Professional Documents
Culture Documents
TAX320
TAX320
AC/OCT 2006/TAX320
COURSE
TAXATION 1
COURSE CODE
TAX320
EXAMINATION
OCTOBER 2006
TIME
3 HOURS
INSTRUCTIONS TO CANDIDATES
1.
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:
i)
ii)
iii)
iv)
v)
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AC/OCT 2006/TAX320
QUESTION 1
A.
Dr. Hasheem from Syria works as a medical consultant at Syifa' Medical Hospital,
Ipoh. Details of his stay in Malaysia are as follows:
Note
15 September 2000
- 20 December 2000
20 August 2001
1 December 2001
17 December 2001
3 January 2002
1 April 2002
- 1 8 December 2002
15 January 2003
10 March 2003
- 30 November 2003
1 January 2004
1 March 2003
4 and 5
- 27 February 2004
29 May 2004
1 1 January 2005
- 20 January 2005
1 January 2006
7 July 2004
- 30 August 2006
Note:
1.
Dr. Hasheem went to China on 2 December 2001 until 16 December 2001 for
medical course sponsored by his employer.
2.
He went back to Syria on 4 January 2002 to take care of his son who was
suffering from a renal failure until 31 March 2002.
3.
In the afternoon of 19 December 2002 he left for Indonesia for a social visit.
4.
Dr. Hasheem went to United Kingdom for a seminar at the Royal Medical
Hospital from 1 January until 14 January 2003.
5.
6.
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AC/OCT 2006/TAX320
Required:
Determine the resident status of Dr Hasheem for all the relevant years of
assessment, giving reasons for each answer.
(12 marks)
B.
Suzana is a computer science graduate, who has just set up her own computer
service center in June 2005. Suzana approached you for advice in respect of the
following:
(i)
(ii)
(iii)
(4 marks)
(2 marks)
(2 marks)
(Total: 20 marks)
QUESTION 2
Puan Allysa, (aged 40 years old) has been with Macadamis Industries as an accountant
since 1 July 1999. Her service was terminated on 31 July 2005. She received RM45.000 as
compensation for loss of employment and a gratuity of RM25.000. She withdrew RM50.000
from an unapproved fund (70% of the fund was contributed by Macadamis Industries).
The details of her remuneration and benefits from Macadamis Industries in the year 2005
were as follows:
a.
b.
c.
d.
On 1 August 2005, Puan Allysa commenced employment with Cadbury Sdn Bhd as a
Finance Manager for which she was given the following remuneration and benefits for the
year 2005:
a.
b.
c.
d.
e.
f.
Salary RM4.005 per month (after deducting employee's EPF contribution of 11%)
Bonus of RM6,000
A fully furnished bungalow. Cadbury Sdn Bhd paid a monthly rental of RM5.500
inclusive of furniture value at RM2,500.
A brand new Mercedes Benz (costing RM278,000) and a driver were also provided.
The company paid RM650 per month for the driver and RM4,000 for fuel,
Entertainment allowance of RM300 per month,
A servant with a salary of RM500 per month, paid by the employer.
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g.
AC/OCT 2006/TAX320
Leave passages to Tioman Island and New Zealand (with her husband and a
daughter). Costs of air tickets paid by Cadbury Sdn Bhd were RM3.500 and
RM11,750 respectively.
Other information:
1.
Puan Allysa incurred entertainment expenses of RM2.000 from August 2005 until
December 2005.
2.
Required:
Compute the statutory income from employment for Puan Allysa for the year of assessment
2005.
(20 marks)
QUESTION 3
Encik Kamal is the owner of a construction supplies business, Nilam Sdn. Bhd. The financial
year ends on 31 December. The following are the assets used in the business:
1.
A facsimile machine was purchased on 25 May 2004 for RM5,800. It was sold on 1
February 2006 for RM3,200.
2.
A second-hand motor vehicle was bought in February 2003 for RM118,000. The
vehicle was not licensed for commercial transportation and the Inland Revenue
Board, Malaysia has determined that only one-third of its usage was for business
purpose. On 24 October 2006 the motor vehicle was sold for RM80,000.
3.
A lorry was acquired on 25 August 2005 under a hire-purchase terms for which a
deposit of RM36.000 was paid. The cash price was RM120,000. The hire purchase
loan consist of 48 installments of RM2.030 per month. The first installment
commenced on 16 September 2005.
Required:Compute the capital allowances, balancing charges or allowances (if any) that can be
claimed by Encik Kamal for all the relevant years of assessment up to year of assessment
2006.
(Total: 15 marks)
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AC/OCT 2006/TAX320
QUESTION 4
Rozaime owns Rainbow Shoppe which is located in Taman Sri Pelangi, Johor. The
business deals in general trading commenced operation on 1 July 2004. On 31 September
2006, he came to you for some advice regarding his business tax liability. He submitted to
you the Forecasted Trading, Profit and Loss account for the year ended 31 December 2006.
Rainbow Shoppe
Forecasted Trading, Profit and Loss account
for the year ended 31 December 2006
Sales
Less: Cost of goods sold
Gross profit
Add: Other income
Commission received
Dividends received (net)
Interest received
Less: Operating expenses
Salary
Bonus
EPF
Water and electricity
Telephone bills
Transportation expenses
Legal fees
Bad debts
Entertainment expenses
Insurance
Taxation
Depreciation
Sundry expenses
Net Loss
Note
1
RM
2
3
4
5,000
2,980
1.570
5
5
5
6
7
8
9
10
11
12
13
14
15
40,000
8,000
5,280
750
1,982
2,825
5,500
4,000
7,100
4,280
2,570
7,310
505
RM
110,000
42.560
67,440
9.550
76,990
90,102
(13.112)
During the year, Rozaime has withdrawn goods that have not been recorded in the
books. The selling price and the cost of the goods withdrawn were RM4.250 and
RM3,150 respectively.
2.
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3.
AC/OCT 2006/TAX320
RM
2,100
880
ASB
Areca Bhd.
Date Received
2 January 2006
30 April 2006
4.
5.
Salary (RM)
24,000
16.000
Bonus (RM)
4,800
3.200
EPF (RM)
3,168
2.112
40.000
8.000
5.280
Included in the salary, bonus and EPF paid to employees are salary of RM6.000,
bonus RM1,000 and EPF RM770 paid to Muthu, a disabled employee.
6.
One-third (1/3) of the water and electricity was for private use.
7.
Telephone bills:
RM
Rainbow Shoppe
Charges related to his wife's business
8.
1,367
615
Transportation expenses:
RM
Carriage outwards
Rozaime's holiday to Terengganu
9.
2,225
600
Legal fees:
RM
3,500
1,200
800
Bad debts:
RM
Rozaime's friend
Ex-staff
Bankrupt debtors
Specific provision for doubtful debts
600
600
800
2,000
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11.
AC/OCT 2006/TAX320
Entertainment expenses:
RM
4,850
1,050
1,200
Insurance:
RM
1,300
1,800
1,180
Taxation:
RM
14.
Motor vans
Furniture
Office equipment
15.
2,120
450
Depreciation
(RM)
3,200
1,650
2,460
Capital
allowance (RM)
3,600
1,400
2,620
Sundry expenses included medical expenses of RM280 for Muthu (an employee)
who is handicapped and RM225 for Rozaime's son.
Required:
Starting with net profit before tax, compute the statutory business income of Encik Rozaime
for the year of assessment 2006. (Indicate 'nil' or'-' in the appropriate column for any item/s
that does not require any adjustment).
(Total: 20 marks)
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AC/OCT 2006rTAX320
QUESTION 5
Encik Shahir works as an accountant in a private company in Johor Bahru. His wife, Puan
Tasya is a teacher at Sekolah Menengah Datuk Paduka, Johor Bahru (Government School).
They are both residents in Malaysia. For the basis year 2005, their income from the following
sources are:
Encik Shahir:
1.
Monthly salary of RM4.500 net (after deducting RM250 for income tax and
RM520 for EPF). He also received bonus amounting to RM10,540 and monthly
housing allowance of RM500.
2.
80,000
Nil
15,000
4,000
Nil
During the year, Encik Shahir invested in shares and received dividend as follows:
RM4.200 (net) from Petra Bhd. (a company resident in Malaysia). In buying
these shares, he secured a bank loan which he paid RM280 per month
including interest of RM50.
RM3.000 from Pakhini Company (a company resident in Thailand). The total
dividend was remitted to Malaysia in 2005.
4.
Interest of RM5.250 received from savings account in Alliance Bank Bhd (Capital
invested was RM105,000 @ 5% interest per annum).
5.
6.
Encik Shahir is a member of the Malaysian Institute of Taxation. For the basis year
2005, he paid RM150 for the membership fees.
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AC/OCT 2006/TAX320
Puan Tasya:
1.
2.
She received RM600 interests from her saving account with BCB Bank (Capital
invested was RM12,000 @ 5% interest per annum).
3.
Puan Tasya has a house in Kulai, Johor which is rented out. The house was
purchased on 26 July 2004. The following information is related to the house:
Monthly rental
(July - December 2005)
Quit rent
Fire insurance
Upkeep of garden
Repair of broken window (see note)
Renovation
Note:
4.
Puan Tasya also conducted a 2-month extra classes at her home for the PMR
students. She earned RM1,400 per month from the extra classes.
Other information:
1.
Bita
Nizam
Sham
Aiman
2.
Encik Shahir spent RM4.275 and RM1,650 for his father and mother in-law medical bills
respectively.
3.
Life Insurance
Life Insurance
Education Insurance
Premium paid
(per annum)
RM600
RM1.200
RM3.000
On the life /
name of
Sham
Encik Shahir
Aiman
Paid by
Puan Tasya
Puan Tasya
Encik Shahir
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4.
10
AC/OCT 2006/TAX320
Encik Shahir paid zakat on his employment income amounting to RM1,350 for the year
2005 and zakat fitrah of RM30
5.
Puan Tasya purchased a personal computer that cost her RM4.800 and claimed for the
rebate.
6.
7.
Puan Tasya spent RM800 on books and magazines. However, only the RM600
receipt is available.
8.
Puan Tasya has made an election to claim all the children relief.
Required:
Compute the income tax payable for Encik Shahir and Puan Tasya for the year of
assessment 2005.
(Total: 25 marks)
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APPENDIX 1 (1)
AC/OCT 2006/TAX320
Chargeable Income
(RM)
Rate (%)
Tax Payable
(RM)
On the first
On the next
2,500
2,500
On the first
On the next
5,000
5,000
150
On the first
On the next
10,000
10,000
175
300
On the first
On the next
20,000
475
1,050
On the first
On the next
35,000
15,000
13
1,525
1,950
On the first
On the next
50,000
20,000
19
3,475
3,800
On the first
On the next
70,000
30,000
24
7,275
7,200
On the first
On the next
100,000
50,000
27
14,475
13,500
On the first
On the next
150,000
27
27,975
27,000
On the first
250,000
Above
250,000
0
1
25
15,000
100,000
0
25
54,975
28
Self
Wife/husband
Child - basic
Life insurance and approved schemes
8,000
3,000
1,000
6,000 maximum
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APPENDIX 2(1)
AC/OCT 2006/TAX320
Annual Value
RM
Fuel (per ar
RM
50,000
and below
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
Others
Types of BIK
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APPENDIX 2 (2)
AC/OCT 2006/TAX320
Prescribed
Average life span
(D
Motor car
8 years
(2)
5 years
15 years
8 years
10 years
6 years
20 years
10 years
7 years
15 years
Miscellaneous
Mobile telephone
10 years
(3)
(4)
(5)
VALUE OF BENEFITS
(i)
(ii)
(iii)
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APPENDIX 3 (1)
AC/OCT 2006/TAX320
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