TUTORIAL – ESTATE UNDER ADMINISTRATION

QUESTION 1 – FEB 2022

En Abdussalam, a non-resident businessman from Brunei, come to Malaysia five years ago
and married a local woman from Melaka. They have a daughter who currently studying in
UiTM Jengka. The family lived in Bandar Hilir area. On 1 July 2021, En Abdussalam was
admitted to Melaka Medical Center and passed away due to sudden heart attack. He was
domiciled at the time of his death. Upon En Abdussalam’s death, his uncle En Eusoff a resident
taxpayer was appointed as the executor of his estate.

For the purpose of tax filing, En Eusoff provides information regarding the income and
expenses of the late En Abdusssalam’s for the basis year of 2021.

RM
Business income - Trading
Adjusted income 250,000
Capital allowance 45,000

Business income - Manufacturing

Adjusted loss (25,000)

Business income - Brunei

Adjusted Income (All were donated to an approved institution there). 35,000

Dividend (single tier)

Rasidah Utama Bhd - received on 12 June 2021 5,000

Rental Income
Net rental income - Segamat (received in advanced in June 2021) 15,000
Net rental income - Surabaya (received RM8,000 on 1 September 2021) 13,000

Interest
Maybank, credited on 1 March 2021 7,000
CIMB on RM115,000 saving account, credited on 1 November 2021 11,500

Other income
Honorarium - En Abdussalam was invited as speaker for a seminar series in
Kuala Lumpur, only half of the payment received in May 2021. 20,000

Expenditures incurred during the year of assessment 2021 are as follows:

i. The executor fees of RM20,000 is to be paid to En Eusoff in December 2021, whereas

annuity amounted to RM5,500 per month is to be paid to En Adussalam’s wife (full-time
housewife) every month-end after his death.

ii. En Abdussalam made a cash donation of RM15,000 paid to an approved charitable

institution (Rumah Seri Kenangan, Melaka) on 15 March 2021.
Required:

a. Compute the income tax payable of En Abdussalam and En Eusoff as the executor of
the estate for the year of assessment 2021.
(10 marks)

b. Explain the tax consequences if En Eusoff fails to furnish the tax return and pay income
taxes of the estate.
(2 marks)
(Total: 12 marks)

QUESTION 1 – FEB 2021

For basis year 2020, Azman who was a resident individual of Malaysia died domiciled on 31
May 2020 at Jakarta due to the pandemic of Covid-19 virus infection. In accordance with
Azman’s will, Johanis, a non-resident was appointed to administer Azman’s estate.

Azman’s income and expenditure for the year ended 31 December 2020 were as follows:

1. Business Income RM

Retail Business (Malaysia)

Adjusted income for the year ended 31 December 2020 250,000
Balancing charge 3,000
Capital allowance (current year) 28,000

Textile Business (Jakarta)

Adjusted income for the year ended 31 December 2020 (net after
allowable deductions) was RM150,000. However, only the following
sums were remitted to Malaysia:
April 2020 60,000
October 2020 80,000

2. Dividend received (single tier system) in March 2020 from Petron Bhd, a 7,000
company resident in Malaysia.

3. Interest received from CIMB in February 2020 amounting to RM2,800.

Another interest amounting to RM3,500 on fixed deposit was received
from HSBC Melaka branch on 25 November 2020.

4. Rental income from a piece of property in Seremban rented out in the

basis year 2020:

Rental for January 2021 (received on 8 December 2020) 2,000

Rental for January – December 2020 24,000

Rental expenses: RM
Fire insurance 1,200
Maintenance cost 800
Renovation 4,600

Other information:
i. There was an unabsorbed business loss of RM15,000 brought forward from the year of
assessment 2019.

ii. As stated in the will, in October 2020, Johanis paid a monthly annuity of RM3,000 to
Azman’s widow, Puan Rosila starting from June 2020. In December 2020, Johanis also
paid a sum of RM10,000 to Azman’s mother (though it is not an annuity).

iii. In March 2020, Azman donated RM6,500 to Rumah Anak Yatim while in July 2020,
Johanis donated RM5,000 to Rumah Orang Tua Kenangan. Both institutions are
approved institutions.

iv. In the basis year 2020, a remuneration of RM2,000 was paid to Johanis for
administering the estate.

Required:

a. Compute the total income of the deceased and the executor of the estate for the year
of assessment 2020.
(10 marks)

b. If Azman was not domicile at the time of his death, discuss briefly the implications on
the tax liabilities of the executor.
(2 marks)
(Total: 12 marks)

QUESTION 1 – DEC 2019

Wilfred passed away in Sweden on 30 April 2020. Wilfred’s estate was administrated by Sean,
who acted as the executor. Wilfred was resident for the year 2020 and domiciled in Malaysia
at the time of his death, while Sean was not a resident for the year 2020.

For the basis year 2020, the details of Wilfred’s income and his estate are as follows:

Business income
 Johor Bahru: Adjusted income of RM164,000. Capital allowances for the business
amounted to RM44,000.
 Pontian: Adjusted loss of RM42,000. This business had an unabsorbed adjusted loss of
RM12,000 brought forward from the year of assessment 2019.
 Singapore: Income of RM160,000. RM50,000 was remitted to Malaysia in March 2020
and another RM90,000 was remitted to Malaysia in September 2020.

Employment (in Malaysia)

 Salaries (January – April 2020) – RM10,500 per month

Dividends income
 Ramy Bhd (a resident company in Malaysia): RM43,000; received in February 2020.
 Narren Co. Ltd (resident in Singapore): RM28,000, received in March 2020, but only
remitted to Malaysia in August 2020.

Interest income
 RM3,600 being interest on 12-month fixed deposit account of RM80,000 with Maybank
Bank in Malaysia, maturing on 30 September 2020.
Rental income
 House in Melaka: Gross rental RM38,000. Allowable deduction: RM2,000.

Additional information:

1. Wilfred donated RM12,000 cash to an approved institution in March 2020, while Sean,
as executor donated RM8,000 cash to the Melaka State Government in December 2020.

2. Sean, as executor paid a monthly annuity of RM3,000 to Wilfred’s widow, Winnie starting
from June 2020. Sean also paid RM1,800 per month (not annuity) to Wilfred’s mother.

3. Wilfred had two children; Shirley, 22 years old, married and Maisie, 20 years old, not
married. Both his children are currently studying at National University of Singapore.

4. Winnie does not have any source of income.

Required:

a. For the year of assessment 2020, compute

i. The chargeable income of Wilfred; and
ii. The income tax payable by the executor of Wilfred’s estate.
(13 marks)

b. Explain the implication on income tax liability of the estate of Wilfred if Sean was a tax
resident in Malaysia for the basis year 2020.
(2 marks)
(Total: 15 marks)

QUESTION 1 – DEC 2018

Rahimi, a tax resident, died domiciled in Malaysia on 1 September 2020. According to his will,
Siti, a tax resident was appointed as an executor of the estate. Rahimi’s income and
expenditure for the year ended 31 December 2020 were as follows:

RM
Business income
Adjusted income 95,000
Balancing charge 5,000
Capital allowance 19,000

Dividend (single tier):

Received on 2 February 2020 18,600

Interest on fixed deposit in Public Bank

(received on 7 October 2020) 4,000

Net rental income per annum 12,000

Dividend income from Australia

(remitted to Malaysia on 5 September 2020) 15,000

Donations:
Cash contributions to an approved institution on 1 June 2020 4,000
 Annuity payable to Rahimi’s daughter, Fauziah 1,800
per month

Other information:

1. At the time of his death, Rahimi has two children, Amina 16 years old and Fauziah 25
years old (married).
2. He left a wife Marina who is not working.

Required:

a. For the year of assessment 2020, compute

i. The chargeable income of the deceased person; and

ii. The income tax payable by the executor.
(11 marks)

b. Explain the tax implications on the income tax liability of the executor if Rahimi was not
domicile in Malaysia at the time of his death.
(4 marks)
(Total: 15 marks)