UNIVERSITI TEKNOLOGI MARA

MASTER OF ACCOUNTACY

MID-TERM TEST
TAX747

Answer ALL Questions.

QUESTION 1

Taxation should be imposed in proportion to the benefits a taxpayer receives from the state
and should be predictable, convenient, and efficient – Adam Smith (1927).

a. Adam Smith ideas on taxation was highlighted in his articles Guiding Principles of Good
Tax Policy on 1776. His thought is still relevant till now. Please describe and explain
the following principles and support your argument with articles.

i. Equity and Fairness

ii. Simplicity
(15 marks)

b. The Malaysian Budget of 2023 was table to the parliament. According to Budget,
corporate income tax rate for chargeable up to the first RM150,000 was reduced by 2
percentage point from 17 to 15 percent in 2023.

Required:

Discuss the impact of tax cuts on Economic Growth. The discussions are based on
article Tejvan (2022) and Gale and Samwick (2014).
(10 marks)

QUESTION 2

a. KB Golf and Country Club (hereinafter KBGCC) runs a business of club and
management of golf course in Kota Bharu. KBGCC generates income from club
membership, subscription fees and club house activities such as member birthday
party, food, and beverage. In the year assessment 2022, KBGCC spend the capital
expenditure incurred on the golf course (drainage system, grass, and turfing) together
with the cost of upgraded changing rooms, towel station and toilets. KBGCC claimed
capital allowance on the capital expenditure incurred. At the end of the year, the Inland
Revenue Board sent a notice of additional payment together with penalty while stating
that the capital allowance of the capital expenditure incurred does not qualify as a plant
accordance to Income Tax Act 1967.

Required:

With reference to the Income Tax Act 1967 (as amended), discuss whether the capital
allowance claim by the company would be deductible in arriving at the statutory income
from its business.

Note: Students are encouraged to quote the relevant provisions of the law and case
laws where appropriate.
(15 marks)

1
b. Malaysia has introduced Tax Corporate Governance Framework (TCGF) on the year
2023. One year after the introduction of the TCGF, Malaysia will introduce new system,
call as E-Invoice to the company registered in Malaysia.

Required:

Explain 5 (FIVE) benefits of having Tax Corporate Governance Framework to the

Company registered in Malaysia.

(10 marks)
(Total: 50 marks)

END OF THE QUESTION