INTEC

Tutorial: Employment Income and Theory

Q1 James was assigned by his employer in China to work for an associated company in Malaysia
for the following periods, and was remunerated as follows:

Period Remunera on non resident individual ( 60 day rule )

RM
assesable to malaysian tax ?
October 1, 2022 to November 6, 2022 35,000
61 days Principle : S.13(2), derived where ?
Exemption on employment
December 1, 2022 to December 24, 2022 income is
25,000 eligible to non resident individual where exercised
employment in Malaysia not exceeding 60 days .
January 16, 2023 toYA
March 16,
2022, YA2023 70,000because he is present in Malaysia less than 182 days
2023 james is non resident
60 days
and cannot be linked by period , and he is not resident in previous years

C: YA22, employment income of RM 60,000 is taxable in Malaysia

YA23, employment income of RM 70000 is exempted to tax in malaysia
Required: YA2022, james employment period exceed 60 days, YA2023, james employment period does
not exceed 60 days
(i) State, with reasons, whether the above amounts are assessable to Malaysian Tax.

(2 marks)

(ii) If any amount is taxable, explain how James should be assessed to tax.
C
(1 marks)
Since James is a non resident, he should be taxed at a flat rate of 30%,,James cannot claim personal relief and rebate
Q2 Anthony works as a taxi driver with Seri Service Company, a taxi-hire rm, and is paid daily
wages of RM6. He is required to work on shi s and during the night shi s he frequently
TE
receives ps from passengers.

Required:
business or
(i) Explain whether Anthony is exercising a voca on or an employment.
employment income ( fixed rate and master control)
IN

(ii) Explain whether the ps he receives are assessable as part of his income for tax
purposes.
(2 marks)
tips received is due to exercising his employment thus the tips is taxable under employment income
Q3 Accountant, solicitor or doctor can be carrying on his profession as an employment source
or as business source.
contract of services, monthly remuneration
(i) Harry, an associate member of the Associa on of Cer ed Chartered Accountants is
being employed by Hugo & Co at a xed monthly remunera on of RM6,000.

(ii) Suzy, an associate member of The Ins tute of Chartered Secretaries &
Administrator, joined Zain & Co, as a partner of the partnership
contract for service ( business ) , agent is owner , agent is principal and agent to each other
Income derived by the above individuals can be assessable either as employment income
(contract of service) or as a business income (contract for services)

Source of income Contract

a) Harry

Page 1 of 10
ti
ti
ti
fi
ti
ti
ti
ft
ti
fi
ti
ft
fi
 INTEC

b) Suzy

Q4 William is employed by a Malaysian company under a 5year contract. His du es include visits,
not exceeding 30 days in any one year, to supervise the company’s opera ons in neighbouring
countries. He receives part of his salary (RM5,000 per month) outside Malaysia. In addi on,
an annual bonus of RM20,000 is paid directly into his bank account in Toronto.

Required:

State with reasons, whether the salary and bonus received outside Malaysia is subject to
Malaysian Tax. (2 marks)

Q5 Adleen, an advocate and solicitor, exercises her profession partly at her chambers in Kuala
Lumpur and partly at her home in Petaling Jaya. Adleen claims a deduc on for the travelling
expenses incurred between her home and chambers and the courts. not for official duties

Required: travelling expense for official duties ( client place to court ) not home

Explain the deduc bility of the travelling expenses incurred by Adleen (1.5 marks)
C
Q6 Daniel, a ci zen of Australia residing in Singapore, is a director of IPMS Sdn. Bhd., a company
resident in Malaysia. He received director’s fees of RM25,000 from the company for the year
ended 31 December 2023. He spends a total of 70 days in a year in Malaysia, a ending
TE
mee ngs of the board of directors.

Required:

State with reasons, whether the director’s fees are subject to Malaysian tax for the year of
assessment 2023. (1.5 marks)
IN

Q7 (a) Tim, a non service director of GY Sdn Bhd, received perquisites under S.13(1)(a) a total
of RM90,000. He also receives bene t under S.13(1)(b) amoun ng to RM15000
excluding leave passage outside Malaysia for RM6000. He was provided with an
accommoda on with de ned value of RM28000 per annum. What will be the amount
of gross employment income?

(b) Hoshi, a ci zen of Japan residing in Singapore, is a director of Chemical Sdn Bhd which is
resident company of Malaysia. He received director’s fees of RM11500 per annum from
the company, he spends a total of 330 days in a year in Malaysia a ending mee ngs of
the board of directors. State with reason whether the director’s fees is subject to tax in
Malaysia? The directors fees is subject to tax in Malaysia as hoshi is considered tax resident Because he
Hoshi is a director of a resident company in Malaysia
(c) Alice worked as a waiter in Clods Restaurant she is pleasant and kind to her patrons.
Thus she usually receive ps and souvenirs from them. In the year she received a total
of RM8000 ps and souvenirs and later the employer gave her a cash present of
RM3000 for wedding gi s. Explain with reason the tax treatment of the receipts of
RM8000 and RM3000.
8000 tips is taxable as it is income received from exercising employment while the weeding gifts of
3000 is not taxable as it is not derived from exercising her employment as a waiter
Page 2 of 10 TAX TREATMENT
taxable or not - income
deductible or not - expenses revex
capital claimed or not - capital expenditure
ti
ti
ti
ti
ti
ti
ft
fi
ti
fi
tt
ti
ti
ti
ti
ti
tt
ti
 INTEC
dia kena bayar company tlg dia bayar reimbursed it is a, kalau company hired by her masuk a

Q8 Rina an o cer of RR Sdn Bhd, received for the year ended 31 December 2023 salary of
RM168,000 including leave pay RM12,000, Entertainment allowance RM30,000 of which
she claimed was all used to entertained clients, and Bonus RM42,000. She won a service
award for the Most Innova ve Employee from his employer and received RM2,500 in the
year of assessment 2023. She is en tled to leave passage bene ts of which she went to
Japan cos ng RM2,100 for air cket, RM2,000 for meals and RM1,500 for accommoda on.

RR Sdn Bhd provides Rina with bene ts as detailed below. Unless otherwise stated, the
bene ts were provided for the full year ended 31 December 2023.

1) The income tax payable by Rina is borne by the company amoun ng to RM67,500.
2) The gi of a computer, amoun ng to RM2,500.
3) Rina make RM8000 private purchases with a credit card provided by the employer. The
annual membership fees is RM2000.
4) Salary of driver amoun ng to RM24,000, reimbursed by the company.
5) The use of an unfurnished house provided to Rina by RR Sdn Bhd from 1 January to 31
May 2023. The company incurred a rental expense at RM7,000 per month. An air-
condi oner was provided from 1 January to 31 May 2023 which costed RM4,000.
6) the use of fully furnished house by Rina rented by the company monthly rental of
RM8,700 which includes rental of furnishing of RM1,700. Rina was required to contribute
a sum of RM1,000 per month for the rental and maintenance of the premises,
commencing from 1 June 2023. The company also provides a gardener.
C
7) The company provides a domes c helper at a monthly salary of RM1,300
8) The use of a car cos ng RM177,000 (on 1 April 2023 the car is 5 years old). Fuel amounted
to RM8,000 was provided
TE
9) The company paid for tui on fees of RM3,600 for her children and a child care bene t of
Rina’s daughter (age 2) and son (age 10) of RM5,000.
10) the company pays for her professional subscrip on fees of RM1,000. It is not directly
contributed to the business of the employer.
IN

Required: Compute Statutory Employment Income for YA2023.

Q9 (a) Linda an employee from Singer Sdn Bhd was provided with Proton Perdana cos ng
RM150,000 (cost when new) since 1 January. Fuel was also provided. Compute her S.13(1)(b)
if:
1. She uses the car for a whole year
2. She uses the car for 9 months
3. The company did not provide fuel for the car
4. Actual amount of fuel ascertained to be RM3000
5. The car is more than 5 years old
6. The car on 1 May is 5 years old

(b) Mina was provided with fully furnished accommoda on. She was also provided with the
following appliances:
Television cos ng RM10,000
Piano cos ng RM8,000
Compute her S.13(1)(b) bene ts

Page 3 of 10
fi
ti
ft
ti
ti
ti
ffi
ti
ti
ti
ti
fi
ti
ti
ti
ti
fi
ti
ti
ti
fi
fi
ti
ti
 INTEC

(c) Jack is an o cer of MODA Sdn Bhd. for the year of assessment 2023 his S.13(1)(a) income
is RM180,000.

During the year the company provides with fully furnished accommoda on (RM500 per
month). The rent paid by the employer was RM66,000 for the year.

Calculate the assessable value of living accommoda on for year of assessment 2023
under each of the following circumstances:
1. The accommoda on was provided for the whole year
2. The accommoda on was provided for only 9 months
3. The accommoda on was shared with another employee for the whole year
4. The accommoda on was provided for 4 months and it was shared with 1 other
employee of the same company.
5. One quarter of the accommoda on (provided for whole year) was used for MODA Sdn
Bhd’s business purpose.
6. He commenced employment 1 March 2023 and uses the accommoda on during his
employment period for year assessment 2023.
7. He commenced employment 1 March 2023 and uses the accommoda on from 1 May
2023.
8. He commenced employment July 2023 and uses the accommoda on from 1
December 2023. He shared with 1 other employee.
C
9. He is a director and owned 15% of MDA Sdn Bhd (a controlled company). The
accommoda on was provided for 4 months and it was shared with 1 other employee.
One qurter of the house is used for the advancement of MODA Sdn Bhd’s business.
TE
(d) Sria, an Iranian, cease his employment and leaves Malaysia on 1.11.2023 and will not be
coming to Malaysia any me soon. He will not receive any pension in the following basis
year. He receives a salary of RM72,000 for year 2023 plus a leave pay of RM22,000 from
1.11.2023-31.3.2024. Compute the assessment for YA2023. Compute the assessment for
relevant YAs if Sria make an elec on for his leave pay to be assessed on receipt basis.
IN

Q10 Encik Ari n had been working in Syarikat Sri Sinar since 1 January 2014 as a service director.
However, his service was terminated on 30 September 2023 due to the downsizing of the
company. Upon termina on, he received a gratuity of RM40,000. Other informa on
pertaining to his reimbursement and bene ts during his employment in the basis year 2023
are as follows:

1. A monthly salary (net) RM3,750 a er deduc ng a house loan of RM700 and EPF (11%)

2. Monthly allowance on entertainment was RM300

3. Reimbursement of medical expenses of RM1,800

4. Ari n was provided a semi-furnished house rented out by the company for him. The
rateable value of the house was RM3,000 per month, inclusive of the monthly rental of
furniture of RM750. In return, he had to pay a monthly rental to the company RM100. He
stayed in the house un l the day he was terminated.

Page 4 of 10
ffi
ffi
ti
ti
ti
ti
ti
ffi
ti
ti
ti
ti
ti
ft
fi
ti
ti
ti
ti
ti
ti
ti
 INTEC
withdrawal
5. One month a er his re rement, he received RM56,000 from the company’s re rement fund
(unapproved) of which RM37,600 is contributed by the employer.

6. He was also provided with car (year 2012) which cost RM70,000 and a driver whose salary
paid by the company RM800 per month.

During the basis year 2023, Ari n went out of Malaysia twice for the following reasons:

(a) Tokyo for business mee ng. His food and lodging expenses, paid by the company were
RM2,000 and RM1,500 respec vely.

(b) China for holiday with his wife. They spent RM3000 on lodging and RM5000 on food
while the airfare cost him RM8000. The company paid for the expenses.

Arri n produced several bills which he claimed need to be incurred for his duty as a service
director. The expenses were regarding: Travelling-RM4000; Entertainment-RM3500

Required: compute the statutory employment income of Ari n for the year assessment
2023

Q11 Ferdin, an expatriate was employed as the CEO of Future Gains Berhad at a monthly salary of
C
RM20,000. His employment ceased on 30 November 2023.

During the year, his employment par culars were as follows:

TE
- Allowances: RM
Entertainment 85,000

- Car provided by the company:

Driver’s monthly salary RM1,000 reimbursed by the company.
IN

Cost of car RM220,000

- A domes c servant employed by the company at a monthly salary of RM800.

- Other bene ts provided by the company

School fee RM18,500 for his adopted child, aged 10
- Corporate membership with two recrea on clubs with monthly subscrip ons of RM270
and RM200 respec vely.

- Living accommoda on provided by the company:

A full furnished house complete with air-condi oners and kitchen equipment. The
company paid a monthly rental of RM8,300, of which RM1,800 is for furnishings. The
furnished house was provided to Ferdin from 1 January 2023, but he only moved in on
March 2023.

Required:
Compute the statutory employment income of Ferdin for year of assessment 2023.

Page 5 of 10
fi
ti
fi
ft
ti
ti
ti
ti
ti
ffi
ti
ti
ti
ffi
ti
ti
 INTEC

Q12 Mr. Arryl works as a nancial analyst for Big Ben Bhd, a listed company. In view of his good
performance in the past year, the company gave him an increase in salary with e ect from 1
April 2023. His salary for the year 2023 is therefore as follows:

Jan – Mar RM 5,000 per month

Apr – Dec RM 6,500 per month

Other details rela ng to his employment are for the whole year unless stated otherwise:

1. E ec ve from 1 April 2023, a company car cos ng RM 130,000, together with a driver was
provided to him.
2. A new personal computer cos ng RM 6,000 was given to him as a gi .
3. Mileage allowance was given to him RM 9,000.
4. Entertainment allowance RM 30,000.
5. Mr. Arryl engaged a servant and paid her monthly RM 750 and this was reimbursed by the
company.
6. Fully furnished living accommoda on in Bangsar was provided to him free with e ect from 1
May 2023. The monthly rental for the house is RM 4,000 (including rental of furniture of RM
400 per month).
7. A package tour of Perth cos ng RM 900 per person for the cost of airfare for himself, wife,
C
two children and his uncle in July 2023. The sum RM 5,400 for food and lodging.
8. The company provided him childcare bene t amounted RM 3,000 and corporate
membership of a golf club. The annual subscrip on is RM 800.
TE
Mr Arryl made the following claims for deduc on in his tax return:

- Entertainment expenses of RM35,000 which he incurred entertaining company’s clients.

- Professional membership fees RM1,200.

IN

Required:

Compute the Statutory Employment Income of Mr Arryl for the year of assessment 2023.

18) Marks)

Q13 Din was a director (not a service director) of a controlled company in Kota Kinabalu since 2
January 2013. Details of his remunera on for the year ended 31 December 2023 were as
follows:

RM
7,000 per
(i) Salary 01.01.2023 to 31.10.2023 month

Page 6 of 10
ff
ti
ti
ti
fi
ti
ti
ti
ti
ti
ti
fi
ft
ff
ff
 INTEC

7,000 per
(ii) Leave pay 01.11.2023 to 31.12.2023 paid on 30.12.2023 month
(iii Bonus (for 2021 was paid on 23.04.2023) 9,200
)( I v Entertainment allowance (Actual amount expended for
) entertaining and servicing exis ng clients amounted to RM9,000) 7,200

The use of a company car, a driver and a gardener based on the Inland Revenue Board's
public ruling to be RM1,600 per month.

Fully furnished accommoda on (inclusive of furniture at RM400 per month) paid by the
company at RM3,700 per month for 10 months.

Required:

Compute his Statutory Employment Income for YA 2023.

Q14 Lim is employed as an execu ve of a company has income for the year ended 31 December 2023
C
as follows:

RM
TE
Salary 102,000
Entertainment allowance 24,000

The company reimbursed Lim for the following expenses incurred by him during the year:
IN

I. The salary of a gardener employed by Lim amoun ng to RM6,552

II. Water and electricity bills for his residence amoun ng to RM2,961
The company provided Lim with the following for the whole of the year, unless otherwise
stated:

A new car for is private use for which the company had incurred a sum of RM151,500
comprising:
RM
Coast of purchase 143,000
Accessories 5,500
Insurance premium and road tax 3,000

• A driver employed by the company at RM1,100 per month.

• Petrol amoun ng to RM4,200

Page 7 of 10
ti
ti
ti
ti
ti
ti
 INTEC

• Furniture for the lounge, dining and bedrooms of his residence cos ng RM18,000
were provided from 1 February 2023.
• A refrigerator cos ng RM3,600 was provided from 1 February 2023. The prescribed
average life span of the refrigerator is ten years.
• A package tour of Perth cos ng RM7,800 in July 2023 for himself, his wife and his uncle. The
sum comprises RM5,400 for the cost of fares and RM2,400 for food and accommoda on.

Lim claims the following:

• A sum of RM25,400 being entertainment expenses incurred by Lim to entertain the

company's customers.

Required:

Compute the statutory income of Lim in respect of his employment for the year of
assessment 2023.

Q15 Encik Augus n commenced employment with Uni Sdn Bhd on 1 January 2023. His
remunera on for the year ended 31 December 2023 is as follows:
C
RM
Salary 222,000
TE
Entertainment allowance 45,000
Travelling allowance for o cial du es 9,000

The company provided him with the following for the whole year, unless stated otherwise:

1) For the rst two months of 2023, the company reimbursed Encik Augus n the salary of
IN

a domes c servant employed by him at the rate of RM800 per month.

With e ect from 1 March 2023, the company employed the domes c servant and
provided the servant free of charge to Encik Augus n

2) An interest free loan for a car for which the company had to take a loan amoun ng
RM250,000 from a third party and incur interest amoun ng to RM7,500

3) Leave passage for a family holiday within Malaysia at RM900 per person for Encik
Augus n, his wife, his two children and both his parent in June 2023.

4) The use of a mobile phone for which all bills of RM1,200 was paid by the company. The
phone was registered under company’s name

5) The use of a car cos ng RM125,000 together with free fuel amoun ng RM4,000

6) From 1 March 2023, the service of a driver

7) A gardener employed by the company at a salary of RM600 per month

Page 8 of 10
ti
ff
fi
ti
ti
ti
ti
ti
ffi
ti
ti
ti
ti
ti
ti
ti
ti
ti
ti
ti
 INTEC

8) A fully furnished house completed with air-condi oners and kitchen equipment. The
company paid monthly rental of RM3,500 of which RM700 is for furnishing. The
furnished house was provided to Encik Augus n from 1 February 2023. Encik Augus n
is required to pay RM300 as rental of the house.

9) Encik Augus n paid RM400 as professional fees to the Ins tute of Surveyors Malaysia

10) Encik Augus n made the following claims:

Entertainment expenses incurred by him entertain the company’s client amoun ng to

RM46,500.

Required:

Compute the statutory employment income of Encik Augus n for the year of assessment
2023.

Q16 Encik Kassim an engineer of MaxiFood Bhd, was promoted as Produc on Manager on 2
January 2023. His remunera on for the year ended 31 December 2023 is as follows:

- Salary RM120,000

-
C Entertainment allowance RM30,000

- Parking allowance RM15,000

TE
- Bonus RM42,000

- Reimbursement of travelling expenses for carrying out du es RM8,500

The company provided him with the following for the whole year, unless stated otherwise:
IN

1) A new company car cos ng RM190,000 with free petrol amoun ng RM5,800

2) A house which cost the company monthly rental of RM8,000. Of this RM2,000 per
month is a ributable to the furniture in the living room, bedroom and kitchen with air-
condi oners and carpets. The house was provided to Encik Kasim together with a
domes c servant from 1 March 2023.

3) Water and electricity bills amoun ng to RM6,500. The bills are under the employee’s
name

4) Phone rental and charged amoun ng to RM3,800 for his smartphone. The phone is
registered under the employee’s name

5) Wife’s medical treatment at Saujana Medical Centre amoun ng RM12,000

6) Entrance fee of RM8,000 and subscrip ons of RM200 per month for a non-corporate
membership of a golf club

Page 9 of 10
ti
ti
tt
ti
ti
ti
ti
ti
ti
ti
ti
ti
ti
ti
ti
ti
ti
ti
ti
ti
 INTEC

7) Two leave passages for him and his family; one leave passage to the USA cos ng
RM9,800 and the other to Bali cos ng RM2,800. Cost of accommoda on were
RM8,000 and RM3,000 respec vely

8) Reimbursement of salary of driver employed by him amoun ng RM10,000

9) Discount amoun ng RM2,800 in respect of goods purchased from the company at sta
price

Encik Kassim made the following claims for deduc on in his tax return:

- Contribu on of RM1,500 per month from 1 March to 31 December 2023 which he paid
to MaxiFood Bhd for the use of his residence (unfurnished)

- Entertainment expenses of RM33,000 which he incurred entertaining company’s clients

- Professional membership fee RM1,200

Required:

Compute the statutory employment income of Encik Kassim for the year of assessment 2023
C
TE
IN

Page 10 of 10
ti
ti
ti
ti
ti
ti
ti
ti
ff