CONFIDENTIAL AC/JUN 2022/TAX517

UNIVERSITI TEKNOLOGI MARA

TEST

COURSE : TAXATION 2
COURSE CODE : TAX517
EXAMINATION : JUNE 2022
TIME : 2 HOURS

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of three (3) questions.

2. Answer ALL questions in English.

3. Answer ALL questions in your ANSWER SHEET. Start each answer on a new page and
number each page.

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

i) the Question Paper

ii) a four-page Appendix 1

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

This examination paper consists of 6 printed pages

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CONFIDENTIAL 2 AC/JUN 2022/TAX517
QUESTION 1

A. Fusion Sdn Bhd, a resident company in Sabah has been in operation since 2017. The
company manufactures two products, Product Bee (a promoted product) and Product Dee
(a non-promoted product). The financial information pertaining to the promoted and non-
promoted products are as follows:

2022 2023
RM’000 RM’000
Product Bee
Adjusted income/(loss) 400,000 800,000
Capital allowance 160,000 180,000
Unabsorbed capital allowance from YA 2021 60,000
Unabsorbed business loss from YA 2021 (100,000)
Qualifying capital expenditure incurred:
Plant and machinery 90,000 120,000
Factory building 130,000

Product Dee
Statutory income/(loss) (62,000) 88,000
Unabsorbed business loss from YA 2021 (28,000)

Cash donation to Sabah State Government 10,000 15,000

To maximise tax savings, the company plan to apply for Pioneer status or Investment Tax
Allowance incentives currently available under the Promotion of Investment Act 1986.

Required:
a. Calculate the company’s chargeable income and the amount to be credited to the
exempt income account for the year of assessment 2022 and 2023 under the
following tax incentives:

i. Pioneer Status
ii. Investment Tax Allowance
(20 marks)

b. Based on the computation in (a), evaluate the incentive that Fusion Sdn Bhd
should apply.
(2 marks)

B. Cengkih Sdn Bhd is a Malaysian resident company specializing in manufacturing food

products since 2015. To reduce the operating cost and increase the quality of the
products, the company installs three new sophisticated machines to its existing
production line at a cost of RM2 million. The modernization project commenced in
January 2021 which is eligible for reinvestment allowance.

Required:
Explain the factors that determine the eligibility of Cengkih Sdn Bhd in claiming for
reinvestment allowance.
(3 marks)
(Total: 25 marks)

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 CONFIDENTIAL 3 AC/JUN 2022/TAX517
QUESTION 2

A. Kaer is a Malaysian citizen. He entered into a Sales and Purchase Agreement with Shiqa to
sell his single-storey house in Batu 3, Sandakan for RM450,000. On 17 May 2021, Shiqa
paid a deposit of 10% of the selling price while waiting for her bank loan to be approved.
Shiqa failed to secure the bank loan. As a result, the deposit paid by her was forfeited.

Kaer received the house as a graduation gift from his father, Encik Bahar who is a Malaysian
citizen. The transfer was made on 23 December 2014 and the market value of the house at
the time of transfer was RM350,000. Encik Bahar purchased the house from his brother for
RM280,000 on 14 March 2011. The market value on that date was RM300,000. Encik Bahar
had incurred RM6,500 for the legal fees, RM2,000 for stamp duty and RM20,000 for minor
renovation.

A construction activity near Kaer’s house resulted in damages to his house. Kaer received
a compensation of RM50,000 from the contractor for the damage. He also claimed
RM15,000 from the insurance company for the said damage.

On 15 November 2021, Kaer found a new buyer, Mel and sold the house to her for
RM481,000. He incurred RM1,000 for advertisement fee to find the buyer.

Required:

Calculate the real property gains tax payable (if any) by the following disposers:

a. Encik Bahar on the transfer of the house to Kaer.

b. Kaer on the disposal of the house to Mel.
(10 marks)

B. On 1 April 2016, Nongkhai (a Thailand citizen) received a shophouse as a gift from his
mother-in-law, Mayuree (a Malaysian citizen). The market value of the shophouse at the
transfer date was RM2.2 million. Mayuree has purchased the shophouse at a cost of RM1.8
million on 15 November 2012. She also incurred RM18,000 and RM16,000 for legal fees
and stamp duty, respectively.

On 1 February 2021, Nongkhai disposed the shophouse to Mamat for RM3.5 million. Mamat
is a Malaysian citizen. Prior to disposal, Nongkhai incurred RM1,200 for an online advertising
charges and a total of RM28,500 for valuation and legal fees. Nongkhai also incurred
RM1,500 on maintenance works a month before the disposal took place.

Required:

Calculate the real property gains tax payable (if any) by Nongkhai on the disposal of the
shophouse to Mamat.
(5 marks)

C. Explain the following components of real property company:

a. A controlled company.
b. Derivation of total tangible asset.
(5 marks)
(Total: 20 marks)

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 CONFIDENTIAL 4 AC/JUN 2022/TAX517
QUESTION 3

Puan Kamelia, a Malaysian citizen transferred a house in Kolombong, Sabah as a gift to her
daughter, Nani on 15 May 2018. Puan Kamelia bought the house on 1 April 2015 for RM240,000.
She paid stamp duty and lawyer fees of RM5,600 during the purchased. On 20 January 2016,
Puan Kamelia renovated the house for RM45,000. However, in July 2017, she received
insurance compensation of RM25,000 due to fire that damaged the kitchen. Nani paid RM3,200
for the transfer fees of the house and the market value on the date of transfer was RM390,000.

On 12 July 2019, Nani was transferred to a new branch in Butterworth, Penang and therefore she
disposed the house to her cousin, Amzar (resident) for RM350,000. The market value of the
house was RM450,000 on the date of transfer. On 1 February 2017, Amzar acquired a factory in
Kluang, Johor, for RM520,000. Amzar paid stamp duty and legal fees amounting to RM6,000 in
connection with the acquisition of the factory.

Required:

With reference to the above question, calculate the stamp duty payable by Amzar on the
acquisition of the house from Nani.
(5 marks)

END OF QUESTION PAPER

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CONFIDENTIAL APPENDIX 1 (1) AC/JUN2022/TAX517

• The following tax rates are to be used in answering the questions.

Income tax
rates
a) Resident company with paid up capital of RM2.5 million and below
(at the beginning of the YA) AND having gross income from source
or sources consisting of a business of not more than RM50 million
for the basis period for a YA:

On the first RM600,000 chargeable income 17%

On subsequent chargeable income 24%

b) Resident company with paid up capital above RM2.5 million (at the
beginning of the YA) OR having gross income from source or
sources consisting of a business of more than RM50 million for the
basis period for a YA 24%

c) Non-resident company/branch 24%

d) Resident limited liability partnership with capital contribution of

RM2.5 million and below (at the beginning of the YA) AND having
gross income from source or sources consisting of a business of
more than RM50 million for the basis period for a YA AND the
resident limited liability partnership is not controlled by or does not
control another company with a capital contribution (whether in
cash or in kind) and paid up share capital of more than RM2.5
million:

On the first RM600,000 chargeable income 17%

On subsequent chargeable income 24%

e) Resident limited liability partnership with capital contribution above

RM2.5 million (at the beginning of the YA) OR having gross income
from source or sources consisting of a business of more than RM50
million for the basis period for a YA 24%

f) Non-resident limited liability partnership 24%

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CONFIDENTIAL APPENDIX 1 (2) AC/JUN2022/TAX517

g) Resident individuals

Chargeable Income Rate Cumulative Tax

RM RM
0 - 2,500 0% 0
2,501 - 5,000 0% 0
5,001 - 10,000 1% 50
10,001 - 20,000 1% 150
20,001 - 35,000 3% 600
35,001 - 50,000 8% 1,800
50,001 - 70,000 13% 4,600
70,001 - 100,000 21% 10,900
100,001 - 150,000 24% 22,900
150,001 - 250,000 24% 46,900
250,001 - 400,000 24.5% 83,650
400,001 - 600,000 25% 133,650
600,001 - 1,000,000 26% 237,650
1,000,001 - 2,000,000 28% 517,650
Above 2,000,000 30%

h) Non-resident individuals 30%

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

Cost of car Prescribed annual Prescribed annual

(when new) value of private value of
RM usage of car private petrol
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 benefit is fixed at RM600 per month.

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CONFIDENTIAL APPENDIX 1 (3) AC/JUN2022/TAX517

• 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

• Rate of Capital Allowances

Motor Heavy General Computers Others Building

Vehicles Plant & Plant &
Machinery Machinery
Initial 20% 20% 20% 20% 20% 10%
allowance
Annual 20% 20% 14% 20% 10% 3%
allowance

• Rate of Real Property Gains Tax Rates

For the period of 1 January 2019 and onward

Category of disposal RPGT rate

Individual Individual Company
(citizen or (non-citizen or
permanent non-permanent
resident) resident)
Within 3 years after date of 30% 30% 30%
acquisition
In the 4th year after date of 20% 30% 20%
acquisition
In the 5th year after date of 15% 30% 15%
acquisition
In the 6th year after date of 5% 10% 10%
acquisition or thereafter

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CONFIDENTIAL APPENDIX 1 (4) AC/JUN2022/TAX517

• Sales Tax and Service Tax

For the period from 1 September 2018 and onward

Sales tax rate for taxable goods 5%, 10%

Service tax rate for taxable services 6%

• Stamp Duty

Rates of duty under the First Schedule

Conveyance, assignment, transfer or absolute bill of sale

Rate
%
Sale of property from 1 January 2019 – 30 June 2019
For every RM100 or fractional part thereof:
On the first RM100,000 1%
RM100,001 to RM500,000 2%
On the excess over RM500,000 3%

Rate
%
Sale of property from 1 July 2019 onwards
For every RM100 or fractional part thereof:
On the first RM100,000 1%
RM100,001 to RM500,000 2%
RM500,001 to RM1,000,000 3%
On the excess over RM1,000,000 4%

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