CONFIDENTIAL 1 NOV 2023/TAX667/490

UNIVERSITI TEKNOLOGI MARA

COMMON TEST

COURSE : ADVANCED TAXATION / ADVANCED MALAYSIAN

TAXATION
COURSE CODE : TAX667/490
ASSESSMENT : NOV 2023
TIME : 2 HOURS

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of three (3) questions.

2. Answer ALL questions in the Answer Booklet. Start each answer on a new page.

3. Do not bring any material into the examination room unless permission is given by the
invigilator.

4. Please check to make sure that this examination pack consists of:

i) the Question Paper

ii) Appendix

5. Answer ALL questions in English.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

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This test paper consists of 6 printed pages

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QUESTION 1

Rafiz, a resident taxpayer, died not domiciled in Malaysia on 30 September 2023. Azalina,
Rafiz’s wife (non-resident and not working) was appointed as the executor of his estate. The
information pertaining to the income and expenditure of Rafiz for the year ended 31
December 2023 is provided below.

RM
Interest Income
Received from:
Westpac Bank Bhd, credited on 1 August 2023 8,000
Foreign country, remitted on 21 October 2023 3,000

Dividend Income
Received from Sri Aman Bhd (single-tier) on 15 May 2023 7,000

Business I (Penang)
Adjusted Loss (4,000)
Unabsorbed loss brought forward (1,600)

Business II (Klang Valley)

Gross Income 190,000
Balancing allowance 1,800
Revenue expenses (Note: 3) 50,000
Capital allowances 6,000

Royalty (Local)
Received from writing and publication of literary work on 13 April 22,000
2023.

Rental Income (Johor)

Gross rental income received in 2023 (Inclusive of a two-months 45,000
rental income for January – February 2024 amounting to a sum of
RM6,000, and a refundable deposit of RM3,000)
Expenses incurred:
 Installation of an alarm system 8,000
 Repainting of property 3,700

Additional information:

1. Rafiz suffered from a life-threatening illness. He had incurred medical expenses of

RM8,000 to treat the illness in February 2023.

2. Upon demise of Rafiz, Azalina was paid annuity of RM1,000 per month which is a
quarter of the annuity payable.

3. The monthly executor’s fee is RM3,800. Out of the RM3,800 amount, RM2,000 is
associated with managing the business operation in Klang Valley. The remaining
amount is related to estate administration. Payment for the executor fee is not
included in the RM50,000 revenue expense.

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4. Rafiz was a computer programmer. He incurred RM7,800 course fee in February

2023 to learn new skill as a system analyst.

Required:

a. Calculate the followings for the year of assessment 2023:

i. the chargeable income of the deceased

ii. the income tax payable by the executor.

Note: Supporting documents were provided for tax relief purposes. Calculate the
answers to the nearest ringgit.
(12 marks)

b. Explain the tax treatment for the executor’s fee (refer additional information 3,
above). Your answer should focus on the tax treatment for the amount associated
with managing the business operation and administering the estate.
(3 marks)
(Total: 15 marks)

QUESTION 2

Bustawi died on 30 June 2022 due to chronic illness. A trust, resident in Malaysia, was
created for his wife Salmah and children Azeela, Budin, Cahya and Daud under the terms of
his will.

The trust’s income and expenditure for the year ended 31 December 2023 are as follows:

RM RM
 Statutory income from business 210,000  Trustee’s fees 25,000
(Malaysia)
 Rental income (Canada) - not 112,000  Cash donation 8,000
remitted to Malaysia (Unapproved Institution)
 Dividend income (single tier) 18,000
 Interest income from Utama 31,000
Bank Bhd

Information pertaining to the trust is provided below:

i. A sum of RM20,000 per annum is to be accumulated for Daud until he reaches the
age of twenty-one.

ii. Azeela and Cahya were paid such sums as the trustees think fit out of the
discretionary portion. Three-quarters (3/4) of the trust income was used for this
purpose.

iii. Budin is the sole beneficiary of the non-discretionary portion from the trust’s
income.

iv. Salmah received an annuity of RM2,000 per month. The annuity payable is
RM2,500 per month.
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Additional information:

1. In 2023, Azeela, Budin and Cahya received RM62,000, RM60,000 and RM58,000,
respectively from the trust.

2. All beneficiaries are resident for tax purposes in Malaysia except for Budin.

3. Budin received RM60,000 rental income from Thailand (suffered foreign tax at
20%). An amount of RM40,000 is remitted to Malaysia on 18 August 2023.

Required:

a. Assuming that Section 61(2) is not to be applied, calculate the followings for the
year of assessment 2023:

i. the chargeable income of the trust body (including the statutory income of
each beneficiary from the trust body).
ii. the income tax payable by Budin.
(12 marks)

b. Explain the implication for tax credit under Section 110(8) to Azeela and Budin if
Section 61(2) is not to be applied.
(3 marks)
(Total: 15 marks)

QUESTION 3

Arameh REIT is an approved REIT and is listed on Bursa Malaysia. Its main source of
income is derived from the rental of shop lots in Klang Valley. The following are the income
and expenditure for the year ended 31 December 2023.

RM RM
Rental income from shop lots 4,200,000
Interest income (Note 1) 135,000

Less: Expenses
Trustee’s fee 48,000
Renovation for shop lot 76,000
Fire insurance for shop lots (Note 2) 20,000
Employees’ salaries 120,000
Maintenance cost - rented out shop lots 60,000
REIT manager’s fee 100,000
Tax appeal 3,000
Secretarial and tax filing fees 18,000
Interest on loan (Note 3) 90,000
Donation to UKM Library (Note 4) 30,000
Bad debts (Note 5) 40,000 (605,000)
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Net profit before tax 3,730,000

Additional information:

1. Interest income of RM135,000 consisted of:

 RM80,000 interest received from bonds guaranteed by the government
 RM55,000 interest received from debentures which are not approved by the
Securities Commission.

2. One of the shop lots in Klang Valley is still not rented out. However, a sum of RM2,000
fire insurance premium has been paid.

3. Sixty percent (60%) of interest on loan is related to the purchase of bonds guaranteed
by the government while the remaining is related to debentures not approved by the
Securities Commission.

4. Arameh REIT applied Section 44(8) for the cash donation to UKM library.

5. Three quarters of the bad debts are related to general provision.

6. Arameh REIT decided to distribute RM3,600,000 to their unit holders on 18 December

2023. No further distribution is made to unit holders after the initial distribution.

Required:

a. Calculate the income tax payable by Arameh REIT for the year of assessment 2023.
Start your answer from the ‘net profit before tax’ figure and write ‘Nil’ where no
adjustment is required.
(15 marks)

b. Explain how distributions made by Arameh REIT will be taxed for the following types of
unit holders:
i. resident companies in Malaysia;
ii. resident individuals in Malaysia; and
iii. non-resident individuals in Malaysia

Note: Your answers should include the rate of tax applicable.

(5 marks)
(Total: 20 marks)

END OF QUESTION PAPER

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Personal reliefs (BUDGET 2023)

RM
Self 9,000
Disabled self - additional relief for self 6,000
Spouse relief (normal) - no income/ joint assessment 4,000
Disabled spouse - additional spouse relief 5,000
Child – unmarried and under 18 years old (each) 2,000
Child – unmarried child of 18 years and above receiving "A-Level", (each) 2,000
certificate, matriculation or preparatory courses.
Child – unmarried child of 18 years and above receiving further (each) 8,000
education at higher learning institution
Disabled child (unmarried) (each) 6,000
Disabled child - more than 18 years old and study at institution of (each) 14,000
higher education
Fees paid to childcare centre and kindergarten (maximum) 3,000
Expenses on medical treatment, special needs/ carer exp for (maximum) 8,000
parents expenses expended on self, spouse or child with serious
Medical (maximum) 10,000
disease, fertility treatment, vaccination up to RM1,000 and
diagnostic treatment for learning disabilities.
Basic supporting equipment for disabled self, spouse, child or parent (maximum) 6,000
Study course fees for skills, qualifications, upskilling and self- (maximum) 7,000
enhancement
Lifestyle allowance (basic) (maximum) 2,500

* Scaled Rate (BUDGET 2023)

*Chargeable Income (RM) Rate Cumulative Tax (RM)
On 5,000 0
Next 5,000 1 50
On 10,000 50
Next 10,000 1 100
On 20,000 150
Next 15,000 3 450
On 35,000 600
Next 15,000 6 900
On 50,000 1,500
Next 20,000 11 2,200
On 70,000 3,700
Next 30,000 19 5,700
On 100,000 9,400
Next 300,000 25 75,500
On 400,000 84,400
Next 200,000 26 52,000
On 600,000 136,400
Next 1,400,000 28 392,000
On 2,000,000 528,400
Exceeding 2,000,000 30

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