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BAC4644

UNIT TRUST/CLOSED END FUND

Question 1
Public Trust was formed on 1.2.2012. On 1.4.2012, it purchased an office building in KL
for RM56 million. The building was fully tenanted and the rent receivable per month was
RM 200,000. The trust also had the following interest income from Malaysian financial
institution and other sources of income for year ended 31 Dec 2012.
RM000
Interest received
300
Interest accrued
30
Interest receivable
10
340
Profit on sale of quoted shares
Profit on sale of shares listed overseas and
Remitted to Malaysia
Less: Loss on disposal of shares

300.

Dividends from Malaysian companies (net of tax)


Exempt dividends
Overseas dividends received in Malaysia

750
50
120

20
(10)
310

920

The following expenses were incurred for the building which it purchased for the period
1.4.2012 to 31.12.2012
RM000
Fire insurance
Cleaning and rubbish disposal
Assessment and quit rent
Security
Lift service charges

10
3
12
50
12
87

Other expenses incurred for the year are:


Trustees remuneration
Office rent and incidental expenses
Fund management fee
Secretarial, audit and accounting fee
Telephone, printing and stationery expenses
Maintenance of unit holders register
Traveling

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100
10
200
50
20
40
10
430

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Included in the purchase price of the property were the following plant & machinery:
Fire protection system
Air conditioning system
Alarm system
Lifts
Generator
Refuse disposal system

RM000
700
2,000
100
3,000
200
20
6,020

Assume the rate of capital allowance of 14 % for plant and machinery, calculate the
income tax payable by Public Trust

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Solution 1
Public Unit Trust
Computation of income tax payable for YA 2012
RM000
RM000
S 4(d)
Gross rental (200,000 * 9 months)
Less: section 33 expenses
Adjusted income
Less: special deduction S 63A
10% * 6,020
Statutory income
S4c
Interest income exempted para 35A, Sch 6)
Dividend income (gross)
Exempt dividend
Overseas dividend (para 28, Sch 6, exempted)
Aggregate income

1,800
87
1,713
(602)
1,111
1,000
-

Less: Fraction of permitted expenses, S 63(B)


Chargeable income
Income tax payable @ 25%
Less: s110 set off (1,000 * 25%)
Income tax payable

1,000
2,111.000
65.957
2,045.043
511.26
(250.00)
261.26

Fraction of permitted expenses, S 63(B)


Fund management fee
Secretarial, audit and accounting fee
Telephone, printing and stationery expenses
Maintenance of unit holders register
Permitted expenses (A)
Gross income chargeable to tax
Gross rental (200,000 * 9 months)
Dividend income (gross)
Gross income chargeable (B)
Add: Exempt dividends
Overseas dividends received in Malaysia
Gains from realisation of investment
Aggregate gross income (C)
A*B/4C
Or
10% of A

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200
50
20
40
310
1,800
1,000
2,800
50
120
320
3,290

=
=

310 * 2,800/ 4 * 3,290


65.957

=
=

10% * 310
31 , whichever is higher Higher is RM65957

BAC4644

UNIT TRUST/CLOSED END FUND

Question 2 (Closed End Fund Company)


Mayfair Bhd is a closed end fund public listed company incorporated in Malaysia on
1.1.2012 and approved by the Securities Commission to invest in shares and bonds. The
profit and loss account of Mayfair Bhd for the year ended December 31, 2012 is as
follows:
RM000

Income:
Gross dividends from public listed companies
Gross dividends from private limited companies
Interest from Malaysian Government bonds
Interest from listed convertible bonds
Gain on realization of quoted shares

360
70
45
120
400
995

Expenses:
Salaries and wages
Fund managers remuneration
Travelling
Accounting and auditing
Subscription to business magazines
Rental expense
Share registration expenses
Stationery and postage
Utility expenses (electricity and water)
Maintenance of shareholders register
Secretarial fees
Loss on disposal of shares
Telephone and fax
Approved donation
Depreciation

58
80
12
27
4
116
2
5
13
9
6
18
7
13
16
(386)

Net profit

609

Required:
Compute the tax payable by Mayfair Bhd for the year of assessment 2012

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UNIT TRUST/CLOSED END FUND

Solution 2
Mayfair Bhd
Computation of tax payable for YA 2012
RM. ' 000
Gross dividends from public listed companies
Gross dividends from private limited companies
Deemed total income

360
70
430

Interest from listed convertible bonds


Less: Permitted expenses A X B/4C
Less: Approved donation(restricted to 10%
of aggregate income)
Total income
Chargeable income
Tax payable:
Income tax @ 25 %
Less: S110 set off
Net tax payable
Permitted expenses:
Fund management remuneration
Accounting and auditing
Share registration expenses
Maintenance of shareholders register
Secretarial charges
Telephone and fax
Stationery and
postage
Total
Aggregate of gross income:
Gross income
chargeable to tax
Exempt interest
Profit from sale of
shares

120
(19)
(12)
89
519
129.75
107.50
22.25
80
27
2
9
6
7
5
(A)

136

(B)

550
45
400

(C)

Closed end fund


Open end fund

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995

- exempt interest is included in the computation of C


- exempt interest is not included in the computation of C

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Question 3
AmInvest (Am) is approved by SC to invest in RP and securities. It is an approved REIT
as stated in S61A of ITA. The Income statement for year ending 31.12.2012 is as
follows:RM000
Income
Rental income (gross)
700
Dividend income (gross) Note 1
20
Dividend income (exempt)
12
Debenture interest (not exempt)
4
Gain from realization of securities
44
780
Expenses
Rates and assessment
40
Maintenance of buildings
100
Salaries and allowances
40
Interest expense on loan to acquire shares
10
Depreciation
10
Telephone, printing
10
Donation to approved charity
4
Maintenance of register of shareholders
4
Audit, accounting and tax services
8
Advertising and promotion
40
Managers remuneration
184
450
Net profit

330

Notes:
1.
Dividend income is derived from Malaysia and suffered a tax of 25 %
2.
Capital allowance for the year is RM 12,000.
Required:
i)

Compute the tax payable for YA 2012 if:


a)
b)

ii)

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distribution to unit holders is RM 245,000


distribution to unit holders is RM 100,000
If the unit holder is a resident company, how much should Am withhold? And
explain whether this is a final tax or not?

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UNIT TRUST/CLOSED END FUND

Solution 3 - REIT
Computation of tax payable of AmREIT for YA 2012
Section 4a
Net profit before tax
Less:
Dividend income (gross)

330
20

Dividend income (exempt)


Debenture interest (not exempt)
Gain from realization of securities
Add: Non allowable expenses
Interest expense on loan to acquire shares
Depreciation
Donation to approved charity
Adjusted income
Less: capital allowance
Statutory income
Section 4 c

12

Dividend income (gross)

20

Less:
Interest expense on loan to acquire shares
Adjusted income
Debenture interest (not exempt)
Aggregate income
Less: approved donations
Total income
a) Less: Distribution to unit holders ( >90%)
Chargeable income
Tax payable
Less: s110 tax credit on dividend income
Tax refund
b) If distibution is RM 100,000 ie <90%
Chargeable income = total income
tax payable
Less: s110 tax credit on dividend income
Net tax payable

4
44

-80

10
10
4
274
12
262

10
10
4
276
4
272
272
0
0
5
5

272
68
5
63

Am need not withhold any tax when distributed to a resident company s 109D (2). It is
a final tax to the company.

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BAC4644

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UNIT TRUST/CLOSED END FUND