SUGGESTED SOLUTION (NOVEMBER 2023)

COMMON TEST TAX667

QUESTION 1
a.
Deceased Executor
9/12 3/12
(R&ND) (NR)
RM RM
S.4(a) Business I (Penang)
Adjusted/ Statutory Income - - -

Business II (Klang Valley)

Gross Income 190,000
Less: Revenue Exp (50K + (2,000 x 3) (56,000)
Adjusted Income 134,000
Less: Capital Allowance (6,000)
: Balancing allowance (1,800)
Statutory Income 126,200 94,650 31,550

Aggregate Statutory Buz Inc 94,650 31,550

Less: Unabsorbed loss b/f (1,600)
Adjusted Aggregate Statutory Buz Inc 93,050 31,550

Add: Other non-business income

S.4(c) Dividend Inc (Single Tier) – exempted Nil
Interest Inc (Westpac Bank Bhd) – 1/8/2023 Nil
Interest Inc (Foreign) – 21/10/2023 Nil

S.4(d) Gross Rental Inc 45,000

Less: Advance Rental Inc Nil
: Refundable deposit (3,000)
Less: Installation alarm system (NA) Nil
: Repainting property (A) (3,700)
Adjusted Rental Income 38,300 28,725 9,575

Royalty 22,000
Less: Exemption (20,000) 2,000

Aggregate Income 123,755 41,125

Less: CY Business Loss (3,000) (1,000)
: Annuity Payable (4,000 x 3 mths) (12,000)
: Executor’s fee (1,800 p.mth - NA) Nil
Total income 120,755 28,125

Less: Self relief/ special relief (9,000) Nil

Wife relief (4,000)
Medical exp for serious illness (8,000)
Course fee @ upskilling (7,000) Nil
Chargeable income 92,755 ** 28,125

Tax Payable (24%) 6,750

** Give  - only if answer is correct.
(24 x ½ = 12 marks)
1
b. Executor’s fee:
RM2,000 monthly fee is associated with managing business. Therefore, the sum of
RM6,000 (3 x RM2,000)  is deducted from the Gross Business Income of Klang
Valley  business under Sec 4(a). The remaining sum is related to managing the estate
and hence non-allowable in arriving at Total Income.

(3 x 1 = 3 marks)
(Total: 15 marks)

QUESTION 2

a. i. Chargeable Income of Resident TB:

TI DI
RM RM
Sec 4(a) Statutory Buz Inc (Malaysia) 210,000√ 210,000

Sec 4(c) Dividend Inc (ST) - Exempted Nil 18,000√

Interest Inc (UBB) 31,000√ 31,000

Sec 4(d) Rental Inc (Canada) Nil√ 112,000√

Aggregate Income 241,000 371,000
Less:
Annuity payable (30,000) (24,000) √
Unapproved donations Nil (8,000)
Trustee’s fees - (25,000) √
Total Inc /Distributable Inc 211,000 314,000
Less: Accumulation (20,000) √
Chargeable Inc/ Net Distributable Inc 211,000 ** 294,000
**  given - only if answer is correct.

Deemed total income = RM 294,000/RM314,000 x RM211,000

= RM197,561  OF

ND Trust (1/4) √ D Trust (3/4) √

Budin Azeela & Cahya
Share of TTI Share of TTI = 3/4 x RM197,561
= 1/4 x RM197,561 = RM148,171
= RM49,390√
More than 1 beneficiary, compare ASR
with TTI:

Agg sum received by Azeela <

Total Income of
& Cahya
Trust Body =
= RM62,000 + RM58,000
148,171
= RM120,000√

Since ASR < TTI, sum received by

beneficiary is the SI √
Azeela = RM62,000 Cahya = RM58,000√

2
 ii. Income Tax Payable by Budin (NR)
RM
Sec 4(d) – Rental Income (FSI) Nil
Sec 4 (e) – SI from Trust 49,390 OF
Aggregate income/Total Income 49,390
Less: Personal relief Nil (Not entitled)
Chargeable income 49,390

Tax Payable (30%) 14,817

(24√ x ½ mark = 12 marks)

b. Section 61 (2) not applied – Both resident (Azeela) and non-resident (Budin)
beneficiaries√ are entitled to claim tax credit under Section S110 (8) √. As such,
the tax credit set-off will reduce the tax burden of both beneficiaries.

(3√ x 1 mark = 3 marks)

(Total: 15 marks)
QUESTION 3
a.

RM RM
Sec 4(a) Net Profit 3,730,000
Adjustments:
Less:
Interest Inc (Bonds) (80,000)
Interest Inc (Unapproved debentures) (55,000)

Add: Non-allowable expenses

Trustee’s fee 48,000 
Renovation for shop lot 76,000 
Fire Insurance for shop lot 2,000 
Employee’s salary NIL 
Maintenance cost for shop lot NIL 
REIT manager’s fee NIL 
Tax appeal 3,000 
Secretarial and tax filing fees 3,000 
Interest on loan 90,000 
Donation 30,000 
Bad Debts (General) 30,000  282,000
3,877,000
Other income:
Sec 4(c) 
Interest Inc (Bond) - Exempted Nil 
Less: Interest on loan (disregarded) Nil Nil

Interest Inc (Unapproved debenture) 55,000 

Less: Interest on loan (40% x 90,000) (36,000)  19,000

Aggregate Income 3,896,000

Less: Donation to public library (restricted to) (20,000)
Total Income  3,876,000**
** Tick given if answer is correct

3
 Distribution to unit holders: 3,600,000 / 3,876,000 X 100 = 92.88% OF

Since the distribution of income exceeded 90% of Arameh REIT’s Total Income for
the YA 2023, Arameh REIT would not be chargeable to tax.

Chargeable income = Nil 

Income Tax Payable = Nil 
(30 x ½ mark = 15 marks)

b. i. Company - residents in Malaysia:

No withholding tax. The income received from a REIT is subject to tax at
the prevailing tax rate applicable to the company at standard rate 24%.
For SME at 15%, 17% or 24%.

ii. Individual - resident in Malaysia:

Subjected to withholding tax at 10%  and it is a final tax.

iii. Individual - not resident in Malaysia:

Subjected to withholding tax at 10% and it is a final tax.

(Any 5 Acceptable answers  x 1 mark = 5 marks)

(Total: 20 marks)