EXAMPLE & EXERCISE: TAXATION FOR ESTATE

Q1

Siti domiciled in Malaysia, died on 31 March 2022. His sources of income for the respective periods are as
follows:
Business 1: Adjusted income RM64,000 for the year ended 31 December 2022
Bank interest: RM26,000 due and credited on 31 December 2022
Business 2: Adjusted loss RM20,000 for the year ended 31 December 2022
Rental income: RM36,000 for the year ended 31 December 2022
Dividend income: RM35,000 paid on 1 January 2022
Other details are as follows:
(i) The executor paid RM2,000 annuity to Sitimah (daughter of the deceased) on 1 December 2022.
(ii) The executor paid RM10,000 cash as gift to a state government on 1 October 2022.
(iii) The executor paid RM6,000 to Sinun (beneficiary of the estate) from the income of the estate in
2022.
Required:
Calculate the total income of Siti, estate of Siti, Sitimah and Sinun for the YA 2022.
Answer:

Siti (RM) 1/1 – 31/3 Estate (RM) ¼ -

(3/12) 31/12 (9/12)
Business 1:
Adjusted income / SI (64,000) 16,000 48,000
+ Other statutory income:
Interest 26,000
Rental income (36,000) 9,000 27,000
Dividend Exempted
Aggregate income 25,000 101,000
-CYLoss (20,000) (5,000) (15,000)
-Annuity - (2,000)
-Donation - (10,000)
Total inc / CI 20,000 74,000
-relief: personal (9,000) (9,000)

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 Relief : husb (4,000)
Children
Books
insurance

Chargeable income 7,000 65,000

Tax payable:
First 5k /50k 0 1,800
2,000 x 1% / 15k x 13% 20 1,950
Tax payable 20 3,750
Total income Sitimah: RM2,000 ; TI Sinun: exempted

Q2

Mr S who was resident and domiciled in Malaysia passed away on 30 April 2022 soon after he had a sudden
heart attack. His sources of income for the year ended 31 December 2022 are as follows:
(i) Business A (Malaysia): RM
Adjusted income for the basis period ended 31 December 2022 240,000
Capital allowance for the year of assessment 2022 20,000
(ii) Business B (Malaysia):
Adjusted loss for the year ended 31 December 2022 (60,000)
Unabsorbed loss brought forward from the year of assessment 2021 (30,000)
(iii) Business C (Myanmar):
Adjusted income for the basis period 31 December 2022 200,000
(iv) Rent (net of allowable expenses) from a shophouse located in Kuala 84,000
Lumpur
(v) Dividend (Indonesia): 10,000
It was distributed by an overseas company and remitted into Malaysia on 9
May 2022.

Mr S donated RM20,000 in cash to an approved welfare home in Kuala Lumpur on 25 January 2022.

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Serene is a niece of Mr S. She is the only executor appointed under the will of Mr S. She is a tax resident in
Malaysia for the basis period for the year of assessment 2022. Commencing from the month of June 2022,
Serene received an annuity of RM2,000 (monthly) from the estate of the deceased.

Required:
(a) For the year of assessment 2022, compute the respective chargeable income of Mr S (the deceased)
and the executor of the Estate of Mr S.
(b) Discuss distribution to beneficiaries and its taxability in the estate of administration.

Q3

Mr Kim, domiciled in Malaysia died on the 30.9.2022. Details of his income for the year ended 31
December 2022 are as follows:

RM
Business (Malaysia) 160,000
Rental (Malaysia) 100,000
Rental from Australia (remitted to Malaysia) 48,000
Dividend (Malaysia) 110,000

Expenses relating to the business:

Allowable revenue expenses 45,000
Renovation expenses on business premise 30,000
Capital allowances for the year 25,000

Expenses related to the rental of Malaysian property:

Repairs and maintenance 5,000
Assessment & quit rent 3,000
Fire insurance 2,500

The following monthly annuity was paid by the executor from the income of Mr Kim’s estate:
RM
Mrs Kim (wife) 2,000
Daughter 1,000
Son 1,200

The executor also distributed RM6,000 to Miss Cha, Mr Kim’s sister from the estate.

Required:
(i) For the year of assessment 2022, Calculate the chargeable income of:
(a) Mr Kim.

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 (b) the estate.

(ii) Explain the difference on treatment of the deceased domiciled and not domiciled in Malaysia.

Q4

Jerry, a tax resident, domiciled in Malaysia died on 1 September 2022. According to his will, Tom, a tax
resident was appointed as an executor of the estate. Jerry’s income and expenditure for the year ended 31
December 2022 were as follows:

RM
Business income
Adjusted income 133,000
Balancing charge 7,000
Capital allowance 26,600

Dividend (single tier):

Received on 2 February 2022 26,040

Interest on fixed deposit in Maybank 5,600

(received on 7 October 2022)
Net rental per annum 16,800
Dividend income from New Zealand 21,000
(remitted to Malaysia on 5 September 2022)

Donations:
Cash contributions to an approved institution on 1 5,600
June 2022

Annuity payable to Jerry’s daughter, Reena 2,520 per month

Other information:

(i) At the time of his death, Jerry has two children, Jeremy 17 years old and Jenny 26 years old
(married).
(ii) He left a wife Shereen who is not working.

Required:
(a) For the year of assessment 2022, compute:
(i) The chargeable income of the deceased person; and
(ii) The income tax payable by the executor.
(b) Explain the tax implications on the income tax liability of the executor if Jerry was not domiciled in
Malaysia at the time of his death.

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Q5

Mr Ali, a tax resident, died domiciled in Malaysia on 1 July 2022. According to his will, Mrs Sheilla, a tax
resident was appointed as an executor of the estate. Mr Ali’s income and expenditure for the year ended 31
December 2022 is as follows:

Business Income RM
Adjusted income 160,000
Balancing charge 2,000
Capital allowance 18,000

Dividend (single tier):

Received on 2 March 2022 6,000

Interest on fixed deposit in RHB Bank (received on 10 October 2022) RM10,000

Foreign income:
Royalty income received from Singapore RM35,000
(Only RM25,000 was remitted to Malaysia on 15 August 2022)

Rental income per month RM2,000

(The house was first rented out on 1 March 2022)

Expenditures incurred during the year of assessment 2022:

Cash contributions to an approved institution on 1 May 2022 RM6,000
Annuity payable per month to Mr Ali’s parents RM3,400
Executor fees of RM10,000 was paid to Mrs Sheilla in December 2022.

Note: At the time of his death, Mr Ali who is a single parent, has two children, both under 18 years old.

Required:
Compute the income tax payable of Mr Ali and the executor of his estate for the year of assessment 2022.

Answer:

RM Deceased (RM) – Estate (RM) –

6/12 6/12
AI 160,000
+BC 2,000
-CA (18,000)
SI 144,000 72,000 72,000

Dividend Exempted -
Interest - 10,000
Royalty 25,000 - exempted
Rental (10 x 2,000) = 20,000 20,000 10,000 10,000
Aggregate income 82,000 92,000
-Annuity payable (3,400 x 6) - (20,400)

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 -Donation (10% x AI) 6,000 (6,000)
-Executor fees Nil Nil
Total income 76,000 71,600
-reliefs:
Personal relief (9,000) (9,000)
Children (2,000 x 2) (4,000) -
Chargeable income 63,000 62,600

First 50,000 1,800 1,800

Next 13,000 x 13% / 12,600 x 13% 1,690 1,638
Tax payable 3,490 3,438

Q6

Mr Sofean, an entrepreneur and a director of several companies, died on 1 July 2022. He was a resident
and domiciled in Malaysia at the time of his death. He left behind his wife, Madam Rose (resident) and two
children. His brother, Mr Arun (non-resident), is appointed as the executor of his estate. Mr Arun provided
the following information for the basis year 2022:

(i) Trading Business:

RM
Adjusted income for YA 2022 360 000
Unabsorbed loss brought forward from YA 2021 44 000
Capital allowance for YA 2022 25 000
Capital allowance brought forward from YA 2021 10 000

(ii) Manufacturing business:

RM
Adjusted loss for YA 2022 100 000
Capital allowance for YA 2022 15 000
Balancing allowance for YA 2022 18 000

(iii) Directors’ fees:

RM
Received in April 2022 from a Malaysian 60 000
resident company
Received in June 2022 from a foreign company 50 000

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(iv) Dividend income:
RM
Received from Malaysian resident company in June 12 000
2022 (single tier)
Received from a foreign company in August 2022 16 000
(remitted)

(v) Interest from a Malaysian resident bank - received in August 2022 amounting RM3 000.
(vi) Net rental loss after deducting renovation of RM30 000 amounting to RM20 000.
(vii) Annuity paid to Madam Rose in 2022 amounting to RM24 000.
(viii) Distributions (not an annuity) to his children in 2022: Sandra, 21 years old who is studying in an
Australian University and Suhil, 20 years old who is studying in a Malaysian University of
RM12 000 and RM16 000 respectively.
(ix) Executor fees paid in YA 2022 amounting to RM26 000.
(x) Mr Sofean donated 2 units of computers to an approved institution in February 2022 amounting
to RM4 500.
(xi) Medical insurance premium paid for the period 1 January 2022 to 30 June 2022 amounting to
RM2 400.
Required:

Compute the income tax payable by the deceased and the executor of the estate of the deceased for the year

of assessment 2022.

Answer:

Deceased Executor
6/12
6months 6months
Trading Business

Adjusted income 360,000

- CA b/f (10,000)

- CA c/y (25,000)

Statutory income 325,000 162,500 162,500

- -

Manufacturing business - -
Adjusted income nil nil nil

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Statutory income nil nil nil

Aggregate Statutory business Income 325,000 162,500 162,500

- Loss b/f (44,000) (22,000) (22,000)

Add: - -

Directors fees - -

- Msia 60,000 60,000 -

- foreign exempt exempt -

Dividend -

- Msia final final -

- foreign exempt - exempt

Interest - FD local bank exempt - exempt

Adjusted Rental income 10,000 5,000 5,000

Aggregate income 205,500 145,500

- current year loss (100,000) (50,000) (50,000)

Annuity (24,000) (24,000)

Approved donation - BIK - -

Total income 155,500 71,500

Relief

Personal (9,000) (9,000)

wife (4,000)

Medical insurance (2,400) (2,400)

Children

- Sandra (8,000)

- Suhil (8,000)

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 Chargeable income 124,100 62,500

On first RM100,000 / first 50k 10,900.00 1,800.00

Next 24,100@ 24% / next 12,500 x
13% 5,784.00 1,625.00

Tax liability 16,684.00 3,425.00

Q7

Mr Andrew Kuok was a Malaysian resident and had three businesses - two in Malaysia and one in Vietnam.
He passed away on 30 September 2022 without a will. The businesses accounts are drawn to 31 December
each year. For the year ended 31 December 2022, the trading results according to the tax agent were as
follows:
Business sources Income / (loss) Amount (RM)
Business 1 (Malaysia) Statutory income 146,362
Business 2 (Malaysia) Adjusted loss (59,177)
Business 3 (Vietnam) Adjusted income 24,405

Business 2 ceased operations in June 2022. Mr Andrew Kuok ’s other income consists of a rental from a
residential property in Kuala Lumpur, a single tier dividend from a public listed company in Malaysia, and
interest from a fixed deposit in a Malaysian bank, the details of which are as follows:

Other income sources Amount

(RM)
Rental (year ended 31 December 2022) 28,000
Dividend (Malaysian single tier paid in October 2022) 11,749
Interest from a Malaysian bank (received in May 2022) 4,918

Mr Andrew Kuok, who was domiciled in Malaysia at the time of his death, was survived by a wife and a
child aged 10 years in January 2022. The wife had no source of income. The younger brother of Mr Andrew
Kuok, Jeremy Kuok administered the estate till the financial year end 31 December 2022. He closed down
the business in Vietnam and remitted a sum of RM70,000 to Malaysia in November 2022. He made an
annuity payment of RM17,000 to the wife of the deceased, pending the formalities of the winding up of the
estate sometime in early 2023.

Required:

Compute the chargeable income for the year of assessment 2022, in respect of:

(i) Mr Andrew Kuok, assuming that the wife relief and child relief were claimed by him; and

(ii) The estate of Mr Andrew Kuok (deceased).

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Q8

Mr T who was resident and domiciled in Malaysia passed away on 30 April 2022 soon after he had a
sudden heart attack. His sources of income for the year ended 31 December 2022 are as follows:
RM
(i) Business A (Malaysia):
Adjusted income for the basis period ended 31 December 2022 240,000
Capital allowance for the year of assessment 2022 20,000

(ii) Business B (Malaysia):

Adjusted loss for the year ended 31 December 2022 (60,000)
Unabsorbed loss brought forward from the year of assessment (30,000)
2021

(iii) Business C (Myanmar

Adjusted income for the basis period 31 December 2022 200,000
An amount of RM160,000 (after tax suffered in Myanmar) was
received in Malaysia on 1 July 2022

Rent (net of allowable expenses) from a shophouse located in 84,000

(iv) Kuala Lumpur

(v) Dividend (Indonesia): 10,000

It was distributed by an overseas company and remitted into
Malaysia on 9 May 2022

Mr T donated RM20,000 in cash to an approved welfare home in Kuala Lumpur on 25 January 2022.
Serena is a niece of Mr T. She is the only executor appointed under the will of Mr T. She is a tax resident in
Malaysia for the basis period for the year of assessment 2022. Commencing from the month of June 2022,
Serena received an annuity of RM2,000 (monthly) from the estate of the deceased.

Required:
For the year of assessment 2022, compute the respective chargeable income of Mr T (the deceased) and the
executor of the Estate of Mr T.

Q9

Encik Fahmi, an entrepreneur and a director of several companies died on 1 July 2022. He was a resident
and domiciled in Malaysia at the time of his death. He left behind a wife, Puan Farhani (resident and not
working) and two children. His brother, Encik Syahmi (non-resident) is appointed as the executor of his
estate. Encik Syahmi provided the following information for the basis year 2022:

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(i) Manufacturing business:
RM
Adjusted income 200,000
Adjusted loss brought forward from year of assessment 2021 44,000
Capital allowance for year of assessment 2022 12,000
Capital allowance brought forward from year of assessment 2021 10,000
Balancing charges for year of assessment 2022 28,000

(ii) Director fees:

Received in April 2022 from a Malaysian resident company 60,000
Received in June 2022 from a foreign company 50,000

(iii) Dividend income:

Received from Malaysian resident company in June 2022 (single-tier) 12,000
Received from a foreign company in August 2022 (remitted) 16,000

(iv) Annuity payable to Puan Farhani in 2022 24,000

(v) Distributions made to his children in 2022 (not an annuity):

Shima (non-resident), 21 years old, studying in an Australian university 7,000
Faris (resident), 20 years old, studying in Malaysian university 5,000

(vi) Executor fees paid during year 2022 26,000

(vii) Encik Fahmi donated cash to an approved institution in February 2022 4,500

(viii) Purchase of books in January 2022 for Encik Fahmi’s children 800

Required:

Calculate the chargeable income of the deceased and the executor of the estate for the year of assessment
2022.

Q10

Mr James Jayakumar (‘Kumar’) was an enterprising businessman who actively operated two businesses in
Malaysia and one in Cambodia. The Cambodian business is overseen by his brother in-law, Rathana Nimol
(‘Nimol’) who is a resident of Cambodia. Kumar had always wanted to write a will but he was so busy with
his business matters that he failed to find the time to consult with a lawyer to prepare one. However, on 30
September 2022, he passed away suddenly after attending a late-night party in Phnom Penh to celebrate the
appointment of a new agent for the company’s supplies there – without ever writing a will. He was
domiciled in Malaysia at the time of his death.

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After his death, Kumar’s accountant worked out the financial details for the year ended 31 December 2022
and had provided the following information:
▪ The two Malaysian businesses had a statutory income of RM151,060 and an adjusted loss of
RM61,077 respectively. Due to the losses, this second business was closed down in June 2022.
▪ The business in Cambodia had an adjusted income of RM25,188 and a sum of RM20,000 was
remitted to Malaysia in December 2022.
▪ A single tier dividend of RM5,000 was received from the shares held in a public listed company
that Kumar invested in 2020.
▪ Interest of RM3,000 was received in May 2022 from the fixed deposit in a local bank that had
provided business loans to Kumar on the security of the fixed deposit.
▪ A double storey bungalow owned by Kumar in Klang had been rented out for the whole of the year
2022 and the net rental was RM24,000.

Kumar leaves behind a wife, Ms Shanthi who has no source of income of her own; and a daughter who was
at the time of his death, only nine (9) years old. It was agreed that Ms Shanthi’s brother, Mr Stevens Dorai
(‘Dorai’), who is a lawyer by profession, would administer the estate.

Dorai made legal arrangements for the business in Cambodia to be transferred and carried on in the name
of Nimol with effect from 1 January 2023. He paid an annuity of RM20,000 in October 2022 to Shanthi to
cover her financial needs till the end of the year; and a distribution of RM900,000 in December 2022 from
the winding up proceeds of the Malaysian business after settling all outstanding debts.

Required:
(a) With reference to the provisions of the Income Tax Act 1967, compute the chargeable income for
the year of assessment 2022 in respect of:
(i) Mr James Jayakumar [you may assume that he had claimed wife and child relief];
(ii) The estate of James Jayakumar (deceased); and
(iii) Ms Shanthi, wife of the deceased.
(b) Assuming that the late James Jayakumar was not domiciled in Malaysia at the time of his death,
what is the significance for the determination of the income tax liability on the executor of his
estate?

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