FACULTY OF BUSINESS AND MANAGEMENT

SOUTHERN UNIVERSITY COLLEGE

SEMESTER C
YEAR 2020/2021
FINAL EXAMINATION
BBAC3233 ADVANCED TAXATION
DATE: 20/1/2021 DURATION: 3 HOURS

BACHELOR OF ACCOUNTANCY (HONS)

YEAR THREE

STUDENT ID: B170219B

BATCH NO: BAC17C1

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Answer for Question 1

Kalsom Sdn.Bhd’s Tax Computation for the year of assessment 2020

RM’000 RM’000 RM’000

Net profit before taxation 6,544

Adjustment:
Cost of Sales
Marine Insurance NIL
Compensation paid to customer NIL

Depreciation 186
Rental Income 97
Gain from Sale of Property 330
Insurance Proceeds 400

Directors Remunerations
Entertainment allowance (50%xRM600,00) 300
EPF [3% x RM300,000]+(22% x 75
RM300,000)]
Contributions (3% x RM2,100,000) 63
Unapproved Fund 38
Staff Welfare:
Medical Expenses Nil
Cost of Foreign Leave passage 99
Cost of food and accommodation Nil
Gain on disposal of motorcar 3
Decrease in specific provision Nil
Increase in general provision 381
Bad Debts written off 920
Bad Debts recovered 221
Foreign Exchange gain Nil
8606 1051
(1051)
Adjusted Profit 7,555
Add: Balancing Charge 4
Less: Capital Allowance (308)
Statutory income 7,251
Add: Rental Income 97
Chargeable Income 7,348

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Answer for Question 2

(a)
For Pioneer Status
Year of Assessment Y/A 2021 Y/A 2022 Total
RM’000 RM’000 RM’000
Adjusted Income 600 1,500
Less: Capital Allowance (300) (400)
Statutory Income 300 1,100

70% thereof 210 770

Less: Pioneer Loss NIL NIL
Exempt income credited to exempt 210 770 980
account
Pioneer loss carried forward NIL NIL
30% deemed total income 90 330
Interest Income 30 60
Total income 120 390 510

For Investment Tax allowance (ITA)

Year of Assessment Y/A 2021 Y/A 2022 Total
RM’000 RM’000 RM’000
Adjusted income 600 1,500
Less: Capital Allowance (300) (400)
Statutory Income 300 1,100

ITA brought forward NIL 270

ITA current year (60% x 480 300
Qualifying Capital Expenditure
Less: Utilised (restricted to 70% of (210) (570) (780)
SI)
ITA carried forward 270 NIL

Statutory income (30%) 90 530

Less: Loss Brought forward NIL NIL
Loss Carried forward NIL NIL

Interest Income 30 60
Total Income 120 590 710

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The method should be chosen will be pioneer status as the total income or taxable income is
lower and it is more tax efficient.

(b)
Since JB Automatic Bhd wanted to sell old machine to subsidiaries that should be considered as
controlled transfer. (Para 38 and 39, Sche 31). Under these provisions, the assets are deemed to
have been transferred at the residual expenditure of the transferor which is JB Automatic Bhd.
Therefore, there is no balancing charge or balancing allowance will arise for JB Automatic Bhd.
On the other hand, the subsidiaries will able to claim annual allowances only and no initial
allowances is allowed based on the original acquisition cost of the assets. The transfer price will
be disregarded in this case.

(c)

Firstly, the accelerated capital allowances is gave for the company to recycle the waste.
[P.U.(A) 505/2000]. The manufacturing company which has incurred qualifying expenditure for
the purpose of business may claim accelerated capital allowances on the plant and machinery
which are used exclusively to recycle the waste or further process the waste into a finished
product. The company can enjoy ACA of 20% for initial allowance and 40% for annual
allowance.
Next, the accelerated capital allowances also gave for the company that have provision of
plant or machinery as certified by the Ministry of Energy, Telecommunications and Multimedia
or machinery used exclusively for the conservation of energy of its business. ACA will be fully
given within one year with IA of 40% and AA of 60%

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Answer for Question 3

(a)
Date of Acquisition = 15/12/2013
Date of Disposal = 10/12/2020
Rate of RPGT = 5%

RM
Disposal Price
Sales Consideration 2,300,000
Less: Permitted Expenses
- Extending Kitchen 50,000
- Legal fees preserving title 4,000
(54,000)
Less: Incidental Cost
- Valuation fees 2,000
- Broker fees 1,500
(3,500)
2,242,500
Acquisition Price
Purchase Consideration 1,500,000
Add: Incidental Cost
- Legal Fees 9,000
- Stamp Duty 30,000

39,000
Less: Recoveries
- Compensation Received (8,000)
1,531,000
Chargeable Gain 711,500

Less: Para 2, Sch 4. Exemption

(RM10,000 or 10% x RM711,500) (71,150)
Net Chargeable Gain 640,350
RPGT Payable @ 5% 32,018

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(b) The amount should be retain for Malaysian permanent resident is 3% of total
consideration.
Which is RM2,300,000 x 3% = RM69,000
The due date of submission is within 60 days which is by 9th of February 2021. If exceed
the date, penalty of 10% will be charged which is RM6,900.

(c) RM24,000 + (RM1,300,000x4/100)

= RM24,000 + RM52,000 = RM76,000

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Answer for Question 4

(a) (i)

Firstly, for tax estimation. For new company, tax estimation is not needed. When a
company first commences operations in a year of assessment and the basis period is less than 6
months, the company is not required to furnish an estimate of tax.
For existing company, the estimation of tax is the responsibility of management. The
management is required to estimate the tax and submit the form CP204 on 30 days before the
beginning of the basis period. The amount of tax estimated cannot less than 85% of the tax
estimated for the immediate preceding year of assessment.
Next, for the payment of tax liabilities and submission tax return form. It is the same for
both new and existing companies.
The tax estimated is payable by 12 equal month instalments. The due date is by 15th of
the following month. The company is allowed to revised the estimated tax amount in the 6th
month and 9th month during the year. The tax payer should submit Form C which is tax return
form to declare final tax and pay net tax payable or claim tax refundable after offset against tax
instalment paid. The due date of payment is by 7th month after year end.

(ii) Companies with paid-up share capital of less than RM2,500,000 should be considered
as SME. A tax resident SME is exempted from filing a tax estimate for a period of 2
years commencing from the YA in which a SME commences operation.

(b)
RM
Final tax 180,000
Tax estimated (100,000)
80,000
(-) 30% of final tax (54,000)
Amount of tax under-estimated 26,000
Penalty @ 10% 2,600

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(c) If SOS Bhd not agree with the J(A) Form received, SOS Bhd should submit Form Q to
appeal within 30 days from the date of Notice, but the amount of additional tax remained
payable.

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