CONFIDENTIAL AC/JUL 2022/TAX267/TEST

UNIVERSITI TEKNOLOGI MARA

COMMON TEST

COURSE : TAXATION 1
COURSE CODE : TAX267
EXAMINATION : 9 JULY 2022
TIME : 1 HOUR 30 MINUTES

INSTRUCTIONS TO CANDIDATES

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

2. Answer ALL questions in English.

3. Answer ALL questions in your ANSWER SHEET. Start each answer on a new page and
number each page.

4. Please submit your HANDWRITTEN answer in ONE (1) PDF file.

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

i) the Question Paper

ii) a four-page Appendix 1

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QUESTION 1

Mr Albert, from the United Kingdom, was employed by a Johor Bahru-based Malaysian
company, Coconut Virginoil Bhd on 1 June 2017. His periods of stay in Malaysia are as follows:
From To Notes
1 June 2017 19 December 2017 Note 1: 20 December 2017 – 2 January 2018
He was sent by his employer to Liverpool for
a conference.
3 January 2018 31 May 2018
15 November 2019 31 December 2019
1 January 2020 31 August 2020 Note 2: 16 March 2020 – 17 April 2020
He went to Bahamas for a family holiday.
1 April 2021 2 July 2021

Required:
Determine the tax residence status of Mr Albert for the year of assessment 2017 until 2021.
Support your answer with relevant sections and reasons.
(Total: 15 marks)

QUESTION 2

A. Golden Sports Enthusiast Bhd (GSEB), a manufacturer of sports equipment in Puchong,

made up its accounts to 31 October every year. GSEB has been in business for a number
of years and decided to expand its production line to a new site. In the year 2019, the
proposed plan of expansion was executed through construction of a new factory building
located in Langkap, Perak. The details of the expenditure incurred are as follows:

Date Expenditure RM
18 June 2010 Cost of land 650,000
(The land was initially acquired by GSEB to build a
warehouse for its exported goods. However, the
warehouse was not effectively used and left
unattended since March 2018)
10 August 2019 Architect fees 21,000
20 August 2019 Cost of obtaining approval from the local authority 5,000
16 October 2019 Cost of demolishing of the warehouse building on 52,000
the land
5 June 2020 Construction costs 982,000

The factory building was completed and put into use on 1 August 2020, with part of its
area was used as surau (10%), office (9%), and showroom (6%).

Below are assets owned by GSEB:

Plastic injection molding machine

On 2 July 2020, the machine was purchased costing RM400,000 for the production of
sports equipment. GSEB incurred installation cost and the cost of preparing site to install
the machine at RM20,000 and RM1,280,000, respectively.

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Delivery truck
The truck was acquired from Tan & Tan Motors on 3 December 2020. Details of the
acquisition are given below:

Basis of acquisition Hire-purchase

Cash Price RM282,000
Deposit RM30,000
No. of instalment 72
Monthly instalment RM4,000
First monthly instalment was due on 3 January 2021

On 25 October 2021, the delivery truck was severely damaged and had to be scrapped
off due to major road accident. The insurance company agreed to pay RM250,000 as
recovery of the loss.

Furniture
Several units of furniture were purchased on 10 February 2021 for business use as
follows:

Item Unit Cost per unit Total cost

RM RM
Table 30 400 12,000
Office Chair 40 90 3,600
Bench Chair 30 220 6,600
22,200

Required:
Compute the capital allowances, industrial building allowances, balancing allowances or
charges (if any) for each asset for the relevant years of assessment up to the year of
assessment 2021.
(15 marks)

B. Ramu Pineapple Farm Sdn Bhd (RPFSB) commenced its business on 1 January 2017
and made up its accounts to 31 July annually. The details of the expenditure incurred are
as follows:

Date Expenditure Amount

RM
1 January 2018 Clearing of land for planting of pineapples 50,000
15 February 2018 Planting of pineapples 200,000
18 November 2018 Construction of godown for storing of picked
pineapples 80,000
6 March 2019 Construction of workers accommodation 120,000
15 May 2020 Acquisition of a doubles storey house for the
farm manager in nearby town area 280,000
16 June 2020 Construction of temple for farm workers 86,000
20 June 2020 Replanting of pineapples 30,000

On 20 August 2020, RPFSB received a subsidy for planting activities of RM20,000 from
the Ministry of Agriculture and Food Industries. Unfortunately, the entire farm was sold to
the nearby farm, Alpha Agro Sdn Bhd (AASB) for RM300,000. The sale and purchase
agreement was signed on 7 March 2021. AASB’s financial year end is on 31 December
every year.

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Required:
Calculate the agriculture allowance/charges for RPFSB and AASB, for the relevant years
of assessment up to the year of assessment 2021, assuming RPFSB did not make an
election under Paragraph 27, Schedule 3 of Income Tax Act 1967.

(10 marks)
(Total: 25 marks)

QUESTION 3

Khadijah, Melor and Mamat are the partners in Khadijah & Associates Advertising Agency. In
2021, Melor ceased to be a partner on 31 August 2021 and Muthu joined the partnership on
1 September 2021.

During the financial year ended 31 December 2021, the salary and interest of the capital
received by the partners are as follows:
Salary Interest on capital
RM RM
Khadijah 108,000 4,500
Melor 68,000 2,000
Mamat 102,000 3,000
Muthu 28,000 700

The partnership agreement provides for the profits for the year 2021 to be shared as follows:
Khadijah Melor Mamat Muthu
1/1/2021 – 31/8/2021 80% 10% 10% -
1/9/2021 – 31/12/2021 70% - 15% 15%

The partnership’s net profit for the year ended 31 December 2021 is RM18,700.
Business expenses include the following items:
RM
Depreciation 10,100
Salaries including partners 346,000
Office rental 18,000
Postage and stationery 2,300
Interest on partners’ capital 10,200
Renovation of office premise 10,000
Approved donation – 1/8/2021 25,000
Unapproved donation – 1/10/2021 10,000
Medical expenses - Khadijah 8,000
Life insurance premium - Mamat 6,000
Travelling allowance - Muthu 1,200

Capital allowances claimed for the year of assessment 2021 is of RM8,400.

On 31 May 2021, Mamat contributed RM10,000 to Rumah Anak Yatim Sejahtera (approved).
During 2021, Melor’s adjusted rental income amounted to RM9,500.

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Required:
Compute the total income of each partner for the year of assessment 2021.
(Total: 10 marks)
(TOTAL: 50 MARKS)

END OF QUESTION PAPER

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APPENDIX 1(1)

 The following tax rates are to be used in answering the questions

a) Resident individuals

Chargeable Income Rate Cumulative Tax

RM RM
0 - 2,500 0% 0
2,501 - 5,000 0% 0
5,001 - 10,000 1% 50
10,001 - 20,000 1% 150
20,001 - 35,000 3% 600
35,001 - 50,000 8% 1,800
50,001 - 70,000 13% 4,400
70,001 - 100,000 21% 10,700
100,001 - 250,000 24% 46,700
250,001 - 400,000 24.5% 83,450
400,001 - 600,000 25% 133,450
600,001 - 1,000,000 26% 237,450
1,000,001 - 2,000,000 28% 517,450
Above 2,000,000 30%

b) Non-resident individuals 30%

 Benefits-in-kind (BIK) scale rates as per Inland Revenue Board (IRB) guidelines

Cost of car Prescribed annual value Prescribed annual

(when new) of private usage of car value of private petrol
RM RM RM
Up to 50,000 1,200 600
50,001 - 75,000 2,400 900
75,001 - 100,000 3,600 1,200
100,001 - 150,000 5,000 1,500
150,001 - 200,000 7,000 1,800
200,001 - 250,000 9,000 2,100
250,001 - 350,000 15,000 2,400
350,001 - 500,000 21,250 2,700
500,001 and above 25,000 3,000

The value of the car benefit equivalent to half of the above rates is taken if the car
provided is more than five years old.

Where a driver is provided, the value benefit is fixed at RM600 per month.

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APPENDIX 1(2)

 Household furnishing, apparatus and appliances

Types of BIK Annual value of BIK

RM
Semi-furnished with furniture in lounge,
dining room or bedroom 840

Plus one or more of the following:

Air-conditioners, curtains, carpets 1,680

Plus one or more of the following:

Kitchen equipment, crockery, utensils,
appliances
i.e fully furnished 3,360

 Rates of capital allowances

Motor Heavy Plant General Computers Others Building

Vehicles & Machinery Plant & & Software
Machinery
Initial 20% 20% 20% 20% 20% 10%
allowance
Annual 20% 20% 14% 20% 10% 3%
allowance

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APPENDIX 1(3)

 Personal reliefs

RM
Self 9,000
Disabled self, additional 6,000
Medical expenses expended on parents (maximum) 8,000
Medical expenses expended on self, spouse or child with serious (maximum) 8,000
disease including:
medical examination expense : RM1,000
vaccination : RM1,000
fertility treatment
Basic supporting equipment for disabled self, spouse, child or parent (maximum) 6,000
Study course fees for skills or qualifications (up to RM1,000 for
upskilling or self enhancement course) (maximum) 7,000
Lifestyle (maximum) 2,500
Lifestyle, additional (purchase of personal computer/ smartphone/
tablet) (additional) (maximum) 2,500
Healthy lifestyle (sport equipment, entrance fee to sport activity, etc.) (maximum) 500
Spouse relief 4,000
Disabled spouse, additional 5,000
Child - basic rate (each) 2,000
Child - higher rate (each) 8,000
Disabled child (each) 6,000
Disabled child, additional (each) 8,000
Childcare fees (below six years old) (maximum) 3,000
Breastfeeding equipment (maximum) 1,000
Life insurance premium (maximum) 3,000
Contribution to approved provident fund (maximum) 4,000
Life insurance (Pensionable public servant) (maximum) 7,000
Private retirement scheme contribution, deferred annuity premium (maximum) 3,000
Medical and/or education insurance premium for self, spouse or child (maximum) 3,000
Deposit for a child into the Skim Simpanan Pendidikan Nasional
(SSPN) (maximum) 8,000
Contribution to the Social Security Organisation (SOCSO) (maximum) 250
Domestic travelling expenses (local tour package, accommodation &
entrance fee) (maximum) 1,000

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APPENDIX 1(4)

 Rebates

Chargeable income not exceeding RM35,000 RM

* Individual – basic rate 400
* Additional rebate when wife/husband relief is claimed 400
Departure levy for umrah travel / religious travel for other
religions Flight class Destination/rate
ASEAN Others
RM RM
Economy 8 20
Business/First 50 150

Zakat/Fitrah Amount incurred