Ss - Pyq Feb2021

CONFIDENTIAL 1 AC/FEB 2021/TAX317
UNIVERSITI TEKNOLOGI MARA

FINAL EXAMINATION
ANSWER SCHEME
COURSE : TAXATION 2
COURSE CODE : TAX317
EXAMINATION : FEBRUARY 2021
© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL
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SOLUTION 1A
a. i. Hi-Star Manufacturing Sdn Bhd is a Malaysian resident company is YA 2020 √

ii. The resident status of Hi-Star Manufacturing is determined by reference to the
existence of management and control in Malaysia during YA 2020. The key factor
to determine management and control of Hi-Star Manufacturing exist in Malaysia
is when at least one the BOD meetings of the company was conducted in Malaysia
during the basis period of YA 2020 (1/7/2019 – 31/8/2020). √
(2 √ x 1 mark = 2 marks)
b.
Hi-Star Manufacturing Sdn Bhd
Computation of income tax payable for the YA 2020
Notes RM RM
Less Add
Net profit before taxation 776,700√
Less: Non-business income:
Rental income from a shop lot in Singapore 2 80,000√
Foreign exchange gain on payment from trade
receivables (unrealized) 2 18,250√
Dividend received from a local company 2 21,450√
Add: Non-allowable expenses:
Provision of warranty 1 38,400√
Amortization of patents 1 15,300√
Royalty paid to a non-resident company for the use
of a special manufacturing process (no withholding
tax was deducted from this payment) 1 48,600√
Maintenance of plant and machinery 1 NIL√
Salaries and bonuses (normal employees) 3 NIL√
Salaries and bonuses (an ex-drug dependent who
had been placed under supervision and registered
with the AADK = RM3.5k x12m) DD because full-
time, monthly salary < RM4k 3 42,000√
Salaries and bonuses (a parole = RM4.1k x 12m)
AE because full-time, monthly salary > RM4k 3 NIL√
Salaries and bonuses (disabled employees) 3 83,000√
Overtime 3 NIL√
Employees Provident Fund (RM124,280 restricted
to 19% x (RM830,000) = RM157,700 3 NIL√
Repayment of PTPN loan on behalf of full-time
employees 3 NIL√
Defalcation of cash by one of the directors 3 31,000√
Expenses on Covid-19 testing to employees 3 NIL√
Secretarial fees & tax filing fees (restricted to 15k) 3 14,000√
Statutory audit fees 3 NIL√
Service fee to a contract research and
development company 3 34,000√
Equipment to facilitate access to the office for
disabled employees 3 NIL√
Installed commercial grade alarm system 3 30,700√
Advertisement in trade magazines and billboard 4 NIL√
RM RM
Less Add
Lucky draws and special gift for customers who
made purchases in a single receipt 4 NIL√
Sponsorship of golf tournament (members only) 4 11,000√
(50% NAE: refer PR 4/2015 item 7.5 p. 5-6 &
Diagram 1 p. 12)
Gift (with the company logo) to spectators 4 NIL√
Reimbursement to marketing staff for expenses
spent on customers (50% NAE) 4 6,200√
Sponsor three handicapped persons (non-
employee) who are registered with the Ministry of
National Unity & Social Development to attend an
approved training program by the MOF (DD) 4 15,000√
Contribution of personal protective equipment, face
masks and hand sanitizers to Hospital Sungai
Buluh (claimed under s 34(6)(h)) 5 NIL√
Cash donation to Rumah Kasih Murni (approved
orphanage home by JKM) 5 35,500√
Cash wakaf to Jabatan Agama Islam Selangor 5 40,000√
Business zakat 5 61,000√
Cash contribution for the maintenance of Bangunan
Sultan Abdul Samad (a heritage building) 5 NIL√
Translation of books into Bahasa Malaysia for the
use of secondary schools with the approval of
Dewan Bahasa and Pustaka 5 NIL√
Depreciation 38,200√
(293,700) 1,146,600
ADJUSTED BUSINESS INCOME 852,900
Less: Capital allowance (98,600)√

STATUTORY BUSINESS INCOME 754,300
Add: Rental income from Singapore NIL√

Add: Dividend income NIL√
AGGREGATE INCOME √ 754,300
Less: Cash donation to approved institution &

Cash wakaf to JAIS
[RM35,500 + 40,000 = 75,500√ vs restricted
to 10% AI = RM75,430] √ (75,430)
Less: Business zakat
[RM61,000 vs restricted to 2.5% AI =
RM18,858] √ (18,858)
TOTAL INCOME / CHARGEABLE INCOME 660,012
Tax rate (SME)
First RM600k of CI x 17% 102,000√
Next RM60,012 of CI x 24%√ 14,402.88
INCOME TAX PAYABLE 116,402.88
(44√ x ½ mark = 22 marks)
SOLUTION 1B
a. For the year of assessment 2020, Symphony Sdn Bhd as a newly commenced resident
non-SME company, √ should submit the estimated tax payable within 3 months √ from
the commencement date of the business √ which is latest by 30/11/2019 √ via Form
CP204. √ The first tax instalment will commence from the sixth month of the basis period
for YA 2020 √ and due not later than 15th of the month √ which is latest by 15/2/2020. √
b. Computation of penalty for underestimation of income tax for year assessment 2020 if
the company is a non-SME:
RM
Actual tax payable 1,400,000
(-) Estimate tax payable (800,000)
Difference 600,000 √
(-) 30% of RM1,400,000 √ (420,000)
Excess 180,000 √
Penalty on excess 10% √ 18,000

(Total: 30 marks)
SOLUTION 2A
a. Sunshine SB (FYE 31/10)
i. Main factory
Apply 10% Rule
NQP (office) = 1,980 / 9,900 sqft x 100% = 20% and it is more than 10% of the
total building area √. Thus, the NQP is excluded from QBE. √
YA RM
2018 √ QBE (80% x RM2,397,500) 2,350,000 √
Less : IA (10%) √ (235,000)
: AA (3%) √ (70,500)
RE 2,044,500
2019 Less : AA (3%) (70,500)
RE 1,974,000
2020 Less : AA (3%) (70,500) √
RE 1,903,500
ii. Storage for export goods
YA RM
2018 √ QBE 189,000 √
Less : IA NIL √
: AA (10%) √ (18,900)
RE 170,100
2019 Less : AA (10%) (18,900) √
RE 151,200
2020 Less : DV (WIH MV or sales (250,000) √
proceeds)
BC√ 98,800
BC is restricted to the actual amount claimed of RM37,800 √ due to disposal

within 2 years from the acquisition date (1/9/2018 – 15/5/2020).
iii. Living quarters para 42A(1)
YA RM
2019 √ QBE 280,000 √
Less : IA NIL √
: AA (10%) √ (28,000)
RE 252,000
2020 Less : AA (10%) (28,000) √
RE 224,000
iv. Child care centre
YA RM
2020 √ QBE (renovation cost) 16,950 √
Less : IA NIL √
: AA (10%) √ (1,695)
RE 15,255
b. i. QPE √ = RM100,000 √ because COPS < 75% of aggregate cost

ii. QBE √ = RM510,000 √ because COPS > 75% of aggregate cost. COPS = 400k /
510k = 78.4%
SOLUTION 2B
a. Steagles Sdn Bhd (FYE 31/3)

Clearing land Duck coops Staff Storeroom
quarters
QAE RM600,000 RM350,000 RM135,000 RM75,000
YA Rate 50% 10% 20% 10%
RM RM RM RM
2018 √ AA 300,000 √ 35,000 √ - -
2019 AA 300,000 35,000 27,000 √ 7,500 √
2020 AA - 35,000 x 7/12 27,000 x 7/12 7,500 x 7/12 =
= 20,417 √ = 15,750 √ 4,375 √
AC √ (600,000) √ (90,417) √ (42,750) √ (11,875)
without
election
FarmBest SB (FYE 30/9)

Duck coops Staff Storeroom
quarters
QAE RM350,000 RM135,000 RM75,000
YA Rate 10% 20% 10%
RM RM RM
2020 √ AA 35,000 – 27,000 – 7,500 – 4,375
20,417 = 15,750 = = 3,125 √
14,583 √ 11,250 √
b. i. The company is entitled to claim AA in YA of disposal √ because the QAE was in

used within 1 month prior to disposal√
ii. The company is not entitled to claim AA in YA of disposal √ because the QAE was
not in used within 1 month prior to disposal √
(Total: 24 marks)
SOLUTION 3A
a. TWO situations where DP = AP:
1. Gift of real property to close family members in the relationship between husband
and wife, parents and children, and grandparents and grandchildren √ where the
disposer is a Malaysian citizen (para 12, RPGT Act 1976) √
2. Disposal of real property between spouse √ where the disposer is a Malaysian
citizen. (para 3(2), RPGT Act 1976). √
3. Disposal of real property to a company controlled by him, or his relatives √ in
exchange with at least 75% consideration in shares of the company, where the
disposer is a Malaysian citizen (para 3(1)(b), RPGT Act 1976). √
(Any 2 situations x 2√ x 1 mark = 4 marks)
b. Habib (PR Malaysia)
RM
Disposal Price (13/3/2020)
Consideration received 650,000 √
Less: Incidental cost
Advertisement (2,500) √
Legal fee and stamp duty (8,600) √
Valuation fee (7,000) √
Less: Permitted expenses
Capital expenditure for enhancement of asset (42,000) √
DISPOSAL PRICE 589,900
Acquisition Price (1/6/2016)

Consideration paid [by reference to s 140(6) ITA 1967 for the 450,000 √
meaning of arm’s length because the expression of arm’s length
is not defined in the RPGTA 1976]
Add: Incidental cost
Legal fee and stamp duty 6,700 √
Less: Capital receipts
Compensation received (41,000) √
Deposit forfeited (22,000) √
ACQUISITION PRICE 393,700
CHARGEABLE GAIN √ 196,200

(-) Sch 4 Exemption: 10% CG @ RM10,000 WIH √ (19,620)
NET CHARGEABLE GAIN 176,580
RPGT rate (in the 4th year permanent resident) 20% √
RPGT Payable 35,316
SOLUTION 3B
a.
Item Reasons
1. Purchase of machine of Not subject to WHT√ because the payment was not
RM800,000 related to services. √
2. Installation of a machine of Subject to WHT√ under s 4A(i) √
RM270,000 in Malaysia The responsibility of payment to NR lies with Malaysian
resident & the services was performed in Malaysia √
3. Technical advice of Subject to WHT√ under s 4A(ii) √
RM90,000 in Malaysia The responsibility of payment to NR lies with Malaysian
resident & the services was performed in Malaysia √
b. Amount of WHT and penalty due to not remitted the amount to IRBM within due time:
Item WHT Rate Amount of WHT
(RM)
1. Purchase of machine of RM800,000 - Nil
2. Installation of machine of RM270,000 in Malaysia 10% 27,000 √
3. Technical advice of RM90,000 in Malaysia 10% 9,000 √
Total WHT 36,000
Penalty 10% √ 3,600 √
Amount due to government 39,600
c. WHT amount if SSB does not deduct the amount of WHT from payment to Jet Ltd (SSB
borne the payment of WHT as payment was made to Jet Ltd)
Item Gross Amount of WHT
(RM)
1. Installation of machine of 270k x 10% 27,000 √√
RM270,000 in Malaysia
2. Technical advice of 90k x 10% 9,000 √√
RM90,000 in Malaysia
Total WHT 36,000
(Total: 18 marks)
SOLUTION 4
RM RM RM RM
Ali Bakar Cyril Minah
DIVISIBLE INCOME
Pre: RM55.2k x 9/12 = RM41,400
(2:2:1) 16,560 16,560 √ 8,280√ -
Post: RM55.2k x 3/12 =
RM13,800 (1:1:1) 4,600 √ 4,600 - 4,600 √
Interest on capital 3,000 3,000 √ 1,125 √ 750 √
Salary 36,000 36,000 √ 18,000 √ 9,000 √
Drawing 2,000 √ - - 3,500 √
ABI 62,160 60,160 27,405 17,850

Less: CA 3,300 (1:1:1) (1,100) (1,100) √ - (1,100) √
Less: CA (Ali) (1,500) √
SBI 59,560 59,060 27,405 16,750

Add: Other Income
Add: Salary 24,000 √
Add: Casual income 8,000 √
AGGREGATE INCOME 83,560 67,060 27,405 16,750

Less: Approved donation 3,000
(1:1:1) (restricted to 10% AI) (1,000) √ (1,000) √ (1,000) √
TOTAL INCOME 82,560 66,060 27,405 15,750

(20 √ x ½ mark = 10 marks)
SOLUTION 5A
a. THREE situations where the Service Tax Act 2018 is outside Malaysia territorial basis:
1. Services provided outside Malaysia √
2. Services provided in or between designated areas of Labuan, Langkawi, Tioman
and Pangkor √
3. Services provided in or between special areas √ of any free zone, LW, LMW, Joint
Development Area and a petroleum supply based licensed under s 77B of the
Customs Act 1967.
b. According to Sales Tax Act 2018:

i. Taxable person refers to a registered manufacturer of taxable goods in Malaysia√;
and importer of taxable goods into Malaysia √
ii. Taxable period refers the period to account for sales tax√ and each taxable period
is made up of two calendar months. √
iii. Payment of sales tax to RMCD must be made within one month upon the
expiration of taxable period √ and the calculation of sales tax due is based on the
invoice date. √
(6 √ x ½ mark = 3 marks)
c. Amount of sales tax payable by Nyaman Sdn Bhd:

No Transactions Sales value (RM)
1 To a hospital in Labuan @24 units (including free items) NIL√
2 To a hypermarket is Segamat @11 units (including free
items) = 11 x RM3k 33,000√√
3 To a departmental store in Samarahan @18 units
(including free items) = 18 x RM3k 54,000√√
4 To a hotel in Pangkor @7 units NIL√
Sales value 87,000
Sales tax @ 10%√ 8,700√ OF
(8 √ x ½ mark = 4 marks)
SOLUTION 5B
a.
YA Basis Period Adjusted income/(loss)
2015√ 01/07/2014 – 30/04/2015√ 90,000
2016 01/05/2015 – 30/04/2016√ 120,000√
2017 01/05/2016 – 31/12/2017√ ((13,000) + 140,000) = 127,000√
2018 01/01/2018 – 30/09/2018√ (170,000 x 9/17) = 90,000√
2019 01/10/2018 – 31/05/2019√ (170,000 x 8/17) = 80,000√
2020 01/06/2019 – 31/05/2020√ 280,000√
b. The new accounting periods will be apportioned equally to form two basis periods for 2
YAs  for the failure year and its subsequent year. The amount of adjusted income will
be apportioned according to the two basis periods. 
(Total: 18 marks)
END OF SUGGESTED SOLUTION
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CONFIDENTIAL 1 AC/FEB 2021/TAX317

UNIVERSITI TEKNOLOGI MARA

© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL

a. i. Hi-Star Manufacturing Sdn Bhd is a Malaysian resident company is YA 2020 √

Less: Capital allowance (98,600)√

Add: Rental income from Singapore NIL√

Less: Cash donation to approved institution &

© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL

(4√ x ½ mark = 2 marks)

a. Sunshine SB (FYE 31/10)

Apply 10% Rule

© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL

ii. Storage for export goods

BC is restricted to the actual amount claimed of RM37,800 √ due to disposal

iii. Living quarters para 42A(1)

iv. Child care centre

(24√ x ½ mark = 12 marks)

b. i. QPE √ = RM100,000 √ because COPS < 75% of aggregate cost

© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL

a. Steagles Sdn Bhd (FYE 31/3)

FarmBest SB (FYE 30/9)

(16√ x ½ mark = 8 marks)

b. i. The company is entitled to claim AA in YA of disposal √ because the QAE was in

a. TWO situations where DP = AP:

(Any 2 situations x 2√ x 1 mark = 4 marks)

© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL

b. Habib (PR Malaysia)

DISPOSAL PRICE 589,900

Acquisition Price (1/6/2016)

CHARGEABLE GAIN √ 196,200

© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL

ABI 62,160 60,160 27,405 17,850

SBI 59,560 59,060 27,405 16,750

AGGREGATE INCOME 83,560 67,060 27,405 16,750

TOTAL INCOME 82,560 66,060 27,405 15,750

b. According to Sales Tax Act 2018:

c. Amount of sales tax payable by Nyaman Sdn Bhd:

© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL

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