ACC60704 MALAYSIAN TAXATION

TUTORIAL 3 - EMPLOYMENT INCOME

QUESTION 1

Mr Salleh worked as an architect with ZZ Sdn Bhd. He retired from the company on 30
November 2016 upon reaching his compulsory retirement age and received gratuity of
RM44,000. He has been working with the company since 28 December 2006. His
employment income for the year 2016 is as follows:

Item RM
Salary 8,000/month
Commission for the year ended 30/11/2016 10,000
(Commission for the year ended 30/11/2015 was RM3, 500)
Entertainment allowances 600/month
Traveling allowances (General) 200/month
Gardener (provided and paid by ZZ Sdn Bhd) 300/month
Servants (paid by Mr Salleh and claimed from the employer) 350/month
Ticket fare for his vacation with family:
Pulau Tioman 1,600
Hawaii 11,200
Phuket 3,500
Payment from unapproved pension fund 24,000
(Including his contribution of RM11,000)

Additional information:
(i) Mr Salleh was also being provided with motorcar and fuel for his personal use.
During the period of service in 2016, the value of benefits was RM2,500 and
RM800 respectively. Mr Salleh made an appeal to the IRB on the provision of
motorcar value and fuel. The IRB agreed to reduce 30% of the value of both
motorcar and fuel.
(ii) ZZ Sdn Bhd provided him a driver with the salary of RM400/month.
(iii) He was also being provided with a furnished living accommodation until his
employment ceased, but he moved out on 1/11/2016. The employer paid the rent of
RM1,200/month (including the value of RM200 for furniture-derived using formula
method). Mr Salleh was required to pay a nominal rent of RM200/month to the
employer.
(iv) Entertainment allowances used for official purposes were RM7,200.
(v) For traveling allowances, only ¼ was used for private purposes.

Required:
For the year of assessment 2016, determine Mr Salleh’s adjusted employment income.

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 QUESTION 2
Since 1.3.2010, Nadya has been working with Nice Recipe Sdn Bhd, as a marketing
manager. On 1.9.2016, she resigned from the company. As an appreciation, the company
had awarded her with a gratuity of RM36,000, a compensation for lost of employment
amounting to RM40,000 and also an excellent service award in term of watch worth
RM3,000 and cash of RM12,000. The followings are Nadya’s income and expenditure
for year 2016:
Monthly gross salary of RM8,200.
Petrol and traveling allowance for official purpose of RM1,000 per month.
Leave passages: RM
Labuan, Sabah 1,200 (including accommodation of RM400)
Kuantan, Pahang 700
Penang 900
Kota Bharu 600
Jogjakarta, Indonesia 1,000
Dublin 2,400 (not including of food allowance of RM650)

The company provided her with a fully furnished house including air-conditioners, curtains,
carpets and kitchen equipment. The annual value of the house is RM25,000. Nadya was
required to pay RM350 per month as a rental payment to the employer.

Nadya hired a gardener to maintain the house compound. The employer reimbursed the salary
of the gardener of RM250 per month.
Nadya also enjoyed medical and dental benefits provided by the employer. The annual amount
was RM10,000 and RM500 respectively. Besides that, the company also provided their
employees RM200 meal allowance per month and paid their parking fees at RM30 monthly.
On 14.10.2016, Nadya withdrew all contribution in a fund established by Nice Recipe Sdn Bhd
amounted to RM38,000 on 30.11.2016. 40% of the withdrawal was employee’s contribution
and the balance consisted of employer’s contribution and profit earned.
Nice Recipe Sdn Bhd paid for part of Nadya’s tax liability for YA 2015 amounting to
RM1,900.
The employer also offered the employees to purchase company’s goods at the discounted price.
Throughout the year, Nadya took up to RM2,500 discounts on cost of goods.
Apart from that, Nadya was also provided with child care allowance of RMRM4,000 per year
as she has two children ages 5 and 12 years old and they are sent to child care centre.
At the end of the year, she reported that she had incurred RM7,900 for official traveling.

Required:
For the year of assessment 2016, determine Nadya’s adjusted employment income. Use
the prescribed value method unless the question stated otherwise.

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 QUESTION 3

Mr Sidek worked as an accountant in Sime Bhd since 1st January 2009. He provided the
following information for the year 2016.
a. Salary of RM13,350 per month after his EPF contribution of 11%.
b. Commission of getting new customers amounting to RM5,500.
c. Monthly allowance:
i. Entertainment - RM300 per month
ii. Travelling (General) - RM250 per month
iii. Parking allowance - RM200 per month
d. He was given 10,000 unit of share at RM1 per share. The market value at the time
option granted was RM3 per share. He exercised his option on 31 October 2016 when
the market value was RM6 per share.
e. Shopping voucher worth RM200 was given by the company for Hari Raya purpose.
f. Two units of computers (notebook) worth RM5,000 each were given to him.
g. RM1,000 monthly for tax allowance.
h. As a professional accountant he needed to pay to Malaysian Institute of Chartered
Accountant RM300 per year to maintain his membership.
i. He resigned from Sime Bhd on 30 November 2016 at age of 52 years old and was
paid RM72,000 as a gratuity to recognize for his service in the company.
j. He was provided with a six-year old Honda Civic car costing RM80,000 by his
employer. The market value of the car was RM100,000 and he used 25% of the car
for private use. The car was sold to him when he resigned for RM50,000 (market
value RM55,000) in which he took the offer. Mr Sidek uses formula method to
determine the taxable value of the car.
k. A fully furnished accommodation was provided by the company until the date of his
resignation. His company rented the accommodation for RM2,000 per month
including the value of furniture for RM500 each month. A servant was provided
which was employed and paid by the company at RM700 per month. Mr Sidek uses
prescribed value method to determine the taxable value of the furniture.
l. The following additional appliances were also provided by the company:
i. Piano valued at RM8,000 (prescribed life span is 10 years)
ii. High dimension television valued at RM6,300 (prescribed life span is 7 years)
m. Medical cost amounting to RM3,500 was paid by his employer in relation to his
family members.
n. He has contributed to an unapproved retirement fund set up by Sime Bhd. He
received the following amount upon his resignation:
i. His contribution - RM35,000
ii. Employer contribution - RM25,000
iii. Interest earned - RM 8,000
o. He only used 20% of entertainment allowance for personal use and RM3,000 was
spent on official travelling.
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 Required:
Compute the adjusted employment income for Mr. Sidek for the year of assessment 2016.

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