HW 20 JUNE 2020

Name: Mohamad Fidri bin SHamsudin

Class: ATX-C

Lecturer: Ms Nabilah

SECTION A

1. A AND BC
2. C
3. D
4. C
5. A
6. B
7. B
8. A
9. B
10. C
11. A
12. C
13. C
14. C
15. B
16. B
SECTION B

QUESTION 1

A)

Employment income is derived from Malaysia when the employee’s activities of exercising
employment is in Malaysia. In this case, Mr Eric employed to perform in japan. He does not
physically exercise his duties and employment in Malaysia.

The employment income received of RM800000 by Mr Eric is not subject to Malaysian tax. It
is foreign source. The income is derived from Japan instead.

B)

Employment income received in Malaysia by a non-resident person is exempted from

Malaysian tax provided conditions are met. The total days of non-resident person stay in Malaysia
must not exceed 60 days.

Sara stay in Malaysia does only amounted to 58 days. This does not exceed 60 days thus 60
days exemption is applicable. The remuneration received by Sara exempted from Malaysian tax.
QUESTION 2

A)

Characteristics of Small and Medium Enterprise (SME) is that the paid-up ordinary share
capital of beginning of basis period must not more than 2.5 million. The company must also be a
Malaysian resident company. A company can also be an SME when it is owned by other SME that
having paid up ordinary share capital of not more than 2.5 million.

B)

1. Commercial vehicles such as bus, lorry and van

QE: NO RESTRICTION

2. New passenger vehicle: motorcar for General Manager

Cost not more than RM150000

QE: RESTRICTED TO RM100000

Cost more than RM150000

QE: RESTRICTED TO RM50000

3. Secondhand passenger vehicle

QE: RESTRICTED TO RM50000

/
QUESTION 3

Business of wholesale RM

ADJUSTED INCOME 100000

LESS: CAPITAL ALLOWANCE (15000)

STATUTORY INCOME 85000

Letting of 4-storey building

ADJUSTED INCOME\LOSS (CURRENT YEAR LOSS OF 10000) NIL

LESS: CAPITAL ALLOWANCE (5000 IS CARRIED FORWARD) NIL

STATUTORY INCOME NIL

AGGREGATE STATUTORY BUSINESS INCOME 85000

STATUTORY RENTAL INCOME 3000

AGGREGATE INCOME 88000

LESS: CURRENT YEAR LOSS (10000)

TOTAL INCOME 78000

Letting of property is considered as business income when the rental provided with
maintenance and support services actively and comprehensively. The letting of 4-storey building
provided with maintenance and support services actively and comprehensively therefore it shall be
treated as separate business income. The letting of terrace house however not included therefore it
is passive rental income.
QUESTION 4

RM’000

ABC SDN BHD

QCE INCURRED 40000

YA 2016

INITIAL ALLOWANCE (20%) 8000

ANNUAL ALOWANCE (10%) 4000

RESIDUAL ECXPENDITURE 28000

YA 2017- YA 2018

ANNUAL ALLOWANCE (10% * 2 YEARS) 8000

RESIDUAL EXPENDITURE 20000

HDA SDN BHD

DEEMED QCE INCURRED 40000

YA 2018

RESIDUAL EXPENDITURE 20000

YA 2019

ANNUAL ALLOWANCE (10%) 4000

RESIDUAL EXPENDITURE 16000

QUESTION 5

I. A sum of RM100000 to the other business as an inducement to vacate

The expenses incurred is to forbid other business from using the narrow road leading to
the factory of Three Manufacturing. This will cause the other business to loss its right to park
along the narrow road. As a return the other business receive money as a compensation.
This expenses also non-recurring. Three Manufacturing can monopoly the road thus giving
advantage to use the area of the narrow road as it wishes. This is capital expenses and it is
non-deductible expenses.

II. A sum of RM80000 per annum for the lease of the premise which had been vacated

This expense is recurring. Three Manufacturing will not have the legal right over the
premise. The right with be retained by the lessor. Therefore, it is a revenue expenditure.
Three Manufacturing will be able to deduct this expense as a deductible expenditure as in
arriving adjusted business income.
QUESTION 6

Failure year Normal year

Definition When existing company fail to When existing company ends it
finish its accounting period year of assessment having
due to changes in accounting normal 12-month basis period.
period which may lead to basis
period having not exactly 12-
month basis period.
Tax implications This must be notified to the There is no tax implication
DGIR. If fail to do so, 10% occur.
penalty will be imposed.
Basis period example scenario 1/1/2010 – 31/12/2010 1/1/2020 – 31/12/2020
1/1/2021 – 31/9/2021 1/1/2021 – 31/12/2021
1/10/2021 – 31/9/2022 1/1/2022 – 31/12/2022
SECTION C

QUESTION 1

A)

I)

For YA20x1, Gretel is a resident of Malaysia. Gretel fulfill the s.7(1)(a). To be a resident, the
person must physically present in Malaysia for at least 182 days or more. Gretel stay in Malaysia for
periods of 321 days. Therefore, in YA 20x1 she is a resident.

For YA 20x2, Gretel is non-resident of Malaysia. This is because Gretel did not satisfy to any
section. The amount of social visit she used is more than 14 days which is 18 days. Thus, in YA 20x2
she is non-resident.

II)

If, however she left Malaysia on 15 December 20x1 due to her mother was hospitalized.
Therefore, she is a resident of Malaysia for YA 20x2. This is because for YA 20x2 she stays in Malaysia
for a period of less than 182 days (28 days) with immediately preceding YA (20x1) stay in Malaysia
for at least 182 days including temporary absent. Her temporary absent was due to ill-health family
related and due to social visit for 13 days which does not exceed maximum of 14 days. She is
resident under the s.7(1)(b).

B)

The director’s fees received by Ahmad is subject to Malaysian tax. This is because of the
Ahmad’s employer is a Malaysian resident. The subsidiary company had its board meeting in Perak
once in 20x7 thus, the company is considered a Malaysian resident company. It does not matter if
Ahmad was never in Malaysia as long as the employer is Malaysian resident thus, any director’s fees
paid is subject to Malaysian tax. The fact that it is credited from his bank in Jakarta also does not
change the fact the it is still taxable under employment income for Malaysian tax.

C)

Amina is working with a multinational company which is based in Japan. And thus, she
received employment income from his work performed in Jakarta, Bangkok and Kuala Lumpur. To be
subject for Malaysian tax, the income must be due to the employees exercising employment in
Malaysia. Amina never exercise her employment in Malaysia as she is employed to work in Japan.
Thus, the income from Bangkok and Jakarta is not subject to Malaysia upon remitted in Malaysia as
it is foreign source and exempted from tax.
QUESTION 2

RM
Section 13(1)(a)
Salary (26000*12) 312000
Aggregate income 312000
Less: Relief
self (9000)
EPF (MAX 4000) (4000)
Chargeable income 299000
Total cost of benefit
Fully furnished apartment (3000*12) 36000
Rental for furnishing and household appliances 12000
(1000*12)
Car loan 250000
Interest on car loan 15000
Petrol 9000
Holiday trip 4800
Personal hand phone bills 6000
Total 332800
Tax savings (28%) 9464
QUESTION 3

A)

The importance of basis period Is for the purpose for claiming Schedule 3 Allowance. It is
also important to determine the due date to submit tax return to IRB which is generally 7 months
from after closing period. It is important as recognition of income and expenses depends on the

B)

I II III IV
YA 20X6 NIL NIL NIL NIL
YA 20X7 1/10/20X6 – NIL 1/10/20X6 – NIL
30/11/20X7 31/10/20X7
YA 20X8 1/12/20X7 – 1/10/20X6 – 1/11/20X7 – 1/10/20X6 –
30/11/20X8 31/1/20X8 31/10/20X8 31/1/20X8

C)

I) YA 20X7

II) YA 20X8

III) YA 20X7

IV) YA 20X8

D)

Yes, there are difference when paid up ordinary share capital is RM2.5millio. the company is
now an SME. For SME, the entity may not have to provide tax estimate for first two YA’s.
QUESTION 4

A)

I)

No, the commission received by Chan does not subject to withholding tax. This is because
Chan business is to receive commission from being agent to the real estate business. He received
commission on regular basis. The commission is considered as business income.

II)

Harris payment does not fall to any scope of withholding tax therefore the income received
by Mitch does not subject to withholding tax.

III)

Commission received by Mia Inc is not subject to withholding tax. Mona Inc is having a
business in Malaysia. Mona pay Mia commission for service provided by Mia of acting as a general
commission agency. Mia’s nature is to provide such service as commission agency. This constitute as
business income for Mia. This business income Is in form of commission. Thus, does not fall to any
scope of withholding tax.

B)

Controlled transfer arises when the company is controlled by another company having by
having 50% shares of the company. ABC hold 60% shares of Q therefore is it company controlled by
ABC. The disposal of asset made by ABC to Q is therefore subject to control transfer. Upon the
disposal of asset, balancing allowance or balancing charge will not arise. The disposal consideration
will be disregarded and the deemed disposal price is the residual expenditure of the asset. Q can
only continue to claim annual allowance only. Initial allowance has been claimed by ABC. The
deemed disposal date will be at 1 July 20x7.