CONFIDENTIAL AC/JAN 2022/TAX267/TEST

UNIVERSITI TEKNOLOGI MARA

TEST

COURSE : TAXATION 1
COURSE CODE : TAX267
EXAMINATION : 29 JANUARY 2022
TIME : 1 HOUR 30 MINUTES

INSTRUCTIONS TO CANDIDATES

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

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

i) the Question Paper

ii) a four-page Appendix 1

3. Answer ALL questions in English.

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QUESTION 1
A. Mitchell, a New Zealand financial advisor, arrived in Malaysia on 1 August 2016 and left
Malaysia permanently on 30 June 2021. Details of her stay in Malaysia are as follows:
Year Period of Stay Remark
2016 1/8/2016 – 31/12/2016 Note 1
2017 1/1/2017 – 31/8/2017 Note 2
2018 6/1/2018 – 25/7/2018
2019 10/3/2019 – 30/4/2019
18/7/2019 – 31/8/2019
2020 31/5/2020 – 28/8/2020
2021 1/1/2020 – 30/6/2021 Note 3

Note 1 : From 15 October to 30 December, Mitchell was in New Zealand to visit his
mother who was undergoing knees surgery.
Note 2 : From 1 March to 31 July, she was sent by his employer in Malaysia to several
countries including Australia, Singapore and France to complete a number of
financial projects.
Note 3 : She went to London for holiday from 17 April to 1 May 2021.

Required:
Determine the tax residence status of Mitchell for the relevant years of assessment 2016 until
year of assessment 2021. Provide the relevant sections and reasons to support your answers.
(12 marks)
B. State the circumstances in which leaving Malaysia for umrah is still form the consecutive
182 days in ascertaining the residence status for s 7(1)(b).
(3 marks)
(Total: 15 marks)

QUESTION 2
A. Merah Hiru Sdn Bhd (MHSB), a manufacturing company commenced operations on 1
February 2019 and made up its account to 31 December each year. The company bought
a piece of land for RM74,000 for the purpose of constructing a factory. The following
expenses were incurred the construction of the factory.

Expenditure RM
Legal fee (RM4,000 was related to land) 15,000
Architect’s fee 21,000
Approval of plan – local authority 5,000
Construction cost 250,000
Wiring and plumbing 65,000

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The building was completed and brought into use 1 October 2020. The built-up area
of the factory is occupied by the following:

%
Manufacturing area 80
Office 5
Showroom 5
Staff canteen 10

On 15 December 2020, Machine A was installed in the factory. The following

expenses were incurred to install the Machine A:

RM
Cost of Machine A 96,500
Cost of preparing the site to install Machine A 75,600

The company also acquired the following assets:

1. Honda Civic
Cash price: RM135,000
Deposit: RM20,000 (paid on April 1, 2020)
Hire purchase price: RM115,000
Monthly instalment: RM2,300
No. of instalment : 46 months (commenced on 15 May 2020)

2. Air conditioners
Cash price unit: RM1,800
No. of units purchased: 3 units
Date of purchased: 15 April 2021

Required:

a. Compute the capital allowance, industrial building allowance, balancing allowance or

charges (if any) for each asset for the relevant years of assessment up to the year of
assessment 2021.
(11 marks)

b. State the income tax implication for asset owned for less than two (2) years.
(1 mark)

B. Organic Sayuran Sdn Bhd is in the business of cultivating organic vegetables. The
company commenced the business in January 2019 and made up its accounts to 31
August annually. Since then, the company has incurred the following expenditures:

Date Capital Expenditure Amount (RM)

6 October 2019 Cost of land 120,800
30 November 2019 Clearing of land for planting of organic
vegetables 45,000
2 January 2020 Cost of planting new organic vegetables 85,000
20 September 2020 Construction of farm workers’ housing 50,000
5 July 2021 Construction of farm warehouse 25,000

On 15 August 2021, the company sold the whole plantation to Healthy Food Sdn Bhd for
a sum of RM450,000. Healthy Food Sdn Bhd closes its accounts to 31 December each
year.

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Required:

Calculate the agriculture allowance / charges for both Organic Sayuran Sdn Bhd for the
relevant years of assessment up to the year of assessment 2021, assuming no election is
made under Paragraph 27 of Income Tax Act 1967.
(8 marks)
(Total: 20 marks)

QUESTION 3

Klinik Ibu & Anak Indah, a partnership between Aina and Abdul closes its annual accounts on
31 December. On 31 July 2021, Aina ceased to be a partner. The partnership’s profit for the
year ending 31 December 2021 of RM24,750 after taking into account the following:

Notes RM
Remunerations including partners’ 214,500
Office expenses 5,000
Interest on partners’ capital 3,433
Depreciation 18,500
Renovation 1 13,000
Donation and Fee 2 20,000

Notes:

1. Included in the renovation is a renovation for Aina’s bungalow amounted to RM4,650. The
remaining balance was for office space expansion.

2. RM5,000 was a donation made by the partnership to approved institution on 20 June 2021.

Additional information:
Profit-sharing arrangements up to 31 July are as follows:

Aina Abdul
RM RM
Capital contribution 90,000 90,000
Salary (per annum) 56,000 56,000
Interest on capital (2% per annum) 1,050 1,050
Entertainment allowance (per month) 300 450
Profit-sharing ratio 0.4 0.6

On 1 August 2021, Budi joined the partnership and as from that date, the profit-sharing
arrangements are as follows:

Abdul Budin
Capital contribution RM90,000 RM70,000
Salary (per annum) RM40,000 RM32,500
Interest on capital per annum) 2% 2%
Entertainment allowance (per month) RM500 RM300
Profit-sharing ratio 0.65 0.35

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During the year, Aina received a dividend of RM7,800 from Malaysian resident company.
Budin made a cash donation of RM5,000 to Rumah Anak Yatim Makmur (an approved
institution) on 15 July 2021.
Capital allowance of RM42,800 for the year of assessment 2021.
Required:
a. Determine the divisible income of the partnership for the year of assessment 2021.
(7 marks)

b. Calculate the total income for Aina, Abdul and Budin for the year of assessment 2021.
(8 marks)
(Total: 15 marks)

(TOTAL: 50 MARKS)

END OF QUESTION PAPER