Question 1

Mr Chong was a businessman. He passed away due to heart attack in 2020, leaving
behind his wife and three children. Before his death, he had prepared a will in which
his wife was named as the trustee and their three children as the beneficiaries.

He willed one half of the trust income to the first child at the discretion of the trustee.
The balance will be distributed to the second child. A sum of RM 15,000 is to be
accumulated each year for the third child, now aged seven years until the child
reaches the age of 18 years.

Under the terms of the will, the widow is entitled to an annuity of RM 65,000 per year.
Mr Chong had investments which derived interest, dividend and rental income. The
details of the business and the investment income for the year ended 31 December
2021 are as follows:

Business : 1 January 2021-31 December 2021 RM

Gross income 900,000
Allowable expenses 690,000
Capital allowances due 70,000
Balancing charges 4,000
Balancing allowances 28,000

Other income
Rental 20,000
Dividends (Malaysia) Note (i) 15,000
Bank interest Note (ii) 6,000

Dividends (China)(remitted) 7,000

Notes:

i) The dividend is paid from a single tier account and no taxes were deducted at
source.
ii) The interest income is derived from a fixed deposit with a Malaysian bank.

During the year, the trust paid a cash donation of RM 4,500 to an approved charitable
institution.Based on the trust distributable income of RM 60,000 before accumulation,
the trustee made the following payments to the beneficiaries for the year ended 31
December 2021: a sum of RM 7,000 to the first child and RM 10,000 to the second
child.

Required:

Compute the chargeable income of the trust for the year of assessment 2021 assuming
that section 61(2) of the Income Tax Act 1967 (as amended) was applied. S 61(2) -
DG allow the beneficiary’s share of income as a deduction from the trust total
income to arrive at the chargeable income.
Question 2

Hanif Trust is a trust body, was created by Hanif for his wife, Asiah and his only child,
Adam, aged 23. Hanif appointed his brother, Hassan as a trustee of the trust fund.
Hassan is a Malaysian citizen and resident taxpayer in Malaysia. However, Hanif is
non-resident although he is a Malaysian citizen because he has been working in
Brunei since 2015. The following is the statement of profit or loss of Hanif Trust for
the financial year ended 31 December 2021:

For the financial year ended 31 December 2021, Asiah and Adam received a trust
distribution of RM120,000 and RM100,000 respectively. Both of them are the
beneficiaries of discretionary trust.

Required:

i. State with reason, whether or not Hanif Trust is a tax resident in Malaysia.
ii. Compute the total income of Hanif Trust for the year of assessment 2021. Show all
workings.
iii. Compute the statutory income received by Asiah and Adam that are subject to tax
for the year of assessment 2021.

Question 3

JJT Trust (JJTT) was set up by a Malaysian, Jenny who passed away in October 2019.
Jacob and Theresa are beneficiaries of the trust. Abdul, a tax-resident was appointed
as a trustee of the trust. Under the term of JJTT, Abdul, was given a power to decide
the amount of income to be distributed to Jacob and Theresa because they are
beneficiaries of the discretionary trust. The total income and distributable income of
JJTT for the year of assessment 2021 are RM350,000 and RM550,000 respectively.
Required:

Compute the statutory income of Jacob and Theresa for year of assessment 2021, if:

i. Jacob and Theresa receive Malaysian derived income of RM150,000 and

RM100,000 respectively from the trust.

ii.Jacob and Theresa receive Malaysian derived income of RM300,000 and

RM200,000 respectively from the trust.