CONFIDENTIAL 1 AC/FEB 2021/TAX267

UNIVERSITI TEKNOLOGI MARA

FINAL ASSESSMENT

COURSE : TAXATION 1
COURSE CODE : TAX267
EXAMINATION : FEBRUARY 2021
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.

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

i) the Question Paper

ii) a four-page Appendix 1

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. List TWO (2) types of income which are exempted from tax in Malaysia.
(4 marks)
B. State TWO (2) events that give the rights to taxpayers to make an appeal.
(4 marks)
C. Identify FOUR (4) responsibilities of individual taxpayers.
(4 marks)

D. Dr Dominic Mangga, a Malaysian citizen, is a Dermatology specialist at a Malaysian

private hospital. Under the Experience Enhancement Skills Program, he was
attached to St Vincent's Private Hospital in Sydney, Australia. The following
information relates to him:

Year Details
2016 He left Kuala Lumpur for the first time on 31 December 2016 to
Sydney, Australia.
2017 On 1 April 2017, he came back to Malaysia to attend his son’s
convocation ceremony. He returned to Sydney on 28 April 2017.

On 20 October 2017, he came back to Malaysia to celebrate his

daughter’s birthday and went back to Sydney on 20 December 2017.
2018 On 5 November 2018, he visited his uncle in New Zealand. He
returned to Sydney on 15 November 2018.
2019 Dr Dominic went to Singapore from 2 February 2019 until 10 February
2019 to attend a medical course with his supervisor at St Vincent's
Private Hospital.

He returned to Malaysia after completing 3 years program in Sydney,

Australia on 31 July 2019.
2020 He went back to St Vincent's Private Hospital to attend a seminar on
an updated new screening procedure from 10 February 2020 until 28
February 2020.

Required:

Determine the residence status of Dr Dominic Mangga for the years of assessment
2017 until 2020. Support your answer with relevant sections and reasons.
(8 marks)
(Total: 20 marks)

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QUESTION 2

Alisha, aged 42, was appointed as general manager of UMI Takaful Sdn Bhd since 10
February 2012. However, due to Covid-19 pandemic that affected the businesses in
Malaysia, Alisha was terminated from her employment on 30 November 2020. The company
paid her RM140,000 as compensation for the loss of employment and she withdrew
RM250,000 from an unapproved fund whereby 60% of the fund was contributed by her
employer.
Her remuneration and benefits received until 30 November 2020 are as follows:
a. A monthly salary of RM9,000 before deducting EPF at the rate of 11%.

b. A monthly entertainment allowance of RM1,000 but she only spent 50% of the
allowance to entertain the company’s clients.

c. A monthly petrol allowance for official duties of RM500 and parking fees allowance of
RM120.

d. A car costing RM250,000 with a driver were provided by the company since 2014.

e. A fully furnished bungalow with a rental value of RM2,000 (excluding cost of furniture
RM700 per month) was provided until 30 November 2020. Alisha paid RM400 as
monthly rental for the bungalow.

f. Alisha employed a servant and paid salary of RM800 per month. The amount is later
reimbursed by her employer.

g. Alisha obtained a housing loan amounted to RM400,000 on 1 January 2020. The

interest on loan of 3% per annum was subsidised by her employer.

h. In February 2020, she was provided with leave passage to Melbourne, Australia. The
expenses include cost of air fares of RM3,500. The company also paid for her meals
and accommodation amounted to RM5,000.

i. The company paid for her corporate membership of RM200 per month in Regent Golf
Club.

j. The company paid for her dental treatment of RM300.

Required:

Compute the statutory employment income from employment for Alisha for the year of
assessment 2020.
(Total: 14 marks)

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QUESTION 3

Bonda Enterprise owned by Halim is involved in local distribution of mini egg sponge
cupcakes or bahulu cupcakes. The following is the Statement of Profit or Loss for his
business for the year ended 31 December 2020.

Bonda Enterprise
Statement of Profit or Loss for the year ended 31 December 2020

Note RM RM
Sales 652,000
Less: Cost of goods sold 1 125,000
Gross Profit 527,000
Add: Other income
Interest income 2 13,400
Rental income 3 10,800 24,200

551,200
Less: Operating expenses
Remuneration 4 283,000
Fees 5 15,200
Entertainment expenses 6 27,200
Donations 7 12,800
Repair and maintenance 8 15,800
Bad debts 9 13,100
Travelling expenses 10 10,700
Water and electricity expenses 11 7,300
Compensation 12 5,600
Depreciation 12,800 (403,500)
Net Profit 147,700

Additional information:

1. Cost of goods sold include:

Goods costing RM1,500 taken by Halim as a wedding gift for his cousin. The market
value of the goods was RM1,800.

2. Interest income were received from:

RM
Fixed deposit account at CIMB bank 4,500
Charges on overdue trade accounts 8,900
13,400

3. Rental income:

Rental income received from a condominium rented out to Halim’s friend.

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4. Remuneration comprise:
Salary Bonus EPF
RM RM RM
Halim 57,000 18,000 22,000
Employees 119,000 22,500 44,500
176,000 40,500 66,500

Included in salary and bonus to employees was RM16,200 paid to shop assistant
who is disabled.

5. Fees comprise:
RM
Accounting service 3,200
Fines paid for exceeding speed limit 1,800
Legal fees for purchase of land 3,500
Legal fees on recovery of trade debts 4,300
Fees for designing business logo 2,400
15,200
6. Entertainment expenses comprise:
RM
Gift vouchers to customers 11,200
Annual dinner for employees 8,100
Lunch with suppliers 2,500
Family Day with staff and their families 5,400
27,200
7. Donations consist of:
RM
Business zakat 4,200
Contribution made to a political party 2,500
Contribution to an approved institution:
(Infrastructure for the poor s 34(6)(h)) 6,100
12,800
8. Repair and maintenance comprise:
RM
Repair of delivery van 4,100
Renovation of business premise 6,800
Installation of new air-conditioner in the premise 2,600
Repainting of Halim’s house 2,300
15,800
9. Bad debts comprise:
RM
Net increase in specific provision 4,100
Net increase in general provision 3,200
Trade bad debts written off 5,800
13,100
10. Travelling expense comprise:
RM
Carriage cost for delivering stock to customers 7,700
Halim’s holiday to Langkawi 3,000
10,700

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11. 20% of water and electricity expenses for personal use.

12. Compensation paid to dismiss an employee due to wrongful act by him.

13. Capital allowance charged for the year of assessment 2020 amounting to
RM25,000.

Required:

Compute the statutory business income of Bonda Enterprise for the year of assessment
2020. Indicate ‘Nil’ for any item that does not require any adjustment.
(Total: 18 marks)

QUESTION 4

A. Discuss briefly THREE (3) circumstances under which a wife may elect for joint
assessment.
(6 marks)

B. Encik Samad, who is the general manager and the owner of Hijau Segar Enterprise
has the following income for the year 2020:

1. The adjusted income and capital allowance for Hijau Segar Enterprise were
RM81,000 and RM25,000 respectively.

2. Encik Samad received rental income from the following properties:

Terrace Apartment
house
RM RM
Rental income per month 2,000 1,000
Quit rent for the year 2020 1,200 600
Advertisement cost 200 -
Repair and maintenance on 31 July 2020 700 500

The terrace house was occupied by Encik Samad until September 2020 and
effective from 1 October 2020, the house was rented out to a tenant. The
apartment was rented out since January 2019.

3. A royalty of RM65,000 from Muzik Records Sdn Bhd on song compositions.

On 13 March 2020, his wife, Puan Siti (a disabled person), passed away due to
cancer. On 1 July 2020, Encik Samad remarried Puan Athirah, who then left her
position as an engineer of Naim Berhad and become a full time housewife. Below is
the income pertaining to Puan Athirah for the year 2020.

1. She has been working with Naim Bhd since 1 March 2006. Her monthly gross
salary was RM8,800, before deducting EPF of 11%.

2. Upon her resignation, she received RM50,000 as gratuity from Naim Bhd.

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3. Due to her knowledge and expertise, she received invitations from several
cooperative bodies to conduct seminars pertaining to her engineering expertise.
The honorarium derived was RM55,000.

4. She received single tier dividend from Amanah Saham Bumiputera (ASB) of
RM12,000.

Additional Information:

a. Encik Samad and Puan Siti were blessed with three children:

Sufian Aged 25 years old, worked as an engineer with TNB and

pursuing his studies in MBA with UiTM on part-time basis
Syaqira Aged 22 years old, studying medicine in England and married
in August 2020
Sofwan Aged 17, waiting for SPM result

b. Encik Samad incurred RM25,000 on medical bills due to Puan Siti’s cancer and
RM5,000 on her wheel chair.

c. Encik Samad also incurred RM3,200 on his father’s medical treatment. In July 2020,
he sent his father to a private nursing home and paid the fees of RM2,500.

d. Encik Samad paid RM450 for a business magazine subscription and RM2,100 for
Internet subscription.

e. Encik Samad paid RM3,000 as zakat to Majlis Agama Islam and RM500 to some
underprivileged families in his residential area.

f. Puan Athirah incurred RM4,000 for her life insurance premium and RM3,500 for
medical insurance premium.

g. Puan Athirah incurred RM2,500 for a mountain bike and RM2,000 on the cycling gear
(helmet, knee and elbow guard).

h. Puan Athirah purchased a new HP laptop of RM6,000. No claim was made since
2016.

i. Puan Athirah donated RM6,000 to Majlis Kanser Negara (MAKNA) and RM3,500 to
Yayasan Pembangunan Ekonomi Islam Malaysia (YaPEIM) (both are approved
under s 44 (6) of Income Tax Act 1967).

j. Puan Athirah also paid RM10,000 as zakat to Majlis Agama Islam.

Required:

Compute the income tax payable for Encik Samad and Puan Athirah for the year of
assessment 2020.
(20 marks)
(Total: 26 marks)

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QUESTION 5

A. Discuss briefly TWO (2) circumstances of non-entitlement of agriculture allowance.

(2 marks)

B. MissAnne Skincare Sdn Bhd is a local cosmetic brand famously known for its effective
skin whitening products. The company made up its account to 31 December annually.
The following information is for the company’s assets for the year ended 31 December
2020.

Car
On 1 March 2018, a new car was bought for the marketing manager under hire
purchase loan amounted to RM150,000. The cash price of the car was RM200,000.
MissAnne Skincare Sdn Bhd paid RM50,000 as deposit and the hire purchase term
was for a period of 60 months. The monthly installment is RM3,000 commencing from
1 April 2018.

Computer
A new desktop computer was purchased on 15 February 2020 at a cost of RM4,500.

MissAnne Skincare Sdn Bhd constructed a factory in January 2018, with the following
costs:

RM
Cost of land 1,200,000
Architect’s fees 45,000
Cost of clearing the land 30,000
Electrical wiring and fitting 55,000
Construction costs 750,000

The factory was completed and used on 1 July 2019. 1/8 of the total floor area was
used as an office while the remaining 7/8 was for manufacturing activities.

Required:

Calculate the capital allowances, industrial allowance, balancing allowances/charges

(if any) that can be claimed by MissAnne Skincare Sdn Bhd for all the relevant years
up to the year of assessment 2020.
(20 marks)
(Total: 22 marks)

END OF QUESTION PAPER

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