CONFIDENTIAL 1 AC/DEC 2023/TAX267/TEST

UNIVERSITI TEKNOLOGI MARA

TEST

COURSE : TAXATION 1

COURSE CODE : TAX267

EXAMINATION : 16 DECEMBER 2023

TIME : 1 HOUR 30 MINUTES

INSTRUCTIONS TO CANDIDATES

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

2. Answer ALL questions in the Answer Booklet. Start each answer on a new page.

3. Do not bring any material into the examination room unless permission is given by the
invigilator.

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

i) the Question Paper

ii) one-page Appendix 1
iii) an Answer Booklet – provided by the Faculty

5. Answer ALL questions in English.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

This examination paper consists of 5 printed pages

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 CONFIDENTIAL 2 AC/DEC 2023/TAX267/TEST

QUESTION 1

Dr Hussain Jabal, a Bahraini cardiovascular surgeon, arrived in Malaysia on 23 July 2018 and
left Malaysia permanently on 31 May 2023. Details of his stay in Malaysia are as follows:

Year Periods of stay Notes

2018 23 July - 31 December
2019 15 January - 31 May 1
14 June - 28 July 2
2020 1 May - 15 August
20 September - 10 December
2021 1 January - 31 December
2022 - - - Not in Malaysia
2023 1 February - 31 May 3

Notes:

1. He returned to Bahrain to resolve his children’s school affairs from 1 January 2019 to 14
January 2019.
2. He travelled to Russia to participate in a heart symposium pertaining to his professional
field from 1 June 2019 to 13 June 2019.
3. Left Malaysia permanently on 31 May 2023 at 10.30 pm.
Required:

a. Determine the tax residence status of Dr Hussain Jabal for the relevant years of
assessment 2018 until year of assessment 2023. Provide the relevant sections and
reasons to support your answers.
(12 marks)

b. Briefly state any TWO (2) circumstances of temporary absence.

(3 marks)
(Total: 15 marks)

QUESTION 2

A. Bintang Axia Sdn Bhd, a manufacturing company, prepares its financial statements
annually, with the accounting period ending on 31 December. In 2021, the company
bought a piece of land for the purpose of constructing a factory amounting RM240,000.
The company constructed a factory in February 2021, with the following costs:

RM
Architect’s fee 35,500
Cost of clearing the land 40,000
Electrical wiring and fitting 50,000
Construction costs 500,000
Demolishing abandoned bungalows 30,000
Interest on loan (construction of factory) 15,000

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 CONFIDENTIAL 3 AC/DEC 2023/TAX267/TEST

The construction of the building was completed on 15 December 2021. Nevertheless,

the building was exclusively utilized for production on 1 March 2022. Below is the
occupancy information for the building:

Percentage (%)
Factory 88.5
Showroom 9
Meeting room 2.5

The company also acquired the following assets:

1. Lexus Sedan ES 250 Premium (non-commercial vehicle)

Cash price: RM320,000
Deposit: RM100,000 (paid on 30 June 2021)
Monthly instalment: RM4,120
No. of instalment: 55 months (commenced on 5 July 2021)

However, due to non-commercial justification, the car was disposed of at a price

of RM200,000 on 15 March 2023.

2. On 18 July 2022, the company purchased 11 units of air compressor machines

at a cost of RM1,950 each.

Required:

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

balancing charge (if any) for each asset of Bintang Axia Sdn Bhd for all relevant years of
assessment up to year of assessment 2023. Round off your answers to the nearest RM.
(17 marks)

B. Gigantic Agro Sdn Bhd has been involved in cultivating vegetables. The company
prepares its account to 31 July annually. In 2019, the company bought a piece of land
in Bentong, Pahang and used for plantation purposes.

Date Expenditure RM
1/9/2019 Cost of land 400,000
28/12/2019 Clearing of land 85,800
1/8/2020 Cost of planting 130,300
1/10/2021 Construction of living quarters for workers 55,700
15/10/2021 Construction of roads 38,000

On 31 August 2022, the company sold the entire of plantation to Titanic Agro Sdn Bhd
(make up its accounts to 30 June annually) for RM2,000,000.

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 CONFIDENTIAL 4 AC/DEC 2023/TAX267/TEST

Required:

Calculate the agriculture allowances/(charges) for Gigantic Agro Sdn Bhd and Titanic Agro
Sdn Bhd for the relevant years of assessment up to the year of assessment 2023. Assuming
that Gigantic Agro Sdn Bhd made an election to spread back the agriculture charges. Round
off your answers to the nearest RM.
(8 marks)
(Total: 25 marks)

QUESTION 3

Pasha and Qistina established a partnership named Klinik Gumbira since 2020. Qistina
ceased to be a partner on 31 August 2023 and Razlan joined the partnership on 1 September
2023.The provisional adjusted income for the year of assessment was RM196,000. The profit-
sharing agreements up to 31 August 2023:

Pasha Qistina
RM RM
Capital contribution 80,000 60,000
Partners’ salaries per annum 42,000 36,000
Interest on capital per annum 4,000 3,000
Profit-sharing ratio 0.6 0.4

The profit-sharing agreements on 1 September 2023 and onwards:

Pasha Razlan
RM RM
Capital contribution 90,000 70,000
Partners’ salaries per annum 48,000 42,000
Interest on capital per annum 4,500 3,500
Profit-sharing ratio 0.7 0.3

Additional information:

1. On 30 April 2023, the partnership made an approved donation of RM20,000 to an

approved organization.
2. During the year, Qistina received dividend income (single-tier) amounted to RM5,000.
Meanwhile, Razlan received gross rental income RM18,000 (excluding allowable
expenses of RM2,000).
3. Capital allowance and balancing allowance were RM10,000 and RM3,500 respectively.

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 CONFIDENTIAL 5 AC/DEC 2023/TAX267/TEST

Required:

a. Determine the divisible income/(loss) of the partnership for the year of assessment 2023.
Round off your answers to the nearest RM.
(4 marks)

b. Calculate the total income for Pasha and Razlan for the year of assessment 2023.
Round off your answers to the nearest RM.
(6 marks)
(Total: 10 marks)
(TOTAL: 50 MARKS)

END OF QUESTION PAPER

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 CONFIDENTIAL 6 1 (1)
APPENDIX AC/DEC 2023/TAX267/TEST

Rates of capital allowances

Motor Heavy Plant General Computers Others Building

Vehicles & Machinery Plant & & Software
Machinery
Initial 20% 20% 20% 20% 20% 10%
allowance
Annual 20% 20% 14% 20% 10% 3%
allowance

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