CIA2012: Principles of Taxation

TUTORIAL: COMPUTATION OF INCOME TAX FOR INDIVIDUAL

Question 1

Mr. Zafrul, an engineer is employed by ZYZ Bhd. since 31 August 2013. For the year 2022, he
was paid a gross monthly salary of RM8,000, until his service is terminated on 31 October 2022.
He also received the following income for the year 2022:
 A bonus of RM16,000 for 2021 service [S.13(1)(a)]
 Travelling allowance amounted to RM6,500 for official duties [S.13(1)(a)]
 Reimbursement of utility bill amounted to RM700 from ZYZ Bhd [S.13(1)(a)]
 Reward of RM1,500 for passing exam [S.13(1)(a)] not taxable
 Gratuity of RM55,000 for the years of service with the company [S.13(1)(a)]
 Compensation for loss of employment of RM77,000 [S.13(1)(e)]

The company also provides him with a six-year-old car (cost when new: RM90,000) [S.13(1)(b)]
for the period 1 January 2022 to 30 April 2022. From 1 May 2022 he was provided with a new
car costing RM150,000 [S.13(1)(b)]. Free fuel is also provided for him by the employer [S.13(1)
(b)]. The company also pays for the mobile phone (rental and charges) [S.13(1)(b)] and other
benefits during the year. His benefits and the respective costs incurred by the employers for the
year 2022 are as follows:
RM
Mobile phone [S.13(1)(b)] 2,000
Furnishing – Fully furnished [S.13(1)(b)] 8,000
Gardener’s wages [S.13(1)(b)] 8,400
Domestic servant’s wages [S.13(1)(b)] 9,000
Driver’s wages [S.13(1)(b)] 6,700
Childcare benefit [S.13(1)(b)] exempted 24,000

Leave passage provided to Mr Zafrul in 2022 are as follows:

Month Location RM
January Langkawi 2,120
March Thailand 4,000
April Penang 1,160
June Melaka 80
July Kuching 1,400

Mr. Zafrul was transferred from Johor Bahru to Kuala Lumpur on 1 January 2022. For the first
four months, he was provided accommodation in the Puteri Pacific Hotel and for the rest of the
employment period, he was provided with a rented bungalow. The costs incurred by the
employer for the year was as follows: [S.13(1)(c)]
RM
Hotel accommodation (4 months) 6,000
Rented Bungalow (6 months) 14,000
CIA2012: Principles of Taxation

ZYZ Bhd has operated an unapproved retirement scheme since 1989. On 30 September 2022, the
scheme was wound up. Mr Zafrul thus received the following income: [S.13(1)(d)]
RM
Employer cumulative contributions 43,000
Employee cumulative contributions 25,000
Interest [S.4(c)] 12,000

His wife, Ms. Edna is 40 years old choose an early retirement with a monthly pension of
RM2,500 [S.4(e)]. To fill up her spare time, she writes book on Malaysian Taxation System and
receives royalty income of RM6,000 from her books [S.4(d)] (exempt up to RM20,000). In
addition, she also receives RM13,000 translation fees on translation of literary works at the
special request of the Ministry of Education [S.4(d)] (exempt up to RM12,000). Apart from that
she recorded a tape on patriotic songs for children and music for elementary schools. She
received RM10,000 as royalties in respect of the recording of tapes [S.4(d)] (exempt up to
RM10,000).

Ms. Edna owns a terrace house in Cheras that are rented out for the first time. The rental income
for the year amounted to RM6,550. The expenditure for the year of assessment 2022 is as
follows: Advertising cost of obtaining first tenant (RM120), Housing loan interest (RM5,550),
Insurance premium on fire (RM200), Cost of supervision and rental collection (RM300) and
repairs and maintenance (RM330). [S.4(d)]

Ms. Edna also derived the following income for the year ended 2022:
RM
Annuity from his late father’s estate [S.4(e)] 4,500
Malaysian dividend [S.4(c)] exempted 8,000
Foreign dividend (remitted to Malaysia) [S.4(c)] 1,550
Interest from Malayan Banking Bhd for a 15-month fixed deposit 3,300
[S.4(c)] exempted
Annuity from Malaysian Life Insurers [S.4(e)] exempted 2,000
Amount received from occasional lectures [S.4(f)] 1,500
Lottery winning [S.4(f)] exempted 500,000

Details regarding the expenditure incurred by Donna and Don for the year ended 31 December
2022 are as follows:
Zafrul Edna
(RM) (RM)
Contributions to the Employees Provident Fund 8,800 -
Cost of a wheelchair for disabled mother - 1,300
Medical expenses for his mother - 1,400
Medical insurance premium for himself 1,170 -
Childcare fees 1,100
Purchase of sports equipment and gym memberships 900 500
Purchase of smart phones 3,500 2,350
Life Insurance premium 2,400 1,800
Tuition fees - 8,400
CIA2012: Principles of Taxation

Zakat 7,000 4,000

Note: Zafrul and Edna have not yet been blessed with a child. On 6 May 2022, Edna has legally
adopted her eight-year-old nephew who was a disabled orphan. In 2022, she paid premium on
education policy amounted to RM1,200 and a wheelchair at a cost of RM1,130 for the child.

Required: Compute the total tax payable of Mr. Zafrul and Ms Edna under separate assessment
for the YA 2022, assuming Edna is the one who elects to be assessed with her husband income.