ACC60704 Malaysian Taxation

Tutorial 5 Relief and Rebate

QUESTION 1

Muhammad is a Certified Public Accountant (CPA). He started his employment as an

accountant with Sentosa Bhd on 1 August 2012 with a salary of RM6,000 per month.
Unfortunately, due to downsizing, his appointment was terminated on 30 November 2018. He
was paid compensation for loss of employment of RM40,000 and gratuity of RM72,000 in
December 2018.

During his employment with Sentosa Bhd, Muhammad was provided with fully furnished living
accommodation. The company paid RM3,350/month for the rent, which included RM350 for
furniture.

Additional information:

1. Following information is relevant to his employment with Sentosa Bhd:

a. Entertainment allowances of RM200 per month from 1 July 2018.

b. A gardener was provided by the employer from 1 October 2018. The gardener’s
salary was RM800 per month.

2. Apart from his employment income, Muhammad also earned the followings in 2018:

a. Rental income from his house in Penang (no tenancy RM12,000

agreement)
b. Interest on a deposit of RM90,000 in HSBC Bank 5,000

3. In 2018, the expenditure incurred for his house in Penang was as follows:

a. Renovation of kitchen RM8,000

b. Repainting 700

4. Muhammad’s wife, Nadia, is a full-time housewife. During the year, she received an
interim dividend of RM3,600 from Megajaya Bhd.

5. Muhammand and Nadia have three (3) children. Azam, 21, is studying Shariah in
International Islamic University, Malaysia. Muhammad spent RM5,000 per year for
Azam’s study fee. Adilah, legally adopted from Welfare Department Malaysia, is
currently schooling at a primary school in Damansara. Afif, 4, is disabled. He has to
undergo therapy at a local hospital monthly which costs RM600 per month.

6. In December 2018, Muhammad donated RM1,500 to an orphanage home (an approved

donation).

7. Muhammad bought a new personal computer in 2017 for RM4,000.

8. In July 2018, Muhammad paid zakat of RM1,200.

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9. Muhammad paid a premium of RM2,500 on a joint-life insurance policy with his wife.
Additionally, he incurred RM1,200 for his children education insurance policy.

REQUIRED:

Compute tax liability for Muhammad and his wife for the year of assessment 2018 if she elects
for a joint assessment under Section 45(2) Income Tax Act 1967. (Note: All items mentioned in
the question must be shown in the tax computation. If there is no adjustment necessary,
indicate the amount in the computation as ‘NIL’)

QUESTION 2

Ramli retired from Jaya Sdn Bhd on 31 July 2018 at the age of 50 due to ill health. He served
the company for nine (9) years. He received a gratuity of RM80,000 which he used to start a
video rental business on 1 September 2018. He had an operation prior to his retirement. The
surgical and medical expenses incurred was RM40,000 and this was paid by Jaya Sdn Bhd.

His wife, Jamilah is a housewife. They have two (2) children, Laila, who is studying at the
Universiti Teknologi Malaysia, and Jamal, who is studying at a secondary school in Brunei.

Ramli provided the following additional information for year of assessment 2018:

1. Salary from Jaya Sdn Bhd

RM
Gross salary 50,000
EPF - Employer’s portion 6,000
- Employee’s portion 5,500

2. Life insurance
Ramli (RM)
Capital sum assured 60,000
Premium paid 6,000

3. Other income
Ramli (RM) Jamilah (RM)
Dividends from a Bursa Malaysia listed company 30,000 -
Interest from Ambank - 6,000
Gross rental income 21,000 -
Expenses related to rental income*:
Advertisement to search for potential tenant 500 -
Legal fees for agreement 100 -
Stamp duty for rental agreement 70 -
Renovation 3,000 -
* The house has been rented out since 1 April 2018.

4. Donations to approved institutions

Ramli (RM) Jamilah (RM)
Cash 500 300
VCD player 2,000 -

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5. Medical expenses:
Ramli (RM) Jamilah (RM)
Ramli’s parents 1,500 -
Jamilah’s parents - 600

6. In 2018, Ramli spent RM1,100 for books and magazines.

7. The statutory income for Ramli’s video rental business for the period from 1 September
2018 to 31 December 2018 is RM19,000.

REQUIRED:

Compute tax liability for Ramli and Jamilah for the year of assessment 2018 if she
elects for a joint assessment under Section 45(2) Income Tax Act 1967. (Note: All items
mentioned in the question must be shown in the tax computation. If there is no
adjustment necessary, indicate the amount in the computation as ‘NIL’)