Revision Question

Answer all the Questions Time allowed: 2 hours

Question 1

(i)

Discuss the Malaysian scope of charge for all types of chargeable persons under the Income

Tax Act, 1967. [4 marks]

(ii)

Mr Brendan Michael works for the European Union and oversees its ASEAN projects located

in Malaysia. He has been present in Malaysia for the following periods in the years 2013 to

2020 inclusive.

Year Period of stay Number of days

2013 1 January to 31 July 212

2014 1 April to 30 September 183

2015 1 January to 31 March 90

2016 1 January to 30 November 334

2017 1 March to 31 October 245

2018 1 April to 30 June 91

2019 Absent all year 0

2020 1 January to 31 July 2120

Required:

State, giving reasons, whether or not Mr Brendan is resident or non-resident in Malaysia in

each of the years 2013 to 2020 inclusive. [15 marks]

(iii)

Comment on the following statements:

1. “All foreigners are non tax residents.”

2. “Non-resident individuals enjoyed less tax benefits as compared to tax resident

Individuals. [6 marks]

[Total: 25 marks]
Question 2

(a) Explain briefly ANY FOUR differences in the tax treatments in respect of income from

employment (contract of service) and income from business (contract for service) in

Malaysia. [6 marks]

(b) In respect of employment income, identify ANY FIVE (5) types of benefits in kind that

are exempted from income tax. [5 marks]

(c)

Mr. Sunny is employed as a senior engineer with Light Sdn. Bhd. (LSB) His income for the year

ended 31.12.2020 are as follows:

Salary (whole year) RM240,000

Bonus (3 months) paid on 30.12.2020 RM 60,000

Travelling allowance RM 12,000

Entertainment allowance RM 6,000

A car was provided to Mr. Sunny for use in work since 1.7.2020. It was bought by LSB 7 years

ago at a cost of RM210,000. No fuel was provided by the employer. A domestic maid was

employed by LSB at RM700 per month and provided to Mr. Sunny for the full year.

A fully furnished house was provided for the period 1.7.2020 to 31.12.2020. LSB paid
RM2,600

for the monthly rent of the house (including RM600 for full furnishing). Mr. Sunny paid
RM500

per month as token rent to his employer.

Two leave passages (overseas) were provided to Mr. Sunny by LSB in the year 2020. The

employer incurred RM2,000 to provide a leave passage to and fro Hong Kong, and RM6,000

was for a leave passage to and from Canada.

In the course of performing his duty in the year 2020, Mr. Sunny spent RM9,000 in travelling
and RM8,000 in entertaining clients of LSB. He paid RM2,000 as subscription to the Board of

Engineers (an approved professional body) on 1.2.2020.

Required:

Compute the adjusted income from employment for Mr. Sunny for the Year of Assessment 2020

[14 marks]

[Total:25 marks]
Question 3

(i)

Jean owned a shophouse in Petaling Jaya. Details for the shophouse for the year ended

31 December 2020 are as follows:

Rent received:

January – December 2020 RM42,000

January – March 2021 10,000

(being rental received in advance in December 2020)

Deposits for utilities (refundable) 5,000

Expenditure:

Deposit refunded to ex-tenants 3,000

Rates and assessment 4,200

Quit rent 1,190

Loan interest (Jan-Dec 2020) 8,200

Penalty for late payment of assessments 100

Repainting 5,000

Renovation to kitchen and bathroom 12,000

Replacement of damaged roof tiles 8,000

Required

Compute the adjusted rental income of Jean for YA 2020. [10 marks]

(ii)

Under what circumstances rental income from real properties in Malaysia can be treated as

business income under section 4(a) of Income Tax Act, 1967? [4 marks]

(iii)

Sam owns a semi-detached house which was let for the first time on 1 July 2020. Details of

the property are as follows:

Semi-detached house RM

Gross rental from 1 July 2020 to 31 December 2020 4,000 per month
Quit rent from 1 January 2020 to 31 December 2020 200

Assessment from 1 January 2020 to 31 December 2020 600

In year 2020, he received royalties of RM13,000 from the sales of CDs recorded by him as a

musician and single-tier dividend from GBS Bhd of RM15,000 on 30 June 2020.

Required:

Compute the total income of Sam for YA 2020. [11 marks]

[Total:25 marks]

Question 4

Karam, a Malaysian tax resident, is married to Susan and has a 19-year-old son, David. David

is pursuing a full-time degree at a local Malaysian university and received a full scholarship

from a multi-national company in Malaysia for his university fees. Susan has no income.

Karam is employed by Olive Sdn. Bhd. as the operations manager based in Ipoh, Malaysia.

Details of his employment income for the year 2020 are as follows:

─ A salary of RM48,000.

─ An entertainment allowance of RM3,000. During the year 2020, Karam spent RM2,000

on entertaining the company’s clients.

─ Employees’ provident fund (EPF) contributions by Olive Sdn. Bhd. of RM5,760. Karam

made EPF contributions of RM5,280.

Olive Sdn. Bhd. also provided Karam with the following benefits during the year 2020:

─ Semi-furnished accommodation. Olive Sdn. Bhd. paid a monthly rental of RM2,100 for

an apartment which included RM100 for the furniture in the lounge and dining room.

─ Medical benefits of RM250.

Karam also runs a part-time business selling computer games software. Details of his business

income for the year 2020 are as follows:

Adjusted income RM30,000

Capital allowances RM5,000

Unabsorbed business loss brought forward RM1,000

In addition, in 2020, Karam received RM3,000 as a commission from his neighbour for

assisting him in securing a buyer for the sale of the neighbour’s small office, home office

(SOHO) unit.

Details of Karam’s other expenditure for the year 2020 are as follows:
─ Medical expenses for a weight reduction and wellness programme for his wife of

RM2,000.

─ A donation of goods worth RM10,000 to an approved institution.

─ Deferred annuity premiums paid of RM3,500.

─ Books purchased for his own personal use of RM1,200.

Required:

Compute the income tax payable by Karam for the year of assessment 2020. [25 marks]

Note: You should indicate by the use of the word ‘nil’, as appropriate, any item referred to in

the question for which no adjusting entry needs to be made in the tax computation