CONFIDENTIAL AC/JULY 2021/TAX267/TEST

UNIVERSITI TEKNOLOGI MARA

TEST

COURSE : TAXATION 1
COURSE CODE : TAX267
EXAMINATION : 9 JULY 2021
TIME : 1 HOUR 30 MINUTES

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of three (3) questions.

2. Please check to make sure that this examination pack consists of:

i) the Question Paper

ii) a four-page Appendix 1

3. Answer ALL questions in English.

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QUESTION 1
A. Fernanda is a Brazilian dermatologist who is currently working at a well-known tissue
engineering center in Malaysia. His expertise is required to produce innovation in human
skin replacement. This innovation is able to multiply and produce new skin cells for
accidents or fire victims by using only small pieces of the victim's skin. His period of stays
in Malaysia are as follows:
Year Period of Stay Remark
2015 15/6/2015 – 15/11/2015
16/11/2015 – 25/12/2015 Note 1
2016 12/1/2016 – 25/8/2016 Note 2
6/9/2016 – 31/12/2016
2017 1/1/2017 – 27/2/2017 Note 3
2018 3/3/2018 – 31/5/2018
2019 - Note 4
2020 1/1/2020 – 30/4/2020 Note 5

Note 1 : He went to Mexico to accompany his twin named Francisca for medical
treatment from 26 December 2015 to 11 January 2016.
Note 2 : He attended a short course in relation to his expertise in Dubai, United Arab
Emirates from 26 August 2016 to 5 September 2016.
Note 3 : He went back to Brazil for holiday from 28 February 2017 to 5 March 2017.
Note 4 : He was not in Malaysia.
Note 5 : He went to Singapore for private event from 1 May 2020 to 5 May 2020.

Required:
Determine the tax residence status of Fernanda for the relevant years of assessment 2015
until year of assessment 2020. Provide the relevant sections and reasons to support your
answers.
(12 marks)
B. Soraya Ahmad is an employee of the Ministry of Foreign Affairs, who has been a taxpayer
for almost 5 years. In 2020, she received news that she will be stationed for 3 years at the
Malaysian embassy in Taiwan starting June 2020. Soraya Ahmad is confused about her
tax resident status. Please advise Soraya Ahmad about her tax residence status.
(3 marks)
(Total: 15 marks)

QUESTION 2
A. Tiub Berapi Sdn Bhd (TBSB), a manufacturer of plasma television in Muar, makes
up its accounts annually to 31 December. During the year of assessment 2019, TBSB
acquired two types of building which were a factory building and a warehouse for
RM1.5 million and RM0.5 million respectively. The warehouse was acquired in order
to store the plasma television’s speaker systems components which was imported
from Korea.

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The following year, in January 2020, TBSB purchased a building amounting to

RM600,000 to provide childcare facilities for its employees. The company also paid
RM95,000 for installation of electrical wiring and fittings in the building.

Then, in February 2020, TBSB incurred RM185,000 on cutting and levelling the land
to prepare a site for the installation of heavy machinery, at the cost of RM850,000.
The machinery was put into use for the business from March 2020.

During the board of directors meeting on 2 June 2020, it was determined that there
was an increase in demand for TBSB's products in Malaysia and the finance
manager was instructed to look into constructing a storage warehouse exclusively
for the Malaysian market. He is considering the following options:

Option 1: to construct a warehouse within the same curtilage of the factory premises.

Option 2: to construct a warehouse 28 km away in Pagoh, Johor.

Required:

a. Compute the capital allowances and industrial building allowances for the relevant
years of assessment up to the year of assessment 2020.
(10 marks)

b. State the income tax implication for each option in the construction of warehouse
from the perspective of claiming industrial building allowance.
(2 marks)

B. Kupi Terbang Sdn Bhd commenced a coffee farm business in January 2015 and made up
its accounts to 30 June annually. Since then, the company has incurred the following
expenditures:

Date Capital Expenditure Amount (RM)

1 September 2015 Cost of land 250,000
15 October 2015 Clearing of land for planting of coffee plants 50,000
3 March 2016 Cost of planting new coffee plants 200,000
20 July 2016 Construction of farm workers’
accommodation 60,000
5 January 2017 Construction of an estate office 70,000

On 1 March 2018, Kupi Terbang Sdn Bhd received a grant of RM150,000 from the
government in respect of planting coffee plants.

In October 2018, Kupi Terbang Sdn Bhd met with financial difficulties. Later, on 31
December 2018, the company sold off the farm workers’ accommodation to a neighboring
farmer for a sum of RM70,000.

On 31 December 2019, the company finally sold off his coffee farm to the same buyer for
a sum of RM380,000.

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Required:

Calculate the agriculture allowance / charges for Kupi Terbang Sdn Bhd for the relevant years
of assessment up to the year of assessment 2020, assuming no election is made under
Paragraph 27 of Income Tax Act 1967.
(8 marks)
(Total: 20 marks)

QUESTION 3

Salleh and Ali have been in a partnership business since 2017. Their business known as
Fritters Power which sells various types of fritters such as original banana fritters, banana
fritters with cheese, durian fritters, jackfruit fritters, tempe fritters and keropok lekor at Taman
Sejati, Segamat. In addition to fritters, they also sell a variety of fruits in cups, burgers and
drinks such as coconut shake with ice cream and mango shake with honey.

Each partner contributed RM6,000 as capital and agreed to share the profit or loss equally.
Their partnership agreement stated that each partner is entitled to receive an interest on
capital at the rate of 10% per annum and a monthly salary of RM2,000.

On 1 April 2020, Azmi was admitted to the partnership with a capital contribution of RM12,000.
Since the admission of Azmi, the partners agreed that the profit sharing ratio will be based on
capital contribution. Other terms of the agreement remain the same.

On 1 December 2020, Salleh retired from the partnership and withdrew all his capital
contribution. The terms of the partnership agreement remain as before the retirement of
Salleh.

Additional information:
1. The partnership’s provisional income for the year was RM156,050.

2. The current year capital allowances and balancing charge were RM9,000 and RM3,000
respectively.

3. Salleh received rental income of RM10,000 during the year.

4. Ali received interest income of RM6,000 from a fixed deposit he placed in CIMB Bank
during the year.

5. Azmi made a cash donation of RM3,000 to an approved institution on 20 December 2020.

Required:

a. Determine the divisible income of the partnership for the year of assessment 2020.
(4 marks)

b. Calculate the total income for Salleh, Ali and Azmi for the year of assessment 2020.
(11 marks)
(Total: 15 marks)
(TOTAL: 50 MARKS)

END OF QUESTION PAPER