FACULTY OF BUSINESS STUDIES AND MANAGEMENT

BACHELOR OF BUSINESS ADMINISTRATION (HONS.) ISLAMIC BANKING

(BA249)

ISLAMIC FINANCIAL PLANNING

(ISB535)

INDIVIDUAL ASSIGNMENT:
HOUSEHOLD FINANCIAL ANALYSIS AND TAX ASSESSMENT

PREPARED BY:
NO. NAME STUDENT ID

1. AHMAD RAZIQ BIN ABDUL HALIM 2023387823

PREPARED FOR:
MADAM SHAHIRA BINTI ABDUL JABAR

CLASS:
JBA2493B

SUBMISSION DATE:
23 NOVEMBER 2023
ACKNOWLEDGEMENT

First of all, I am grateful to Almighty Allah SWT for I have completed this
individual assignment on household financial analysis and tax assessment. All praises
to our Holy Prophet Muhammad S.A.W who is the role model for all human being and
a light of all knowledges in the world.

Secondly, I am thankful to my Islamic Financial Planning (ISB535) lecturer,

Madam Shahira binti Abdul Jabar, for her guidance on every steps, encouragement,
and the assistance on how to finish this assignment as the stated criteria needed.
Lastly, I would like to thank my parents and friends for their support because I would
not have the sense of consistency to finish this assignment without the moral support.
In short, I am grateful and appreciate for those contribute directly and indirectly
towards completing this assignment.
TABLE OF CONTENT

CONTENT PAGE

INTRODUCTION 1

BIO DATA OF THE FAMILY 2

BALANCE SHEET 3

CALCULATION OF LOAN 4

CASH FLOW STATEMENT 5

PERSONAL FINANCIAL RATIOS & ANALYSIS 6-7

INCOME TAX YEAR ASSESSMENT 8

CONCLUSION 9

REFERENCES 10

APPENDICES 11
INTRODUCTION

Financial planning is very important in each household for a lot of reasons,

especially in helping the management of the family’s assets, liabilities, taxes, and also
managing their money such as debt and savings so that they can plan for things they
want. Financial planning means making a detailed plan for an individual’s money. It
involves setting goals for what they want to do with their money and then figuring out
the ways to reach those goals. It includes managing the individual’s spending, saving,
and investing to make sure they can meet their needs and achieve their dreams.
Therefore, having a plan gives families peace of mind and helps them feel more in
control of their money. However, Islamic financial planning is different compared to the
conventional financial planning since it involves the effort of an individuals in managing
their financial following the shariah principles to achieve their life goals.

There are few main elements that differentiated Islamic financial planning from
conventional. Firstly, there are activities that only exists in Islamic financial planning
which are zakat payment, planning for hajj and takaful, and also assets distribution in
accordance to shariah. Second, there is investment planning that is to ensure all
investments activities made is shariah compliant and lastly, making sure there is no
element of interest (riba’) in financial activities.

Furthermore, tax planning stands as a critical aspect of financial planning

because its main goal is to reduce an individual's income taxes. When taxes are high,
the money left for spending (disposable income) becomes lower. This decrease in
disposable income creates more challenges for individuals to reach their financial
goals. Next, there is zakat payment which is giving a portion of a Muslim’s income or
belongings to be distributed to other Muslims in need usually through an authorized
zakat collector. Zakat holds huge significance in Islam and is obligatory for all Muslims
due to its role as one of the fundamental principles of Islam.

In this report, financial planning will be made for my father who works as a
business man which is clothing supplier for people who wants to produce their own
clothing. He lives with his wife and three children aged 24 who is currently working, 21
that is studying in college and also 16 years old studying in secondary school. He lives
in a house inherited from his late parent, a BMW 5 Series, Proton Wira and a cruiser
motorcycle.

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BIO DATA OF THE FAMILY

ENCIK HALIM'S FAMILY PICTURE

NAME : ABDUL HALIM BIN AHMAD NOORDIN

AGE : 49

RELIGION : ISLAM

STATUS : MARRIED

NATIONALITY : MALAY

RELATIONSHIP TO
INTERVIEWER : FATHER

OCCUPATION : CLOTHING SUPPLIER

SALARY : RM2500 PER MONTH

NUMBER OF CHILDREN : 3 CHILDREN

NUMBER OF PEOPLE
LIVING IN HOUSE :4

TYPE OF HOUSE : TERRACE HOUSE INHERITED FROM LATE PARENT

TYPE OF CAR OWNED : BMW 5 SERIES, PROTON WIRA

TYPE OF MOTORCYCLE : QJMOTOR SRV250

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BALANCE SHEET

ABDUL HALIM
BALANCE SHEET AS AT 31 DECEMBER 2022
ASSETS RM LIABILITIES RM
Liquid Assets Current Liabilities
Cash in Hand 1,900 Water Bill 25
Savings account in RHB 24,500 Electricity Bill 230
Bank
Current account in 7,700 Wi-Fi Bill 130
Maybank
Total Liquid Assets 34,100 Credit Card Balance 3,700
Total Current Liabilities 4,085
Lifestyle Assets
BMW 5 Series 28,500 Long Term Liabilities
Proton Wira 7,200 Motorcycle loan 11,003.40
Terrace House in 92,000 BMW loan 15,074.50
Kampung Pandan
QJ Motor SRV250 18,000 Total Long Term 26,077.90
Motorcycle Liabilities
Watches 1,100 Total liabilities 30,162.90
PlayStation 4 800
Total Lifestyle Assets 147,600 Net Worth 167,792.10

Investment Assets
EPF 12,455
Common Stock 600
Tabung Haji 3,200
Total Investment Assets 16,255

TOTAL ASSETS 197,955 TOTAL NET WORTH & 197,955

LIABILITIES

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Calculation of Loan

1. BMW 5 Series:

i. Purchased price: RM48,000

ii. Down Payment: 12% of RM48,000
: RM5,760
iii. Interest Rate: 4% Annually
iv. Loan Duration: 10 Years

Monthly Payment = 42240 x 0.00333 x ((1+0.00333)120)

((1+0.00333)120) – 1

= RM467.92 / Monthly

2. QJMotor SRV250

i. Purchased price: RM18,000

ii. Down Payment: 15% of RM18,000
: RM2,700
iii. Interest Rate: 4% Annually
iv. Loan Duration: 4 Years

Monthly Payment = 15300 x 0.00333 x ((1+0.00333)48)

((1+0.00333)48) – 1

= RM358.05 / Monthly

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CASH FLOW STATEMENT

ABDUL HALIM
CASH FLOW STATEMENT FOR FINANCIAL YEAR ENDED AT
31 DECEMBER 2022

ITEMS RM RM

Income:

Salary RM30,000

Commission RM5,000

Total Income 35,000

Expenses:

Car instalment 5615.04

Motorcycle instalment 4296.60

Fuel and Toll 1,440

Groceries 1,320

Electricity bill 2,760

Water bill 300

Wi-Fi bill 1,560

Motor Insurance premium 1,100

Children expenses 3,400

Family vacation 2,750

Spending on food 6,850

Total Expenses (31,391.64)

Savings (Cash surplus/Cash deficit) 3608.36

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PERSONAL FINANCIAL RATIOS AND ANALYSIS

i. LIQUIDITY RATIO = Liquid Assets/Current Liabilities

= 34,100/4,085

= 8.35 times

= the liquidity ratio should be more than 1 in order to maintain

liquidity. This mean that Encik Halim has very high liquidity
position and able to pay off short-term obligations and liabilities
if unemployed.

ii. SOLVENCY RATIO = Net Worth/Total Assets

= 167,792.10/197,955

= 0.85 times

= the solvency ratio indicates that the cash flow is sufficient to

meet short and long-term liabilities since the bigger the ratio,
the fewer chances of becoming bankrupt which has the better
ability to settle debt.

iii. GEARING RATIO = Long term liabilities/Total Assets

= 26,077.90/197,955

= 0.13 times

= The gearing ratio is at good level by seeing the debt to finance

the assets owned. This mean Encik Halim relies less on debt and
he has less risk or less chances to go bankrupt.

iv. SAVINGS RATIO = Cash surplus / Income

= 3,608.36/35,000

= 0.10 times

= The saving ratio level is positive which means he still made

savings based on his income, however, the ratio stated that little
savings is made from total income he received.

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v. DEBT SERVICE RATIO = Total liabilities / Total Assets

= 30,162.9/197,955

= 0.15 times

= The smaller the ratio the better because it means that he

did not have the problem to pay debts. Therefore, Encik
Halim does not have any problem repaying his debt and
also has the ability to complete loan repayment timely.

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INCOME TAX ASSESSMENT

ABDUL HALIM
INCOME TAX ASSESSMENT FOR THE YEAR 2022
ITEMS RM
PART A INCOME
Salary 30,000
Commission 5,000
TOTAL AGGREGATE INCOME 35,000
ASSESSABLE INCOME 35,000

PART B TAX RELIEFS

Individual 9,000
Children above 18 years 8,000
Children below 18 2,000
Lifestyle:
Laptop 1,200
Smartphone 800
Sport equipment 100
TOTAL TAX RELIEFS 21,100
CHARGEABLE INCOME 13,900

PART C TAX RATE

On the First 5,000 0
Next (13,900-5,000 = 8,900 x 1%) 89
GROSS TAXPAYABLE 89

PART D LESS: TAX REBATE

HUSBAND ASSESSMENT (400)
Zakat (1,200)
NET TAX PAYABLE -1,511
LESS: TAX DEDUCTIONS 0
TAX REFUND -1,511

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CONCLUSION

In conclusion, based on the financial planning made for Encik Halim, it can be
seen that his current financial plans are in good condition and able to take care of his
family without issues. From the balance sheet, Encik Halim has two outstanding
vehicle loans that need to be settled which is the purchase of car and motorcycle.
However, the monthly instalment for both the vehicles is suitable for Encik Halim’s
salary since he does not go beyond his income by buying expensive vehicles and
knows his limit before making purchases.

Encik Halim also possesses a lot of assets including a lot of liquid assets so
that he can easily turn the assets into cash, lifestyle assets such as his personal
belongings that have worth and also investment assets where he saves up some
money for future purposes such as for Hajj. Besides, he has credit card balance since
he does his job’s work using credit card first. So from the balance sheet, he has a
really positive ratio of assets compared to his liability making his net worth high
amounting to RM167,792.10.

As we can see from the income statement, the final amount of the statement is
in positive which translates to having cash surplus, meaning he have savings from his
income. If the amount is in cash deficit or negative, some family might struggle with
their income received every month and had to cover the deficit by withdrawing from
savings, increase debt or sell their assets The savings made by Encik Halim can help
keep his money in circulation through investment activities or reduce his liabilities.

The financial ratios are also in good condition since each ratio shows good
analysis proving that Encik Halim can easily meet short term obligations, paying debt
on time, have some savings from the income and have very low risk of becoming
bankrupt. For the tax planning, Encik Halim’s wife is currently still working so there is
no rebate on the side of housewife while his oldest child is currently working making
him also not entitled for another rebate for children above 18 years. The chargeable
income for this family does not exceed RM35,000, hence, Encik Halim is eligible to
receive rebate on tax amounting to RM400. Overall, the family is in good and stable
financial position and this planning will help sees the figures better so that future plans
can be made based on income and expenses made.

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REFERENCES

Ben. G. (2023). What Is Financial Planning? Definition, Meaning and Purpose.

Retrieved from smartasset: https://smartasset.com/financial-advisor/financial-
planning-explained

LHDN. (2022). Rebates. Retrieved from

https://www.hasil.gov.my/en/individual/individual-life-cycle/how-to-declare-
income/rebates/

LHDN. (2022). Tax rate, Assessment Year 2022. Retrieved from

https://www.hasil.gov.my/en/individual/individual-life-cycle/how-to-declare-
income/tax-rate/

LHDN. (2022). Tax Reliefs, Year of Assessment 2022. Retrieved from

https://www.hasil.gov.my/en/individual/individual-life-cycle/how-to-declare-
income/tax-reliefs/

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APPENDICES

ENCIK HALIM’S BMW 5 SERIES EXAMPLE OF CLOTHING SUPPLIER FROM GOOGLE 1

QJMOTOR SRV250 OWNED BY ENCIK HALIM

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