS

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of five (5) questions.

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.

Please check to make sure that this examination pack consists of:

i) the Question Paper

ii) a five-page Appendix 1
iii) an Answer Booklet - provided by the faculty

5. Answer ALL questions in English.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

This examination paper consists of 8 printed pages
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QUESTION 1

A. i. Ardini plans to dispose of all the unnecessary documents including bills and
receipts pertaining to her tax matters for the year assessment 2020 since she
had already completed the e-filling process for that particular year.

Advise Ardini on the above matters with regard to the Income Tax Act 1967.

(2 marks)

ii. Alan, a Chinese citizen runs a business in Kuala Lumpur. In January 2023, he
employed two Malaysian citizens, Zaki and Lutfi to assist him in his business. All
of them are tax residents in Malaysia for the year of assessment 2023.

Briefly explain two (2) responsibilities of Alan, Zaki, and Lutfi as taxpayers.

(4 marks)

B. George Morano is an Australian who is currently employed by Go&Pay Sdn Bhd, as a

software engineer. His periods of stay in Malaysia are as follows:

Year Period of stay Remarks

2018 15/4/2018-07/08/2018
2019 23/09/2019-13/12/2019 i) He returned to Sydney Australia to
14/12/2019-22/12/2019 celebrate the holidays with his family from
23/12/2019 until 05/01/2020.
2020 06/01/2020-31/07/2020

2021 07/03/2021 -15/05/2021 i) He went for training in Turkey from

13/09/2021 -31/12/2021 16/05/2021 until 05/09/2021.
ii) He then continues his stay for one week
from 06/09/2021 until 12/09/2021 to attend
his friend's wedding.
2022 01/01/2022-13/02/2022 i) He went back to Australia on 14/02/2022 to
take care of his brother who was diagnosed
with lung cancer.
2023 12/04/2023-30/10/2023 i) His contract expires on 30 October 2023,
and he left Malaysia for good.

Required:

Determine the resident status of George Morano for the year of assessment 2018 until
the year of assessment 2023. Support your answers with reasons.
(12 marks)
(Total: 18 marks)

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QUESTION 2

Khairil has been employed by Ajang Bahtera Sdn Bhd since 1 October 2013 as a Human
Resource Director. He retired from the company on 31 October 2023 at the age of 55 years
old. Due to his retirement, he was paid a gratuity of RM578,000.

For the basis year 2023, he received the following remuneration package from his employer:

1. A monthly director fees of RM15,500 after EPF deduction of 11%, zakat deduction of
RM500, housing loan of RM2.000 and scheduler tax deduction (STD) of RM450.
2. A housing loan amounting to RM400.000 from the company and was charged with 3%
interest per annum. The funds for the housing loan were obtained from the loan taken
by the company from RHBB Berhad which charges an interest rate of 7% per annum.
In 2023, the company paid interest to the bank amounting to RM14,000.
3. A gift voucher of RM1,000 from the company due to the Hari Raya Aidilfitri festival.
The voucher was given based on his length of service to the company.
4. A six-year-old Honda Accord at the cost of RM180,000 of which half of the usage was
for personal usage. The company also provides him with a driver with a monthly salary
ofRM1,500.
5. Reimbursement of the servant's annual salary amounted to RM8,500 which was
employed by him.
6. A semi-furnished terrace house with basic furniture plus air-conditioner, curtains, and
carpet with a rental value of RM1,800 per month including the rental value of the
furniture of RM500 until August 2023. He also incurred RM3.500 for the repair and
maintenance of the house.
7. An individual membership of A' Famosa Golf Club. During the year, the company paid
entrance fees of RM4,500 and a monthly subscription of RM500.
8. A scholarship amounted to RM85.000 to his son who is studying in the UK.

Required:

Compute the statutory employment income of Khairil for the year of assessment 2023.

(Total: 15 marks)

QUESTION 3

A. Discuss briefly three (3) conditions that must be fulfilled by the business in order to
claim double deduction for the remuneration paid to an ex-drug dependent.
(3 marks)

B. Kamal Chin owns the Best Excellence Centre, a business that provides motivation
and counseling services. The following is the statement of Profit or loss for the year
ended 31 December 2023.

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Best Excellence Centre

Statement of Profit or Loss for the year ended 31 December 2023
Note RM RM
Income
Fees 1 320,400
Add: Other income
Dividend Income 12,000
Gain on disposal of the photocopy machine 8,000
Gross Profit 340,400
Less: Operating expenses
Salary, bonus, and EPF 2 164,300
Repair and maintenance 3 15,400
Entertainment expenses 4 3,400
Legal fees 5 2,000
Bad debts 6 5,300
Advertising 7 4,100
Interest on loan 8 2,500
Stationeries 9 3,200
Donations 10 10,000
Depreciation 8,500 (218,700)
Net Profit 121,700

Additional information:

1. Kamal Chin provided a free of charge of a motivational talk to his son's office worth
RM2,000. The transaction was not recorded in the book of accounts.

2. Salary, bonus and EPF consist of the following:

Salary Bonus EPF

RM RM RM
Kamal Chin 48,000 4,000 10,000
Consultants 72,000 4,000 15,000
Clerk 12,000 1,000 2,300
(disabled)
132,000 9,000 27,300

Repair and maintenance consist of:

RM
Kamal Chin's wife's car 7,000
Repair of business premise leakage 8,400
15,400
Entertainment expenses comprise:
RM
Hari Raya gathering for staff and their families 2,000
Kamal Chin's niece's baby shower 1,400
3,400

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5. Included in the legal fees was RM1,200 being penalty for traffic offences.

6. Bad debts comprise:

RM
General provision for bad debts 2,000
Specific provision for bad debts 3,300
5,300
7. Advertising comprises:
RM
Advertising fee to promote business activities 1,500
Placement of signboard at the business premise 2,600
4,100

Interest on loan of RM24,000 was taken by Kamal Chin and the loan was used to
purchase business assets.

Stationeries comprise:
RM
Personal supplies 900
Business supplies 2,300
3,200
10. Donation consists of:
RM
Food contribution to pitiable families 2,000
Donation to Rumah Anak-anak Yatim (approved institution) 6,000
Cash donation to public school library [Section 44(8)] 2,000
10,000
Other information:

i) Adjusted business losses for the year of assessment 2022 amounting to RM10,100.

ii) Capital allowance and balancing charges for the year of assessment 2023 amounting
to RM18,300 and RM6.500 respectively.

Required:

Compute the statutory business income of Best Excellence Centre for the year of assessment
2023. Indicate 'Nil' for any item that does not require any adjustment.
(17 marks)
(Total: 20 marks)

QUESTION 4

A. Discuss briefly two (2) circumstances that entitle individual tax payer to claim spouse
relief under joint assessment.
(3 marks)

B. Roslan is a pensioner, while his wife Hanani is a marketing director of Well Health Sdn
Bhd. Both are tax residents in Malaysia for the year assessment 2023. They were
blessed with 4 children:
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Izan 21 years old and physically disabled. He also had been diagnosed with a
specific learning disability.

Zaiton 20 years old and is studying in London with full sponsorship of RM35,000
per semester from the University of Kuala Lumpur. Roslan incurred
RM5,000 for Zaiton's maintenance.
Aina 19 years old and was married in July 2022 while pursuing a diploma course
at UiTM. The maintenance cost incurred by Roslan was RM6,300 in 2023.

Roza 15 years old and had been legally adopted by Roslan and Hanani.
Expenses incurred by Roslan for her was RM1,400.

The following are income received by them for the basis year 2023:

Roslan:

a) Pension income RM8.600

b) A dividend income of RM110,000 was received from an investment outside
Malaysia and this amount was not remitted to Malaysia.
c) Roslan owns a shop lot in KB Mall, Kota Bharu, and was rented out on 1 July
2023 at RM3.000 per month. Below are the expenses incurred on the shop lot:

RM
Quit rent (per annum) 3,600
Repairs and maintenance (In December) 4,500

Advertisement 1,300

d) Roslan received a royalty income of RM55.000 from his published articles.

e) In March 2023, he gave a talk on entrepreneurship to university students under
the Business Administration course in UiTM and was paid an honorarium of
RM15,000.

Hanani:

a) A monthly income of RM10,600 after deducting EPF of 11%.

b) She is also a part-time lecturer earning a monthly income of RM1,500 since
April 2023.
c) She had fixed deposit savings at Bank Rakyat amounting to RM200,000. The
interest earned from the savings was RM10,000. She also received interest
from her savings at a bank in London amounting to RM30,000 which was
remitted to Malaysia in June 2023.

The following are expenses incurred by them for the basis year 2023:

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Roslan Hanani
(RM) (RM)
Purchased a wheelchair for Izan 3,500

They incurred several medical expenses:

- Izan's special treatment for learning disability 4,500
- Father's nursing home fees 3,800
- Mother's eye treatment 500
- Father's medical treatment (only produce an 1,500
original receipt for RM1,300)

Online books and journals 1,200 1,750

Sports Equipment and gym membership 355
Registration fees in sports competition 150
Purchase of laptop for Roza 3,300
Monthly bills on internet subscription 1,500
Life insurance premium 3,000 3,300
Education insurance 1,500 3,000
Donation:
- Cash donation to an orphanage in Indonesia 5,500
- 10 units of laptop to rumah anak yatim 15,000
Raudhah
Zakat 1,000 3,000

Required:

Compute the income tax payable by Roslan and his wife, Hanani for the year of assessment
2023.
(22 marks)
(Total: 25 marks)

QUESTION 5

A. A person who incurs qualifying agriculture expenditure for the purpose of agriculture
business can claim an agriculture allowance. However, under certain circumstances,
the persons will not be entitled to claim an agriculture allowance.

Required:

Discuss two (2) circumstances for non-entitlement of agriculture allowance.

(3 marks)

B. Reka Sdn Bhd manufactures specialty food and beverages, commenced its business
on 1 June 2020, and makes up its account to 31 December annually. It has been
operating its business in a rented factory.

Reka Sdn Bhd then built a factory in Sungai Petani with the following costs:
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Capital expenditure RM
Cost of demolishing old industrial building 250,000
Construction cost 2,200,000
Architect fees 60,000
Cost of internal road and drainage system 400,000
Wiring and plumbing 50,000

The building was completed and put into use on 1 March 2021. Reka Sdn Bhd used
75% of the built-up area as a factory, 10% as an administration office, and the balance
as a recreation room for factory workers.

Due to the expansion of its business, Reka Sdn Bhd acquired the following assets:

a. A sealing machine

On 1 April 2021, the company purchased a sealing machine for RM95.000. The
cost of installing the sealing machine was RM5.000 and the cost of preparing
the site to install it was RM10,000. On 15 October 2023, the machine was sold
for RM70.000.

b. Motor vehicle

On 1 March 2022, the company acquired a motor vehicle (which was not
licensed for commercial vehicles) under hire purchase for business purposes.
The cash price was RM147,600. The company traded its old non-commercial
vehicle for RM36.000 and agreed to pay a monthly installment of RM3.500 for
36 months commencing on 28 March 2022.

Required:

Compute the Schedule 3 allowances and balancing charge (if any) for all the relevant
years of assessment up to year of assessment 2023.
(19 marks)
(Total: 22 marks)

END OF QUESTION PAPER

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 APPENDIX 1 (1) AC/JAN 2024/TAX467

• The following tax rates and allowances are to be used in answering the
questions:

"Chargeable Income Rate% Cumulative Tax

RM RM
On 5,000 0 0
Next 20,000 1 150
On 20,000 150
Next 15,000 3 450
On 35,000 600
Next 15,000 6 900
On 50,000 1,500
Next 20,000 11 2,200
On 70,000 3,700
Next 30,000 19 5,700
On 100,000 9,400
Next 300,000 25 75,000
On 400,000 84,400
Next 200,000 26 52,000
On 600,000 136,400
Next 1,400,000 28 392,000
On 2,000,000 528,400
Exceeding 2,000,000 30

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 APPENDIX 1 (2) AC/JAN 2024/TAX467

• Benefits-in kind (BIK) scale rates as per Inland Revenue Board (IRB) guidelines.

Cost of car when new Annual value of BIK Annual prescribed

benefit of petrol
RM RM RM
Up to 50,000 1,200 600
50,001 - 75,000 2,400 900
75,001 - 100,000 3,600 1,200
100,001 - 150,000 5,000 1,500
150,001 - 200,000 7,000 1,800
200,001 - 250,000 9,000 2,100
250,001 - 350,000 15,000 2,400
350,001 - 500,000 21,250 2,700
500,001 - and above 25,000 3,000

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.

Household furnishing, apparatus and

appliances

Types of BIK Annual value of BIK

RM
Semi-furnished with furniture in lounge,
dining room or bedroom 840

Plus one or more of the following:

Air-conditioners, curtains, carpets 1,680

Plus one or more of the following:

Kitchen equipment, crockery, utensils, appliances
i.e fully furnished 3,360
Domestic help 4,800
Gardener 3,600

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Personal Relief (YA2023)

Notes RM
Self 9,000
Disable individual - additional relief to self 6,000
Spouse 4,000
Disabled spouse - additional spouse relief 5,000
Child:
a) Per unmarried child
- below 18 years old each 2,000
- over 18 years old
s receiving full-time instruction at an each 8,000
establishment of higher education (approved
by the government) in respect of:
- diploma level and above in Malaysia, or
- degree level and above outside
Malaysia,
OR serving under articles or indentures
in a trade or profession in Malaysia

b) Per physically/mentally disabled child each 6,000

- unmarried
- AND IF over 18 years of age receiving full-time
instruction at an establishment of higher education each 8,000
(approved by the government) in respect of:
- diploma level and above in Malaysia; or
- degree level and above outside Malaysia,
OR serving under articles or indentures in a trade
or profession in Malaysia
Life insurance premiums or voluntary contributions to (maximum) 3,000
Employee Provident Fund (EPF) or for both
Voluntary or obligatory EPF contributions and (maximum) 4,000
contributions to pension schemes by individuals or
public servants
Private retirement scheme contributions and deferred (maximum) 3,000
annuity scheme premiums (until YA 2025)
Insurance premiums for education or medical benefits (maximum) 3,000
Expenses on medical treatment, special needs or carer (maximum) 8,000
expenses for parents (evidenced by medical
certification).
Employee's contribution to Social Security Organisation (maximum) 350
(SOCSO) and Employment Insurance System
Medical expenses for: (maximum) 10,000
S self, spouse or child suffering from a serious
disease;
s expenses incurred on fertility treatment;
s vaccination up to RM1.000 (including fees of up to
RM1,000 incurred by self, spouse or child for
complete medical examination, COVID-19 detection
test and mental health examinations or
consultations);

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S diagnostic assessment of learning disability or early

intervention program or rehabilitation treatment for
learning disability up to RM4,000 (in respect of the
taxpayers' child who is on age eighteen and above.)
Fee expended for: (maximum) 7,000
S any course of study up to tertiary level, other than a
degree at Masters or Doctorate level, undertaken for
the purpose of acquiring legal, accounting, Islamic
financing, technical, vocational, industrial, scientific
or technological qualification or skill
s any course of study for a degree at Masters or
Doctorate level undertaken for the purpose of
acquiring any qualification or skill
S any course of study undertaken for the purpose of
upskilling and self-enhancement, limited to
RM2.000 (Until YA 2023, extended to YA 20261

Purchase of supporting equipment for self (if a disabled (maximum) 6,000

person) or for disabled spouse, child or parent
Lifestyle relief consolidated with the following: (maximum) 2,500
S purchase or subscription of books, journals,
magazines, newspaper and other similar
publications (in the form of hard copy or electronic)
for the purpose of enhancing knowledge
S purchase of personal computer, smartphone or
tablet
s purchase of sports equipment and gym
memberships
V internet subscription
Purchase of breastfeeding equipment (once in every 2 (maximum) 1,000
YAs)
Sports Equipment and Activities relief for: (maximum) 500
s Cost of purchasing sports equipment, entry / rental
fees for sports facilities and registration fees for
sports competition

Costs related to electric vehicle charging facilities, (maximum) 2,500

including installation, rental, hire-purchase of
equipment, or subscription fees

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Rebates
Chargeable income not exceeding RM35.000 RM
Individual - basic rate 400
Additional rebate when wife/husband relief is claimed 400
Departure levy for umrah travel/religious travel for other Actual amount expended
religions
Zakat/fitrah Actual amount expended

Rate of Capital Allowances

Initial allowance Annual allowance
(IA) (AA)
Rate % Rate %
Industrial buildings 10 3
Plant and machinery - general 20 14
Motor vehicles and heavy machinery 20 20
Office equipment, furniture and fittings 20 10
Computers 20 20

Agriculture allowances
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 Nil 50
expenditure

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