A231 BKAT3023

ADVANCED TAXATION
TUTORIAL QUESTIONS (TOPIC 2-4)
 TUTORIAL 1
TOPIC 2: DOUBLE TAXATION RELIEF
QUESTION 1
Ponniyen Nusantara Sdn Bhd (PNSB) is a resident company carrying on the business of air
transport activities in Malaysia since 2018. The following information is for the year of
assessment 2023:

RM
Gross Business Income:
Malaysia 5,440,000
United Kingdom 8,750,000

Net Dividend Income:

Malaysia 210,800

Gross Interest Income:

United Kingdom 820,000
Mexico 250,000

Additional information:
1. Malaysia has double taxation agreement with United Kingdom but not with Mexico.
2. Tax rate for United Kingdom is 19%.
3. Tax paid on the interest income from Mexico was RM7,500.
4. All incomes from overseas were remitted to Malaysia.
5. PNSB reported that the amount of allowable expenses related to business income and
interest income were as follows:

Country Business (RM) Interest (RM)

Malaysia 415,000 -
United Kingdom 330,000 35,000

6. Capital allowance and balancing charge related to business income were RM130,000
and RM78,000 respectively.

REQUIRED:

Compute tax liability for Ponniyen Nusantara Sdn Bhd (PNSB) for the year of assessment
2023 after taking into consideration the available relief for foreign tax suffered.

QUESTION 2
Cargo Air & Sea Transport Bhd (CAST) is a Malaysian resident company carrying on the
business of air and sea transport in Southern Asian region. The following information is
extracted from the company’s accounts for the year ended 31 December 2023:
 Malaysian sourced Foreign sourced
Business Rental Royalty Interest
Gross Income (RM) 8,000,000 700,000 60,000 50,000
Allowable Expenses (RM) 2,000,000 300,000 - 10,000
Capital Allowance (RM) 900,000 - - -
Balancing Allowance (RM) 100,000 - - -
Foreign Tax paid (RM) - - 12,000 8,000

REQUIRED:

Compute tax liability for CAST for the year of assessment 2023 after taking into
consideration the available tax relief for foreign tax suffered under the following
circumstances:

(i) All foreign sourced incomes are derived from a country that has a double taxation
agreement with Malaysia.

(ii) All foreign sourced incomes are derived from a country that has NO double taxation
agreement with Malaysia.
 TUTORIAL 2
TOPIC 3: WITHHOLDING TAX

QUESTION 1

The following are the transactions that may be subjected to withholding tax and vice-versa:

A. Haryanto Inc is a general commission agency in Indonesia which promoted sales in

Singapore on behalf of HS Sdn Bhd, a resident company in Malaysia. HS Sdn Bhd pays
the commission of RM120,000 to Haryanto Inc based on the sales transactions secured in
Singapore on 1 July 2023. HS Sdn Bhd obtained a copy of Haryanto Inc’s audited
accounts and business registration form as proof that Haryanto Inc is a general
commission agent.

B. Arniza Sdn Bhd (ASB), a Malaysian resident company, entered into an agreement with
Janna Ltd (JL), a non-resident company from Thailand. The agreement was for the use of
copyright patents during the year of assessment 2023.

Apart from that, JL sent one personnel to ASB for consultation services in relation to the
use of the copyright patents and to sign the agreement with ASB. ASB received an invoice
dated 10 June 2023 from JL amounting of RM70,000 for the use of the copyright patents
and RM90,000 which include reimbursement of hotel accommodation of RM15,000 for
the consultation services. ASB credited the funds to JL on 16 June 2023.

C. MunJab Pharmaceutical Sdn Bhd (MGM) had been using the service of a ship owned by
NZSea Ltd. (NZL), a New Zealand company, for exported goods. On 1 January 2023,
MGM paid RM500,000 freight charges to NZL. On 1 June 2023, NZL agreed to rent the
ship to MGM with a payment of RM800,000 each year for seven years. The first payment
to NZL was made on 31 July 2023. NZL had never become a tax resident in Malaysia.

D. Lisa Rose, a non-resident, exercised employment in Malaysia as a musician for Best

Sound Entertainment Sdn Bhd, a Malaysian tax resident company, from 1 March 2023 to
25 April 2023. She arrived in Malaysia on 20 February 2023 and left Malaysia on 20 June
2023, after a two-month holiday in Malaysia. She does not intend to visit Malaysia any
time in the remaining of 2023.

During the employment, Lisa Rose also involved in series of mini concerts which opened
to the public and she received another RM45,000 on top of the remuneration payments of
RM120,000. Lisa Rose was paid for the entire period as a lump sum on the last day of her
employment.

REQUIRED:
State whether each of the following payment is subject to withholding tax. If your answer is
‘Yes’, state the type of income, calculate the amount of withholding tax and the due date to
remit the withholding tax to the Inland Revenue Board of Malaysia (IRBM). If ‘No’, give
reason.
QUESTION 2

The following are the transactions that may be subjected to withholding tax and vice-versa:

a. Vitrox Sdn Bhd enters into an agreement with JN Ltd, a Finnish company specializing
in payroll software to provide software development and licensing to Vitrox Sdn Bhd.
On 15 July 2023, Vitrox paid JN Ltd RM120,000 for licensing its new payroll system.

b. Live-Notion Sdn Bhd, a Malaysian tax resident company, organized a concert for an
international artiste, Coldreel, to perform in Bukit Jalil from 1 June 2023 to 7 June 2023
as part of the band’s world tour. Coldreel arrived in Malaysia on 15 May 2023 and left
Malaysia on 20 June 2023. Coldreel received RM200,000 on remuneration for the main
concert, and RM150,000 more for various engagements during their stay in Malaysia.
Coldreel was paid a lump sum on the last day of their stay.

c. KY Sdn Bhd contracted PH Ltd for training services of KY Sdn Bhd’s employees in
Singapore. The contract amount for the training was RM 120,000 and KY Sdn Bhd has
made full payment to PH Ltd for the training provided throughout 2023.

d. Sabah Oils Sdn Bhd have entered into an agreement with Petrogroup Ltd, an Australian
service provider to provide drilling and formation evaluation, well construction, and
completion services for Sabah Oils Sdn Bhd. Petrogroup has rendered the service to
Sabah Oils from 1 June 2023 until 13 July 2023, where the first three weeks were
performed in Sabah and the rest were performed remotely from their headquarters in
Melbourne. The total value of the service rendered was RM2,000,000 and was paid in
full by Sabah Oils when it was completed.

REQUIRED:
State whether each of the following payment is subject to withholding tax. If your answer is
‘Yes’, state the type of income, calculate the amount of withholding tax and the due date to
remit the withholding tax to the Inland Revenue Board of Malaysia (IRBM). If ‘No’, give
reason.
 TUTORIAL 3
TOPIC 4: BASIS PERIOD

QUESTION 1

A. Magenta Sdn Bhd was incorporated on 1 February 2021 and commenced its business
on 1 June 2021 but has not yet decided on the appropriate date to close its first set of
accounts. In the board meeting, the following dates have been proposed:

(i) 1 June 2021to 31 December 2021, and thereafter to 31 December

(ii) 1 June 2021 to 31 December 2022, and thereafter to 31 December
(iii) 1 June 2021 to 30 April 2023, and thereafter to 31 December

REQUIRED:

Determine the basis period for Magenta Sdn Bhd for the relevant years of assessment
until the year of assessment 2023.

B. 888 Bakery and Café Sdn Bhd has been operating as a food and beverages company
since 2016. However, because of internal issues faced by the business, it has failed to
close its 2021 account that is normally ending on 31 July. The company then managed
to close its account on 28 February 2022. The company prepared the following sets of
account:

Accounting Period Adjusted Income (RM)

01/08/2019 - 31/07/2020 31,600
01/08/2020 – 28/02/2022 26,900
01/03/2022 – 28/02/2023 35,800

REQUIRED:

Determine the basis period and adjusted income of 888 Bakery and Café Sdn Bhd for
the relevant year of assessment until the years of assessment 2023.

C. Sinar Corporation Sdn. Bhd received a liquidation order issued by the Kuala Lumpur
High Court on 17 November 2021, and a liquidator was appointed on the same date.
The company closed its accounts on 31 August each year but decided to change its
accounting period after liquidation. The followings are the company’s accounting
periods before and after liquidation:

YA Accounting Period Period

2021 01/09/2020 – 31/08/2021 12 Months
Failure Year 01/09/2021 – 16/11/2021 2 Months and 16 Days
17/11/2021 – 16/05/2022 6 Months
17/05/2022 – 16/11/2022 6 Months
17/11/2022 – 16/05/2023 6 Months
 REQUIRED:

Determine the basis period for the relevant year of assessment until the years of
assessment 2023.

QUESTION 2

A. Sintok Trading Sdn Bhd commenced business on 1 October 2018 & made its first
account to 30 June 2019 and continues to close on 30 June for subsequent year until
2021 when it changed its accounting date to 30 September 2022. Accounts prepared as
follows:

Accounting Period
1/10/2018 - 30/6/2019
1/7/2019 - 30/6/2020
1/7/2020 - 30/6/2021
1/7/2021 - 30/9/2022
1/10/2022 - 30/9/2023

REQUIRED:

Determine the basis period for all the relevant years of assessment.

B. Jitra Services Sdn Bhd normally closes its account 31 March each year. The company
decides to change its accounting date to 31 December. The accounting periods and the
adjusted income for the relevant periods was as follow:

Accounting Period Adjusted Income (RM)

1/4/2020 - 31/3/2021 60,000
1/4/2021 - 31/3/2022 70,000
1/4/2022 - 31/12/2022 80,000
1/1/2023 - 31/12/2023 90,000

REQUIRED:

Determine the basis period and adjusted income for the relevant year of assessment
until year of assessment 2023.