PaperFTX(MYS)

FOUNDATIONS IN ACCOUNTANCY

Foundations in
Taxation
(Malaysia)
Pilot Paper

Time allowed:
Writing: 2 hours

This paper is divided into two sections:

Section A – ALL TEN questions are compulsory and MUST be
attempted
Section B – ALL NINE questions are compulsory and MUST be
attempted
Tax rates and allowances are on pages 2–4

Do NOT open this paper until instructed by the supervisor.

This question paper must not be removed from the examination hall.

The Association of Chartered Certified Accountants

SUPPLEMENTARY INSTRUCTIONS

1 Calculations and workings should be made to the nearest RM.

2 All apportionments should be made to the nearest whole month.
3 All workings should be shown.

TAX RATES AND ALLOWANCES

The following tax rates, allowances and values to be used in answering the questions.

Income tax rates

Resident individuals
Chargeable income Rate Cumulative tax
RM % RM
First 2,500 (0 – 2,500) 0 0
Next 2,500 (2,501 – 5,000) 1 25
Next 15,000 (5,001 – 20,000) 3 475
Next 15,000 (20,001 – 35,000) 7 1,525
Next 15,000 (35,001 – 50,000) 12 3,325
Next 20,000 (50,001 – 70,000) 19 7,125
Next 30,000 (70,001 – 100,000) 24 14,325
Exceeding 100,000 26

Resident company
Paid up ordinary share capital First Excess over
RM500,000 RM500,000
RM2,500,000 or less 20% 25%
More than RM2,500,000 25% 25%

Non-residents
Company 25%
Individual 26%

2
 Personal reliefs and allowances

RM
Self 9,000
Disabled self, additional 6,000
Medical expenses expended for parents (maximum) 5,000
Medical expenses expended on self, spouse or child with serious disease,
including up to RM500 for medical examination (maximum) 5,000
Basic supporting equipment for disabled self, spouse, child or parent (maximum) 5,000
Purchase of sports equipment (maximum) 300
Fees expended for skills or qualifications (maximum) 5,000
Expenses on books for personal use (maximum) 1,000
Spouse relief 3,000
Disabled spouse, additional 3,500
Child (each) 1,000
Child – higher rate (each) 4,000
Disabled child (each) 5,000
Disabled child – additional (each) 4,000
Life insurance premiums and contributions to approved funds (maximum) 6,000
Deferred annuity premiums (maximum) 1,000
Medical and/or education insurance premiums for self, spouse or child (maximum) 3,000
Purchase of a personal computer (maximum) 3,000
Broadband subscription (maximum) 500
Deposit for a child into the National Education Savings Scheme (maximum) 3,000

Rebates

Chargeable income not exceeding RM35,000 RM

Individual 400
Rate for an individual entitled to a deduction in respect of a spouse or former wife 800

Value of benefits in kind

Car scale

Cost of car Prescribed annual value

(when new) of private usage of car
RM RM
Up to 50,000 1,200
50,001 to 75,000 2,400
75,001 to 100,000 3,600
100,001 to 150,000 5,000
150,001 to 200,000 7,000
200,001 to 250,000 9,000
250,001 to 350,000 15,000
350,001 to 500,000 21,250
500,001 and above 25,000

The value of the car benefit equal to half the prescribed annual value (above) is taken if the car
provided is more than five (5) years old.

Where a driver is provided by the employer, the value of benefit per month is fixed at RM600.

3
 Other benefits
RM per month
Household furnishings, apparatus and appliances
Semi-furnished with furniture in the lounge, dining room, or bedroom 70
Semi-furnished with furniture as above plus air-conditioners and/or curtains and carpets 140
Fully furnished premises 280
Domestic help 400
Gardener 300

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

Real property gains tax

Disposal by companies and other than companies

Date of disposal Rate %

Disposal within two years after date of acquisition 30
Disposal in the third year after date of acquisition 20
Disposal in the fourth year after date of acquisition 15
Disposal in the fifth year after date of acquisition or thereafter 5
Note: An exemption is granted which reduces the effective rate to 5% where the
disposal takes place within five years of the date of acquisition and to nil thereafter.

Sales and service tax

Rate %
Sales tax 10
Service tax 6

4
Section A – ALL TEN questions are compulsory and must be attempted

Please use the space provided on the inside cover of the Candidate Answer Booklet to indicate your chosen answer to
each multiple choice question.

1 Trisha, an expatriate from Egypt, was employed by a company in Malaysia. She commenced employment on 1 January
2011 and worked in the company for four months and ceased employment on 30 April 2011. She returned to Egypt
on the same date. During her stay she was physically present in Malaysia and she never returned to Malaysia in 2011.
Her salary was RM2,500 per month. She was not married.
How much is Trisha’s income tax liability for the year of assessment 2011?
A Nil
B RM2,600
C RM260
D RM175 (3 marks)

2 Rosliza legally adopted a child during the year of 2011. The child was two years old and the child’s expenses were
maintained by her during the year of assessment 2011.
What is the amount of child relief Rosliza can claim for her adopted child for the year of assessment 2011?
A RM4,000
B RM1,000 (1 mark)

3 Hari and Mei Lee run a florist shop as a partnership. The agreed profit sharing ratio was 25:75. On 1 July 2011, the
partners agreed to change the profit sharing ratio and the profits were to be shared equally. The provisional divisible
income for the year of assessment 2011 was RM20,000.
What is the share of divisible income that would be allocated to each partner for the year of assessment 2011?
A Hari: RM5,000; Mei Lee: RM5,000
B Hari: RM10,000; Mei Lee: RM10,000
C Hari: RM7,500; Mei Lee: RM12,500
D Hari: RM12,500; Mei Lee: RM7,500 (3 marks)

4 Germaine is a musical composer, and during the year ended 31 December 2011 she earned royalties amounting to
RM22,000 from her musical composition. It was confirmed that this income was not part of her emoluments in the
exercise of her official duties.
What is the amount of royalty income assessable to tax for Germaine for the year of assessment 2011?
A RM2,000
B RM22,000
C RM10,000
D RM12,000 (2 marks)

5
5 Flora Sdn Bhd received an additional assessment in respect of the year of assessment 2009 arising from a tax audit on
1 March 2011. The company’s tax manager does not agree with the additional assessment issued and wants to lodge
an objection against the assessment.
By what date must Flora Sdn Bhd lodge an objection against the additional assessment for the year of assessment
2009?
A 30 March 2011
B 28 April 2011 (1 mark)

6 Amazon Sdn Bhd commenced leased rental for a passenger vehicle that was to be used by the company’s managing
director.
The following details relate to the year of assessment 2011 based on the financial year ended 31 December 2011:
RM
BMW – on the road price 165,000
Total lease rentals paid during the year 110,000
What is the amount of lease rentals paid during the year that are available for tax deduction for Amazon Sdn Bhd
for the year of assessment 2011?
A RM60,000
B RM165,000
C RM50,000
D RM100,000 (2 marks)

7 Triton Sdn Bhd has an accounting year end of 31 December, and on 1 January 2011 acquired a van for RM90,000
which was registered as a commercial vehicle licensed to transport goods. The company acquired the van on hire
purchase and paid a deposit of RM10,000. The capital portion paid during the year in addition to the deposit was
RM80,000 and the interest portion paid was RM1,000.
What is the qualifying expenditure that can be claimed for capital allowances purposes in respect of the van for
the year of assessment 2011?
A RM50,000
B RM80,000
C RM91,000
D RM90,000 (3 marks)

8 Which one of the following statements is TRUE?

A When a reduced assessment is issued to a taxpayer, it generally means that the taxpayer is required to pay
additional taxes.
B Unutilised capital allowances carried forward are available for set-off against any business source income and not
only for the same business source.
C Unabsorbed business losses carried forward are available for set-off against the same business source only and
not against any other business source income.
D Interest income derived by a non-resident person is subject to withholding tax at the rate of 15% of the gross
income.
(2 marks)

6
9 Tunis Sdn Bhd was incorporated on 1 January 2011 to provide management and consultancy services.
What is the minimum threshold for the management and consultancy services for the purposes of applying for a
service tax licence under the service tax legislation?
A Nil threshold
B RM150,000
C RM300,000
D RM3,000,000 (2 marks)

10 Snow Sdn Bhd recently moved into its new business premises and will be changing its address.
Under the Income Tax Act, 1967, by what date must Snow Sdn Bhd notify the Director General Inland Revenue
of the change of address?

A Within one month
B Within three months (1 mark)

7
Section B – ALL NINE questions are compulsory and MUST be attempted

1 Sanjay ran a luxury car business and due to cashflow problems, decided to close down his business on 31 March
2011. The current year adjusted loss for the year of assessment 2011 was computed to be RM10,000.
He commenced employment on 1 April 2011 as a director in a hotel in Malaysia.
Details relating to Sanjay’s income, benefits and expenditure for the year to 31 December 2011 are as follows:
RM
Income
Salary 130,000
Bonus 20,000
Benefits provided by employer
Car benefit – New MPV costing 120,000
Car provided from 1 April 2011
Leave passage – local trip to Penang 3,100
Domestic help provided by employer from 1 April 2011 – salary 4,500
Expenditure
Contributions to the Employees’ Provident Fund 12,100
Life insurance premiums – self 3,100
Sanjay received total interest of RM3,000 for the year of assessment 2011 which was made up of interest on fixed
deposit of RM350 from a Malaysian bank and interest of RM2,650 from a loan to his sister for the year of assessment
2011.

Required:
Compute Sanjay’s chargeable income and income tax payable for the year of assessment 2011.
Notes:
(1) You should indicate by the use of the word ‘nil’ any item referred to in the question for which no adjusting entry
needs to be made in the tax computation.
(2) Marks will be awarded for the use of accurate technical terms to describe the figures comprising the stages in
the computation of chargeable income.
(15 marks)

8
2 Divine Sdn Bhd is in the business of operating a houseboat in a resort and closes its accounts to 31 December
annually.
Relevant information of the company’s profit and loss account for the year ended 31 December 2011 is shown below:-
RM RM
Sales 1,600,000
Less: Cost of sales (800,000)

Gross profit 800,000
Add: Other income
Dividend income remitted from China 10,000

810,000
Less: Expenses
Foreign exchange loss – trade related and realised 50,000
Leave passage for directors – overseas trip 6,000
Professional fees for company secretary 5,000
Depreciation 13,000
Entertainment of suppliers 12,000
Other deductible expenses 144,000

(230,000)

Profit before tax 580,000

Additional notes relevant to the tax computation are as follows:

i) During the year ended 31 December 2011, the company acquired office furniture comprising table and chairs
costing RM100,000. It was confirmed that each asset costs more than RM1,000 and the claim for small value
assets does not apply. The residual expenditure for the brought forward assets was nil.
ii) Unabsorbed losses brought forward from the previous year of assessment was RM10,000.
iii) The company’s issued paid-up share capital is RM2,000,000.

Required:
Compute the chargeable income and the income tax payable of Divine Sdn Bhd for the year of assessment
2011.
Notes:
(1) You should indicate by the use of the word ‘nil’ any item referred to in the question for which no adjusting entry
needs to be made in the tax computation.
(2) Marks will be awarded for the use of accurate technical terms to describe the figures comprising the stages in
the computation of chargeable income.
(15 marks)

9
3 Su San acquired an office building on 12 January 2009 for investment purposes for RM820,000. She incurred
renovation expense of RM20,400 as part of the building’s enhancement cost and also paid stamp duty of RM18,600.
The total quit rent and assessment per year is RM800.
In 2010, she received an insurance compensation of RM10,000 arising from damage to the building.
She disposed of the office building and signed a sales and purchase agreement on 12 September 2011 based on
a valuation of RM900,000. The valuation fee was RM2,000 and the agency commission fee for the disposal was
RM1,000.

Required:
Compute the chargeable gain subject to real property gains tax arising to Su San from the disposal of the office
building. Clearly show the disposal price and the acquisition price taking into account all necessary adjustments.

Note:
(1) You are not required to compute the real property gains tax.
(2) You should indicate by the use of the word ‘nil’ any item referred to in the question for which no adjusting entry
needs to be made in the computation.
(10 marks)

4 Greenhill Sdn Bhd is a manufacturing company and closes its accounts annually on 31 December. The company
acquired a factory building for RM1,500,000 during the year of assessment 2010.
In 2011, the company extended the factory building and incurred the following capital expenditure:
RM
Levelling of land 10,000
Design fee for factory 18,000
Construction cost for factory extension 102,000

130,000

Required:
Determine the qualifying building expenditure and calculate the industrial building allowance for the years of
assessment 2010 and 2011 for
(a) The original factory building acquired in 2010; and (4 marks)
(b) The extension made to the factory building in 2011. (6 marks)

(10 marks)

10
5 Skysoft Sdn Bhd manufactures computer covers for computers. The company is licensed for sales tax purposes and its
products are subject to sales tax at 10%.
The selling price of each product is RM10 and cost of each product is RM8.
Relevant details relating to sales are as follows:
RM
January 2011
Gross sales value for the month 1,000,000
Payments received 110,000
February 2011
Gross sales value for the month 1,000,000
Payments received 55,000
March 2011
Gross sales value for the month 900,000
Payments received 120,000
April 2011
Gross sales value for the month 700,000
Payments received 90,000

Required:
Calculate the amount of sales tax payable by Skysoft Sdn Bhd, and state the due date to remit the sales tax for
each of the taxable period/periods shown above.
(6 marks)

6 Lara, a Malaysian, was seconded to his employer’s Thailand office on 1 January 2008. The nature of his job required
to him to perform duties both in Malaysia and in Thailand.
Lara’s secondment ended and he returned to Malaysia on 30 September 2010.
Based on the travel schedule prepared based on his passport, the following information was obtained:
Year No of days in Malaysia Resident status /
2006 95 days Non-resident
2007 365 days Resident
2008 190 days Resident
2009 185 days Resident
2010 90 days To be determined
2011 0 days To be determined
2012 365 days Expected to be resident

Required:
Determine, with reasons, Lara’s tax resident status for the years of assessment 2010 and 2011.
(6 marks)

11
7 Ira owned a hilltop house in Kuala Lumpur which she rents out to a tenant who is an expatriate. This was the only
property she owned.
Details of her rental income and expenditure for the year ended 31 December 2011 are shown below.
RM RM
Gross income from rental 24,000
Less: Expenditure
Quit rent and assessment 1,600
Interest on housing loan (see note 1 below) 3,200
Replacement of old air-conditioner 500
New fridge for expatriate tenant (see note 2 below) 1,500
Agent’s commission for collection of rent 1,200

(8,000)

Net income 16,000

Note 1: The above interest includes cheque book charges of RM200.
Note 2: Ira brought the fridge for the first time for her house in Kuala Lumpur.

Required
Calculate the statutory income arising from the rental income for the year of assessment 2011.
Note:
You should indicate by the use of the word ‘nil’ any item referred to in the question for which no adjusting entry
needs to be made in the computation.
(6 marks)

8 Below is information with regards to Star Sdn Bhd’s tax matters.

New employee
One new employee commenced employment on 1 March 2011. The new employee is likely to be chargeable to tax.
Instalment scheme and tax payable for the year of assessment 2011
RM
Initial tax estimate notified to the Inland Revenue Board 100,000
Final tax liability per tax computation to the Inland Revenue Board 300,000

Required
(a) State the due date for Star Sdn Bhd to notify the Inland Revenue Board (IRB) of an employee who has
commenced employment and is likely to be chargeable to income tax. (1 mark)
(b) State the due date for Star Sdn Bhd to remit the employees’ schedular tax deduction (STD) deducted from the
employees’ March 2011 salary. (1 mark)
(c) Compute the penalty for the excessive difference between the estimated tax and final tax payable for the year
of assessment 2011 by Star Sdn Bhd. (4 marks)

(6 marks)

12
9 (a) Martha is a retired Government servant and her income for the year of assessment 2011 is shown below.
RM
Interest income from loan extended to friend’s company 300
Pension from the Government (no other pension) 12,000
Franked dividend from local listed company (net) (taxable) 750
Dividend from shares invested in overseas company 2,000

Required
State whether the above income is taxable or tax exempt. (2 marks)

(b) Below is an extract from page 2 of a tax return for an individual without business (FORM BE)

Part C: Statutory Income and Total Income

Amount (RM)

C1 Employment C1

C2 Dividends C2

C3 Interest and discounts C3

C4 Rents, royalties and premiums C4

C5 Pensions, annuities and other periodical payments C5

Required
In your answer booklet, state the amounts that would be entered in boxes C2, C3, and C5 only. Indicate “0”
if there is no amount to be inserted in the box.
Note: you should show all workings. (4 marks)

(6 marks)

End of Question Paper

13
Answers

14
Pilot Paper FTX (MYS) Answers and marking scheme
Foundations in Taxation (Malaysia)

Notes:
(1) All references to legislation or public rulings shown in square brackets are for information only and do not form part of the answer
expected from candidates.

(2) Marks indicated with a ‘*’ are awarded for the allocation of the appropriate description to the figure calculated, not for the figure itself.

Section A Marks

1 B Trisha was physically present in Malaysia only for 120 days during the year of assessment 2011. She was a
non-resident [under Section 7 of the Income Tax Act, 1967] and will not be entitled to any personal relief and also
not entitled to the scale rates to calculate her income tax liability. She will be taxed as a non-resident at a flat
rate of 26% on the gross income. Therefore, her income tax is RM2,600 [(RM2,500 x 4 = RM10,000) x 26%]. 3

2 B Rosliza is entitled to claim child relief of RM1,000 for the year of assessment of 2011 even if the child is
adopted. She is entitled to claim child relief for the adopted child as long as the adoption was carried out legally. 1

3 C Hari’s share is RM7,500 and Mei Lee’s share is RM12,500 for the year of assessment 2011.
Hari Mei Lee
Share of divisible income from RM RM
1 June 2011 to 30 June 2011 (6 months) 6/12 x 20,000 = RM10,000
Profit sharing ratio 25:75 2,500 7,500
1 July 2011 to 31 December 2011 (6 months) 6/12 x 20,000 = RM10,000
Profit sharing ratio 50:50 5,000 5,000

Total for each partner for year of assessment 2011 7,500 12,500 3

4 A An exemption of RM20,000 is available to be set-off against royalty income from musical composition [under
paragraph 32D of Schedule 6 of ITA, 1967]. Therefore, the amount assessable to income tax for the royalty
income for the year of assessment is RM2,000 (RM22,000 – RM20,000) 2

5 A A taxpayer who wishes to lodge an appeal against any assessment has to do so within 30 days of the date of
issue of the assessment with the Director General Inland Revenue. Therefore, the company has to lodge an
appeal against the additional assessment for the year of assessment 2009 on or before 30 March 2011. 1

6 C The maximum amount available for a tax deduction is RM50,000. This is because [under Section 39(1)(k) of
the ITA, 1967], where the on-the-road cost of the vehicle exceeds RM150,000 then the maximum lease rentals
allowable as a deduction is restricted to RM50,000. In the case where the on-the-road cost of the vehicle is below
RM150,000 then the claim can be restricted to RM100,000 or the actual cost of the vehicle if it is lower than
RM100,000. 2

7 D Triton Sdn Bhd can claim capital allowances for the amount of deposits and capital portion of the instalments
paid during the year of assessment 2011. There is no restriction on the cost as the van is a licensed commercial
vehicle. The qualifying expenditure for the van, that is available for the claim of capital allowances, is RM90,000. 3

8 D Generally, when a reduced assessment is issued to a taxpayer, it means that the taxpayer is assessed on income
that is lower compared to the original or additional assessment raised earlier and under normal circumstances,
the taxpayer will be due for a refund of the excess tax paid. There will be no additional taxes to be paid under
normal circumstances when a reduced assessment is issued. Unutilised capital allowances carried forward is
available for set-off only against the same business source and not against any other business source. Unabsorbed
losses carried forward is available for set-off against any business source and is not restricted to the same business
source. Therefore, statements A, B and C are false. Interest income derived by a non-resident person is subject to a
withholding tax of 15%. Therefore, statement D is true. 2

15
 Marks
9 A Nil threshold. There is no minimum threshold amount for any person who is in the business of providing
management and consultancy services. This means even if there is a billing for RM1, there is a requirement
to apply for a service tax licence before providing such services. This is provided for under Group G – other
service providers of the second schedule of the Service Tax Regulations [under Service Tax Act, 1975]. 2

10 B Snow Sdn Bhd will be required to notify the Director General Inland Revenue by notice in writing within three
months of change of address. 1

20

Section B

1 Sanjay
Tax computation for the year of assessment 2011

RM RM
Employment income
Salary and bonus 150,000 0.5
Car benefit as per table – annual value 5,000 1

Car used from 1 April to 31 December 2011= 9 months 5,000 x 9/12 3,750 2
Leave passage – (local trip) Nil 1
Domestic help (400 x 9) 3,600 2

Adjusted/statutory income from employment 157,350 *0.5
Interest income (3,000 – 350) 2,650 1.5

Aggregate income 160,000 *0.5
Less: Current year adjusted loss from business (10,000) 1.5

Total income 150,000 *0.5
Less: Personal reliefs
Personal relief 9,000 1
Employee’s Provident Fund (EPF) contributions (restricted to maximum) 6,000 1.5

(15,000)

Chargeable income 135,000 *0.5

Tax liability:
Tax on first RM100,000 14,325
Tax on next RM35,000 x 26% 9,100 1

Tax charged /payable 23,425

15

16
 Marks
2 Divine Sdn Bhd
Tax computation for year of assessment 2011

RM RM
Profit before tax 580,000 0.5
Add/(Less)
Dividend income from China (foreign source income is exempt) (10,000) 1.5
Foreign exchange loss – trade and realised Nil 1
Leave passage 6,000 1
Professional fees for company secretary 5,000 1
Depreciation 13,000 1
Entertainment expenses (50% x 12,000) 6,000 2

Adjusted income 600,000 *0.5
Less: Capital allowances
Current year assets
Cost/Qualifying Expenditure 100,000 0.5
– Initial allowance 20% x 100,000 20,000 1
– Annual allowance 10% x 100,000 10,000 1

(30,000)

Statutory income 570,000 *0.5
Less: Unabsorbed losses brought forward (10,000) 1.5

Aggregate income/chargeable income 560,000 *0.5

Tax liability
Tax on first RM500,000 at 20% 100,000
Tax on excess of RM60,000 at 25% 15,000 1.5

Tax charged/payable 115,000

Tutorial note: For a SME (small and medium enterprise) company with issued share capital of RM2,500,000 or less,
the scaled tax rates are available.

15

3 Su San – Computation of chargeable income

RM RM
Disposal consideration 900,000 0.5
Less: Permitted expenditure
Enhancement costs – renovation expense (20,400) 1.5
Incidental costs:
Valuation fees (2,000) 1
Agent’s commission (1,000) 1

Disposal price 876,600

Less: Acquisition consideration 820,000 0.5

Less: Insurance compensation for damage to office building (10,000) 1.5
Add: Incidental expenses relating to acquisition:
Quit rent and assessment (not eligible for deduction) Nil 1
Stamp duty 18,600 1

Acquisition price (828,600)

Chargeable gain 48,000
Less: Schedule 4 exemption for individual
Higher of the following:
(i) 10% of Chargeable gain 10% x RM48,000 4,800
(ii) RM10,000 10,000
(10,000) 2

Chargeable gain 38,000

10

17
 Marks
4 Greenhill Sdn Bhd – Industrial building allowance

(a) Industrial building allowance (IBA)

Assets acquired in 2010 RM RM

Qualifying building expenditure 1,500,000 0.5
Less: IBA for YA 2010
Initial allowance 10% 150,000 1
Annual allowance 3% 45,000 (195,000) 1

Residual expenditure 1,305,000
Less: IBA for YA 2011
Annual allowance 3% x 1,500,000 (45,000) 1.5

Residual expenditure 1,260,000 4

(b) Assets acquired in 2011

Qualifying building expenditure for factory extension
Levelling of land non-qualifying relates to land 0 1
Design fee for factory 18,000 1
Construction cost of factory 102,000 1

Qualifying building expenditure 120,000
Less: IBA for YA 2011
Initial allowance 10% 12,000 1.5
Annual allowance 3% 3,600 (15,600) 1.5

Residual expenditure 104,400 6

10

5 Skysoft Sdn Bhd – Sales tax

Taxable period Amount of sales tax Payment due date for sales tax
RM
January 2011 1,000,000 0.5
February 2011 1,000,000 0.5

Total for taxable period 2,000,000
Sales tax – 10% x 2,000,000 200,000 Due on or before 28 March 2011 1+1

March 2011 900,000 0.5
April 2011 700,000 0.5

Total for taxable period 1,600,000
Sales tax – 10% x 1,600,000 160,000 Due on or before 28 May 2011 1+1

6

6 Lara – Resident status

Year of assessment Resident status Basis

2010 Resident He was in Malaysia for 90 days during the year of assessment 2010 1+ 1
and was resident in three out of the immediately four preceding basis 1
years [under Section 7(1)(c) of ITA, 1967], ie he was resident for the
years of assessment 2007, 2008 and 2009.

2011 Resident He was resident in the following year of assesment (year of assessment 1+1
2012) and was resident in the immediately three preceding basis years 1
[under Section 7(1)(d) of ITA, 1967], ie he was resident for the years of
assessment 2008, 2009 and 2010.

6

18
 Marks
7 Ira – Rental Income
RM RM
Gross rental income 24,000 0.5
Less: Allowable expenses
Quit rent and assessment 1,600 0.5
Interest on housing loan (3,200–200) 3,000 1
Maintenance expenses
Replacement of old air-conditioner 500 1.5
– New fridge for expatriate tenant 0 1.5
Agent’s commission for collection of rent 1,200 1

(6,300)

Adjusted income/statutory income from rental under s 4(d) of the ITA, 1967 17,700

6

8 Bright Sdn Bhd – Compliance

(a) The due date for Star Sdn Bhd to notify the Inland Revenue Board of an employee who has commenced
employment and is likely to be chargeable to income tax , is within a month of commencement of employment.
Therefore, the due date would be one month from 1 March 2011, ie on or before 31 March 2011. 1

(b) The due date for Star Sdn Bhd to remit the schedular tax deducted to the Inland Revenue Board is by the 10th
of the following month. Therefore, the due date for the schedular tax deducted relating to the March 2011 salary
to be remitted to the Inland Revenue Board is on or before 10 April 2011. 1

(c) Penalty for the excessive difference
RM
Final tax as per tax computation submitted 300,000
Estimated tax 100,000

Difference 200,000 1
Less: 30% of final tax (30% x 300,000) (90,000) 1.5

Excess 110,000

Penalty at 10% thereon 10% x 110,000 11,000 1.5

4

6

9 (a) Martha – Self-assessment tax return entries

RM Taxable/Exempt
Interest income from loan extended to friend’s company 300 Taxable 0.5
Pension from the Government 12,000 Tax Exempt 0.5
Franked dividend from local listed company (net) 750 Taxable 0.5
Dividend from shares invested in overseas company 2,000 Tax Exempt 0.5

2

(b) Box C2 RM1,000 Net dividends RM750 2

Tax deducted 25% x 1,000 RM250
Gross amount (RM750/0.75) RM1,000
Box C3 RM300 1
Box C5 RM0 1

Tutorial note: The gross dividend amount of RM1,000 is determined as follows:

Gross dividend income = Net dividend income x 1 = RM750 x 1 = RM750 x 1 = RM1,000

(1-CT*) (1-0.25) 0.75
*CT – Where CT is the current year’s tax rate for corporations (which is currently 25%).

4

6

19