Which of the following are sources of revenue law in Malaysia?

 
(1) Orders and regulations prescribed by the Minister
(2) Case decisions made by the Malaysian courts on tax matters
Guidance notes issued by the Inland Revenue Board (IRB) and the Royal
(3)
Malaysian Customs
2 and 3 only
1 and 3 only
1 and 2 only
1, 2 and 3

Jason is one of the shareholders and directors of All-Digital Sdn Bhd (ADSB), a
digital marketing company which closes its accounts annually on 31 March.
 
Jason’s only sources of income are remuneration from ADSB, and rental income
from letting out an office unit he owns personally to ADSB. ADSB maintains the
office unit.
 
What are the due dates for Jason and All-Digital Sdn Bhd (ADSB) to file tax
returns for the year of assessment 2018?
Jason: 30 April 2019 ADSB:31 July 2019
Jason:30 June 2019 ADSB:31 July 2019
Jason:30 April 2019ADSB:31 October 2018
Jason:30 June 2019ADSB:31 October 2018

TK Sdn Bhd (TKSB) closes its accounts annually on 30 June, and its tax return for
the year of assessment 2018 was submitted on a timely basis. The return shows
income tax due of RM250,000, after taking into account advance tax payments by
instalments.
 
TKSB paid the income tax due on 15 June 2019.
 
What is the late payment penalty payable by TK Sdn Bhd in respect of the
income tax paid on 15 June 2019?
RM38,750
RM37,500
RM25,000
RM25,125

In relation to the scope of goods and services tax (GST), which of the following
statements is true?
GST is not applicable on all imported supplies made by a non-registered
business
Non-monetary consideration received for a supply can be subject to GST
 An individual who makes only zero rated supplies exceeding the GST registration
threshold is not required to register for GST
If a person is GST registered, GST is applicable only on the sale of inventory and
not on the sale of capital assets

On 2 September 2018 Alda arrived in Malaysia for the first time as a secondee to a
Malaysian company for a period of twelve months. She was present in Malaysia
throughout the period 2 September 2018 to 2 September 2019, except for the
following periods:
 
(a
20 days from 1 to 20 November 2018 for a social visit; and
)
(b 70 days from 2 March 2019 to 10 May 2019 for a service related matter at her
) employer's overseas subsidiary.
 
What is Alda’s Malaysia tax residence status for the years of assessment (YA)
2018 and 2019?
YA 2018ResidentYA 2019Non-resident
YA 2018ResidentYA 2019Resident
YA 2018Non-residentYA 2019Resident
YA 2018Non-residentYA 2019Non-resident

Employees who work for multi-national organisations may work in more than one
country during the course of their employment with the organisation.
 
Which of the following factors are relevant in determining whether
employment income received by an employee is subject to income tax in
Malaysia?
 
(1) Whether the remuneration is paid by a Malaysian company or a foreign company
(2) Whether the remuneration is denominated in Malaysian ringgit
(3) Whether the remuneration is in respect of duties performed in Malaysia
(4) The length of time the employee works in Malaysia
2 and 3 only
1 and 2 only
3 and 4 only
1, 2, 3 and 4

In March 2018, Loga's employer paid him the following amounts:

 
(1) A bonus of RM13,000 in respect of Loga's performance in the year 2017.
Leave pay of RM7,000. The leave pay is computed based on unused annual
(2)
leave in the year 2017.
 
In relation to the amounts Loga received from his employer in March 2018,
what is the amount which he will be subject to income tax on in the year of
assessment 2018?
RM7,000
RM13,000
RM0
RM20,000

Dato has aggregate income of RM855,100 for the year of assessment 2018.
 
He made the following cash donations during the year:
 
Donations to a Federal Government fund RM50,000
Donations to approved charitable organisations RM75,000
Donations to unapproved institutions RM20,000
 
What is Dato’s total income for the year of assessment 2018?
RM730,100
RM745,243
RM795,243
RM710,100

SMK Sdn Bhd manufactures energy saving lights. In the year of assessment 2018 it
incurred the following expenditure:
 
(1) Acquired a proprietary right for RM200,000 as part of technology improvement.
The cost was capitalised as a non-current asset.
(2) Business class air-fare of RM2,000 and hotel accommodation expenses of
RM3,000 and RM1,000. The costs relate to a four day trip by a marketing
manager to negotiate and conclude a contract with a customer in Thailand.
 
What is the amount which SMK Sdn Bhd can deduct for tax purposes in
respect of these transactions for the year of assessment 2018?
RM206,000
RM41,800
RM43,000 
RM201,800

Dopollo Shd Bhd (DSB), a food manufacturer, closes its accounts annually on 31
December.
 
On 15 March 2016, the company purchased a heavy machine for RM100,000.
 
On 15 August 2018, the machine was destroyed in a fire and DSB filed the
necessary reports and made an insurance claim. The company received insurance
compensation of RM35,000 and the market value was agreed at RM45,000.
 
What is the amount of the balancing adjustment arising for Dopollo Sdn Bhd in
respect of the destroyed machine in the year of assessment 2018?
Balancing allowance of RM40,000
Balancing allowance of RM5,000
Balancing charge of RM60,000
Balancing charge of RM5,000

The following information relates to TR Sdn Bhd for the year of assessment 2018:
 
Business: Tax-adjusted loss RM20,000
Initial and annual allowances RM30,000
Rental: Tax-adjusted income RM80,000
 
The tax-adjusted business loss brought forward from the year of assessment 2017 is
RM40,000. TR Sdn Bhd does not provide any support services for the property
rented out.
 
What is TR Sdn Bhd’s aggregate income for the year of assessment 2018?
RM70,000
RM60,000
RM40,000
RM80,000

In relation to the private residence exemption (PRE) for real property gains tax
(RPGT) purposes, which of the following statements is FALSE?
The PRE is an exemption that an individual can only enjoy once in their lifetime
Only Malaysian citizens or individuals permanently resident in Malaysia are
eligible for the PRE
A disposer is entitled to PRE only if an irrevocable written application to the
Director General of the Inland Revenue is made
The PRE is only available in respect of a private residence in which the disposer
has resided

On 28 August 2019 Yen Sdn Bhd (YSB) disposed of a building in Malaysia for
RM2,200,000.
YSB had acquired the property on 12 December 2015 for RM1,000,000 plus legal
fees of RM28,000 and stamp duty of RM12,000.
During YSB’s ownership, it incurred the following costs:
 
Installation of a drainage and
(1) RM13,000
irrigation system
(2) Interest expense RM24,000
 
What is Yen Sdn Bhd’s acquisition price of the property for real property gains
tax (RPGT) purposes?
RM1,077,000
RM1,053,000
RM1,040,000
RM1,064,000

PLM Sdn Bhd, a goods and services tax (GST) registered person, incurred the
following expenditure (stated inclusive of GST) during the year ended 31 December
2018:
 
(1) Purchase of an industrial building for RM1,060,000
(2) Purchase of an office building for RM530,000
(3) Purchase of a motor car for use by the factory manager for RM106,000
(4) Maintenance of a fleet of lorries used for the delivery of goods for RM21,200
 
What is the total amount of goods and service tax (GST) input tax which
CANNOT be claimed as an input tax credit by PLM Sdn Bhd in respect of the
expenditure incurred during the year ended 31 December 2018?
RM60,000
RM30,000
RM6,000
RM7,200

Honesty Sdn Bhd (HSB), a Malaysian resident manufacturing company, closes its
accounts annually on 31 December. HSB only has business operations in Malaysia
and during the year of assessment 2018 it made the following transactions:
 
(1 Exported manufactured goods worth RM2 million to a foreign customer on 2
) June 2018 and instructed the customer to remit the proceeds to HSB’s bank
account in Hong Kong.
(2 Assisted one of its foreign customers to source raw materials in Malaysia and
) received a commission of RM20,000 on 14 August 2018.
(3 Sold goods worth RM970,000 on 8 September 2018 to its customer in Kedah,
) Malaysia on credit. The amount remains unpaid at HSB’s year end of 31
December 2018.
 
What is Honesty Sdn Bhd’s taxable amount for income tax purposes for the
year of assessment 2018 in respect of these transactions?
RM990,000
RM20,000
RM2,970,000
RM2,990,000
The following scenario relates to requirements (a)(i) and (a)(ii) only.
 
I-Tiles Sdn Bhd, a ceramic tiles and building materials dealer, incurred the following
expenditure during the basis period for the year of assessment 2018:
 
(1) RM100,000 on floor tiles for resale
(2) RM39,000 on a display shelf for the company showroom
(3) RM12,000 on fixed partitions for the company showroom
 
 
The following scenario relates to requirements (b)(i) and (b)(ii) only.
 
Planters Sdn Bhd (PSB) has been operating a rubber plantation for many years and
closes its accounts annually on 31 March.
 
During the year ended 31 March 2018, PSB decided to venture into the cocoa and
palm oil plantations business for the first time and incurred the following expenditure:
 
RM
Costs necessary to level the land 12,000
Planting of cocoa seedlings 9,000
Replacing rubber with palm oil seedlings 3,000
Construction of workers quarters 240,000
 
Due to a downturn in commodity prices, PSB received a government grant of
RM34,000 on 11 February 2018.
(a)(i) State the four main criteria of plant and machinery for the purposes of
claiming capital allowances.
(2 marks)
 
(ii) State, with reasons, whether the expenditure incurred by I-Tiles Sdn Bhd
meets the criteria to be regarded as plant and machinery for the purposes of
claiming capital allowances.
(3 marks)

Due to a downturn in commodity prices, PSB received a government grant of

RM34,000 on 11 February 2018.
(b)(i) Quantify the qualifying agricultural expenditure and compute the
agriculture allowance which Planters Sdn Bhd can claim for the basis period
for the year of assessment 2018.
(4 marks)
 
(ii) State the tax treatment of the government grant received by Planters Sdn
Bhd.
(1 mark)
 
(10 marks)

The following scenario relates to two requirements.

 
Nurul is a Malaysian citizen but is not tax resident in Malaysia. On 14 June 2014,
Nurul acquired land in Bangi, Malaysia, for RM220,000 plus stamp duty of
RM6,000.  
 
On 15 January 2018 a company, unconnected to Nurul, JNH Sdn Bhd (JNH), agreed
to exchange a property they owned in Penang, Malaysia with Nurul’s land in Bangi.
 
Nurul and JNH incurred RM1,000 each for a valuation report on 10 January 2018.
The reports stated that the market value of Nurul’s land was RM300,000, and the
market value of JNH’s property was RM280,000.
 
JNH originally acquired its property in Penang on 20 January 2010 for RM90,000
plus stamp duty of RM2,000. Following a violent storm, JNH received insurance
compensation of RM3,000 for the damage caused to the property. On 8 August 2012
JNH paid RM8,000 to repaint the property.
(a) Compute Nurul’s real property gains tax (RPGT) payable, if any, on the
exchange of assets on 15 January 2018.
(5 marks)
 
(b) Compute JNH Sdn Bhd’s RPGT payable, if any, on the exchange of assets
on 15 January 2018.
(5 marks)
 
Note: In (a) and (b) you should indicate by the use of ‘0’ any item referred to in the
question for which no entry needs to be made in the tax computations.
(10 marks)
The following scenario relates to requirement (b) only.
 
Subang Sdn Bhd, a hotel operator and goods and services tax (GST) registrant,
incurred the following expenses in the month of January 2018:
 
(1) Purchased a new car for RM530,000 for use by the general manager
(2) Paid parking fees totalling RM5,300 in respect of company vehicles
(3) Purchased linen materials for RM10,600
(4) Gifted goods with a total open market value of RM5,000 to ten customers
(5) Paid golf club subscription fees of RM1,060 for a senior marketing manager
(6) Received an invoice for RM20,000 in respect of imported services from a
supplier of hotel services in Taiwan
 
“Out of scope supplies do not fall within the scope of goods and services tax (GST)”.
 
(a) Give two examples of supplies which are out of the scope of GST.
(2 marks)

(b) Compute Subang Sdn Bhd’s goods and services tax (GST) payable or
recoverable for the month of January 2018.    
 
Notes:
(1) Where applicable, amounts are shown inclusive of GST.
(2) You should indicate by the use of ‘0’ any item referred to in the question for
which no entry needs to be made in the tax computation.
(8 marks)
 
(10 marks)
The following scenario relates to two requirements.
 
Chen and Sharifah are partners in Arts & Crafts, a partnership dealing in antiques.
 
The details of the partnership’s income statement for the year ended 31 December
2018 are as follows:
 
RM RM
Sales 650,000
Less: Expenses
Entertainment expenses – gifts to customers (when
they purchase products) 21,000
Donations-in-kind made to an approved charitable
institution 23,000
Partners’ salaries (Chen and Sharifah) 120,000
Medical expenses for an operation for Chen 11,000
Other deductible expenses 255,000
(430,000)
220,000
Add: Interest income from loan made to a company 18,000
Net profit before tax 238,000
 
Other relevant information is provided as follows:
 
Chen Sharifah
(1
Profit sharing ratio: 50% 50%
)
(2
Salary per month RM5,000 RM5,000
)
(3 Capital allowances computed for the year ended 31
) December 2018 were RM14,000.
 
(a) Compute the provisional adjusted income and divisible income of the Arts
& Crafts partnership and the total income for each partner for the year of
assessment 2018.
 (9 marks)
Notes:
(1
You should start with the net profit before tax figure of RM238,000.
)
(2 You should indicate by the use of ‘0’ any item referred to in the question for
) which no adjusting entry needs to be made and for personal reliefs not given
in the tax computation.
  
Chen has submitted her tax returns to the Inland Revenue Board (IRB) for years up
to and including the year of assessment (YA) 2016.
 
As of 3 September 2019, Chen has not yet submitted her tax return for YA 2017 due
to lack of available records.
 
(b) Explain why the Director General Inland Revenue (DGIR) has the power to
raise a best judgement assessment in respect of the year of assessment 2017
in Chen’s case.
(1 mark)
 
(10 marks)

The following scenario relates to two requirements.

 
CKF Bhd (CKF), a Malaysian tax resident company, manufactures and sells optical
and scientific products. It exports more than 60% of its total sales.  
 
CKF closes its accounts annually on 31 January, and its statement of profit or loss
for the financial year ended 31 January 2018 is as follows:
Note RM'000 RM'000
Sales 300,000
Less: Cost of sales 1 (280,000)
Gross profit 20,000
Add: Other income 2 205
20,205
Less:Expenditure
Consultancy fees 3 184
Foreign exchange loss 4 16
Lease rental expenses 5 66
Sponsorship of cultural activities 6 709
Salaries 7 5,274
(6,249)
Profit before tax 13,956
 
Notes:
(1) Cost of sales includes:
RM'000
Depreciation 1,419
Allowance for stock obsolescence 101
Royalties (see note below) 81
Note: The allowance for royalties account is as follows:
Balance brought forward 120
Add: Allowance for the current year 82
202
Less: Allowance written back during the year (1)
Less: Amount paid during the year (70)
Balance carried forward 131
 
The royalty amount paid during the year was paid net of withholding tax on 20
January 2018 to CKF’s parent company, CKF Global Inc, a non-Malaysian resident
company. The company submitted its tax returns by the due date, however the
withholding tax was paid late. The withholding tax and associated penalty for late
payment was made to the Inland Revenue Board (IRB) on 9 October 2018.
 
(2) Other income is comprised of:
RM'000
Dividend income from a local subsidiary 96
Compensation for restrictive covenant (see note
109
below)
205
 
Note: During the year, the company signed a restrictive covenant agreement not to
enter into a contract with any distributor / company in the related industry in the East
Malaysia region for an indefinite period. CKF had entered into the East Malaysian
region about a year ago.
 
(3) Consultancy fees include:
RM'000
(i) Expenses relating to increasing share capital
from RM100,000 to RM1,000,000 4
(ii) Secretarial fees relating to YA 2018 (paid on 4
April 2018) 12
(iii) Tax appeal fees (paid on 2 January 2018) 11
 
(4) The foreign exchange loss relates to an interest on a loan taken out with an
overseas lender. CKF paid interest on the loan and the necessary withholding tax
obligations were duly met. The money was borrowed to finance CKF's operations in
Malaysia.
 
(5) Motor vehicle expenses are comprised of:
RM'000
Lease rental payments (see note below) 65
Traffic violation expenses 1
 
Note: The lease rental payments relate to a non-commercial passenger vehicle for
the use of a visiting internal auditor from headquarters. The cost of the vehicle when
new would have been RM180,000.
 
(6) A contribution of RM709,000 was made for sponsoring a local arts cultural
programme, which was duly approved by the relevant authorities.
 
(7) The salaries figure includes a payment of RM4,000 for the chief engineer in
respect of an overseas leave passage.
 
Additional information
(8) The capital allowances computed for the current year of assessment was
RM2,300,000.
(a) Compute the chargeable income of CKF Bhd for the basis period for the
year of assessment 2018. 
 
Note: Your computation should start with the profit before tax of RM13,956,000 and
should indicate by the use of ‘0’ any item referred to in the question for which no
adjusting entry needs to be made in the tax computation.
(12 marks)

CKF Bhd is expecting to incur some costs in the year of assessment 2019 in respect
of registering a patent for a new product. The costs incurred will be with relevant
local Malaysian authorities and also with the relevant authorities in Japan for export
purposes.
 
(b) Explain whether the patent registration expenses incurred in the year of
assessment 2019 will be deductible for CKF Bhd.
(3 marks)
 
(15 marks)

The following scenario relates to one requirement.

 
Nakha, a Malaysian tax resident, commenced employment on 1 January 2018 as a
professor at a local university. He also runs an online business selling books and
prepares accounts to 31 December each year.
 
Nakha is married to Sumi, an investor, and they are taxed separately.   
 
Details of Nakha’s income and expenses for the year ended 31 December 2018 are
as follows:
 
(1) Online business
RM
Tax-adjusted income 86,000
Capital allowances 5,000
 Balancing charge 2,000
Brought forward capital allowances 1,000
 
(2) Employment
Nakha’s employment income for the year comprised:
(i) A gross salary of RM10,000 per month.
(ii) Employers’ contributions into Nakha’s provident fund (EPF) of 20% of his
salary. Nakha’s own contribution into the fund was 11% of salary.
(iii) Reimbursement of RM30,000 in respect of the salary of a driver employed by
Nakha.
(iv) The provision of a domestic helper for Nakha from 1 July - 31 December
2018, paid for by Nakha’s employer at a total cost of RM6,000.
(v) Leave passage for a trip to Langkawi of RM3,800 reimbursed by his
employer.
(vi) Food and drinks provided free of charge to all employees. The cost to
Nakha’s employer was RM200 per employee.
(vii) The provision of an unfurnished house to Nakha from 1 July - 31 December
2018 at a cost to his employer of RM2,000 per month.
 
(3) Additional information
Nakha bought a smart phone for his mother as a gift at a cost of RM3,500.
 
Details of Sumi’s income and expenses for the year ended 31 December 2018 are
as follows:
 
(1) Sumi took out a loan of RM1,000,000 from a bank to fund a purchase of
investments. She incurred interest on the loan of RM100,000 for the year ended 31
December 2018.  
 
(2) She made the following investments with the money and received the following
income : 
Investments Income
RM RM
Shares in local company 300,000 13,500
Loans extended to her uncle’s
company in Malaysia 700,000 85,000
 
(3) She bought a tablet for RM3,000 as a gift for Nakha.    
Compute the chargeable income and income tax payable by both Nakha and
Sumi for the year of assessment 2018.
 
Note: You should indicate by the use of ‘0’ any item referred to in the question for
which no entry needs to be made and for personal reliefs not given in the tax
computation.
(15 marks)