This A: Answer ONE (1) question only. SECTION

This question paper consists of 5 questions on 9 printed pages.


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FRIDAY, 3 APRIL 2015 TIME: 9.00 AM – 11.00 AM (2 HOURS)


Instructions to Candidates:

Number of questions on paper: 5
This paper is divided into 2 sections.

Four (4) questions only to be answered as follows:

SECTION A: Answer ONE (1) question only.

SECTION B: Answer ALL THREE (3) questions.

All workings that support the answer should be shown.
Marks will be awarded for clarity in presentation and logical arguments.

Tax rates and personal allowances are printed herewith.

The following rates and allowances are to be used for all questions in this paper:

This question paper consists of 5 questions on 9 printed pages.

Rates of Income

(a) i. Resident company (paid-up capital not exceeding RM2.5 million)
Chargeable Income: First RM500,000 2
Remainder 2
ii. Resident company (paid-up capital exceeding RM2.5 million) 2
(b) Non-resident company 2
(c) Non-resident individual 2
(d) Resident individual
Chargeable income
Rates (%) Cumulative Tax
(0 – 5,000) First RM 5,000 0 0
(5,001 – 20,000) Next RM 15,000 2 300
(20,001 – 35,000) First RM 20,000
Next RM 15,000

(35,001 – 50,000) First RM 35,000
Next RM 15,000

(50,001 – 70,000) First RM 50,000
Next RM 20,000

(70,001 – 100,000) First RM 70,000
Next RM 30,000

(Above 100,000) First RM 100,000
Next each RM


Motorcars and related benefits – value assessable extracted from Public Ruling No. 3/2013
issued by the Inland Revenue Board.

Cost of car (when new) Annual value of BIK Fuel per annum
Up to – 50,000 1,200 600
50,001 – 75,000 2,400 900
75,001 – 100,000 3,600 1,200
100,001 – 150,000 5,000 1,500
150,001 – 200,000 7,000 1,800
200,001 – 250,000 9,000 2,100
250,001 – 350,000 15,000 2,400
350,001 – 500,000 21,250 2,700
500,001 and above 25,000 3,000

When the car provided is more than five years old the taxable car benefit is halved but the value of fuel
provided remains unchanged. The value of driver provided is fixed at RM600 per month.
Household furnishings, appliances, etc: RM

This question paper consists of 5 questions on 9 printed pages.

(i) Semi-furnished with furniture in the lounge,
dining room, or bedroom
840 per annum
(RM70 per month)
(ii) Semi-furnished with furniture as in (i) above
plus, one or more of air conditioner, curtains
and carpets
1,680 per annum
(RM140 per month)
(iii) Fully-furnished with benefits as in (i) and (ii)
above plus, one or more of kitchen equipment,
crockery, utensils and appliances
3,360 per annum
(RM280 per month)
Other benefits RM
Gardener 3,600 per annum
Domestic servant 4,800 per annum

Personal Reliefs

Self 9,000
Self – disabled 6,000 (additional)
Spouse 3,000
Spouse – disabled 3,500 (additional)
Normal child below 18 years old 1,000 each
Normal / disabled child 18 years old and above,
and in higher education:

Overseas universities or similar establishments 6,000 each
Local universities, colleges or similar
6,000 each
Disabled child 5,000 each
Medical expenses incurred for parent(s) 5,000 (maximum)
Medical expenses on serious disease 5,000 (maximum)
Medical examination 500 (maximum)
Basic supporting equipment 5,000 (maximum)
Books and magazines 1,000 (maximum)
Fees for acquiring skills and qualification 5,000 (maximum)
Life insurance premium and contributions to
approved fund or scheme
6,000 (maximum)
Education and medical insurance premiums 3,000 (maximum)
Purchase of a new personal computer 3,000 (maximum)
Skim Simpanan Pendidikan Nasional
Purchase of sports equipment

6,000 (maximum)
300 (maximum)

Personal income tax rebates RM
Individual rebate: chargeable income does not
exceed RM35,000 – self

– spouse
Zakat and fitrah Amount paid by taxpayer

Capital Allowances Initial allowance Annual Allowance
Industrial buildings 10% 3%

This question paper consists of 5 questions on 9 printed pages.

Plant & machinery – general 20% 14%
Motor vehicles, heavy machinery 20% 20%
Office equipment, furniture & fittings 20% 10%
Computers, information technology equipment &
computer software
20% 40%

SECTION A (25 marks)

Answer only ONE (1) question.

Question 1

Mr. John, an Australian citizen, came to Malaysia on 1 June 2009 to work as an architect with
a multinational company. His period of stay in Malaysia is as follows:

Year Period of stay Note No. of days

2009 01.06.09 – 31.08.09 92
13.12.09 – 31.12.09 19

2010 01.01.10 – 11.06.10 1 162
19.06.10 – 20.07.10 32

2011 12.11.11 – 29.12.11 2 48

2012 06.01.12 – 21.07.12 197

2013 – 0 (not in Malaysia)

2014 01.03.14 – 30.04.14 61
28.07.14 – 01.09.14 36

1. From 12 June to 18 June 2010, he was in New Zealand to visit his younger brother who was
undergoing medical treatment.

2. From 30 December 2011 to 5 January 2012, he was in Indonesia to attend an international
workshop in relation to work matters.

(a) Determine and explain Mr. John’s tax residence status for each year of assessment from 2009 to
2014 based on Section 7(1) of the Income Tax Act, 1967. (15 marks)

This question paper consists of 5 questions on 9 printed pages.

(b) Explain any TWO (2) permitted temporary absences that will be deemed as physical presence in
Malaysia under Section 7(1)(b) of the Income Tax Act, 1967. (4 marks)

(c) Explain how the residence status of a company that carries on a business in Malaysia is
determined under the Income Tax Act, 1967. (3 marks)

(d) List any THREE (3) responsibilities of an individual taxpayer according to Income Tax Act,
1967. (3 marks)
Total: 25 marks

Question 2

(a) State the classes of income charged under Section 4(a) to 4(d) of Income Tax Act, 1967.
(4 marks)
(b) Mr. Zamarul owns a restaurant and a laundry shop. The following information relates to his
business for the year ended 31 December 2014:
Restaurant (RM) Laundry shop (RM)
Adjusted income 75,000 (10,000)
Capital allowance 20,000 3,000
Unabsorbed capital allowance brought
– 2,000
Balancing charge 25,000 2,500
Unabsorbed losses brought forward (25,600) –

Other income

Rental income from a property in Singapore received in Malaysia: RM15,000.
Single tier dividend: RM33,000.
Compute the chargeable income for Mr. Zamarul for the year of assessment 2014 pursuant to
the Income Tax Act, 1967. (15 marks)

(c) Explain any THREE (3) general principles to apply in order to determine tax deductibility of
expenses. (6 marks)
Total: 25 marks

This question paper consists of 5 questions on 9 printed pages.

SECTION B (75 marks)

Answer ALL THREE (3) questions.

Question 3

Mr. Yusuf started working as a marketing executive officer for Teen Sdn. Bhd. on 1 January 2014.
His remuneration for the year ended 31 December 2014 is as follows:
Salary 42,000
Travelling allowance 12,000
Entertainment allowance 14,400
Bonus (paid on 31 December 2014) 14,000

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

? A fully furnished condominium was provided to him. Rental paid by employer was RM2,500 per
month inclusive of RM700 for the full furnishing.

? Leave passage to Sydney for him and his immediate family costing RM8,000 and to Pulau
Pangkor costing RM2,000.

? I Phone6 costing RM2,500 and monthly telephone bills costing RM200 per month.

? Motor vehicle costing RM132,000 which was purchased in 2009 by the employer. No fuel was
provided for him.

? Medical expenses paid by company for his family amounting to RM1,200.
Additional information in respect of Mr. Yusuf for 2014:

This question paper consists of 5 questions on 9 printed pages.

? He and his wife, Zulaika, a housewife, have three children. The first child who is married is of
age 24 and is studying at Oxford University. The second child is of age 20, is studying at Tunku
Abdul Rahman University College while the third child is of age 15, is studying at a secondary

? He paid RM7,000 education fees for pursuing a post graduate marketing course in a public
university in Malaysia.

? While meeting the company’s clients, he incurred RM17,000 and RM11,000 on entertainment
and travelling expenses respectively.

? A cash donation of RM2,100 was made to Rumah Anak Yatim, an approved institution.

? Other expenses incurred by him included expenditure on books and journals of RM2,050 and a
personal computer costing RM3,200.

? Medical and education insurance premium for his children totalling RM7,320. He also paid for
life insurance for himself amounting to RM2,000.
Question 3 (Continued)

? Medical expenses incurred for his father in-law was RM3,000.

? Contribution of RM3,500 to Skim Simpanan Pendidikan Nasional for his children.

? Contribution of RM4,620 to Employees Provident Fund.

? Zakat payment of RM850.


(a) Compute the income tax payable for Mr. Yusuf for the year of assessment 2014. (22 marks)
(All items stated in the question are to be included in the computation. Where the item requires
no adjustment, indicate ‘NIL’ in the computation.)

(b) Explain the tax treatment of the leave passage provided to Mr. Yusuf. (3 marks)
Total: 25 marks

Question 4

X-Concept Sdn. Bhd. with a paid up ordinary share capital of RM1 million is in the business of
manufacturing household appliances since 2003.

The company’s statement of profit or loss for the year ended 31 December 2014 is as follows:

Notes RM’000 RM’000
Sales 1,780
Less: Cost of sales 1 893

This question paper consists of 5 questions on 9 printed pages.

Add: Other income 2 39
Less: Expenses
Repairs and maintenance 3 125
Professional fees 4 68
Bad debts

Marketing expenses 8 20
Entertainment 9 19
Staff remuneration 10 280
Water and electricity


Profit before taxation 198

Question 4 (Continued)

Notes: RM
1. Cost of sales:
Included in the cost of sales:
Provision for obsolete inventories 110,000
Royalty payment 90,000

2. Other income comprises:
Interest received from fixed deposit 12,000
Single tier dividends 27,000

3. Repairs and maintenance include:
Renovation of warehouse 87,200
Maintenance of machinery 37,800

4. Professional fees comprise:
Accounting and audit fee 44,600
Fees paid to tax agent 9,900
Fine for traffic offences 13,500

5. Donations to approved institutions:
Donation of cash 29,000
Donation of books 6,000

6. Travelling:
Leave passage for managers to Amsterdam 58,600
Annual company trip to Pulau Tioman organised by employer 26,400

7. Bad debts comprise:
Trade debt 20,500
General provision for doubtful debt 6,000
Specific provision for doubtful debt 5,500
Loan to an ex-employee 3,000

This question paper consists of 5 questions on 9 printed pages.

8. Marketing expenses:
These are expenses incurred to promote company’s products in magazines and newspapers.

9. Entertainment expenses comprise:
Beverages for clients during launching of new products 6,000
Annual dinner for company’s staff 13,000

10. Staff remuneration includes:
Employee Provident Fund contribution 45,000
Salaries and wages 200,000

11. The balancing charge and capital allowances for the year of assessment 2014 were RM15,000 and
RM75,000 respectively.

Question 4 (Continued)


(a) Starting with
net profit before tax, compute the income tax payable for X-Concept Sdn. Bhd. for the year of
assessment 2014. Indicate ‘nil’ under the appropriate column, where no tax adjustment is
required. (23 marks)

(b) Explain
the tax treatment for marketing expenses under Note 8. (2 marks)
Total: 25 marks

Question 5

(a) Mr. Safuan is a tax resident in Malaysia for the year of assessment 2014. In 2014, he worked as
a pilot with the Malaysia Airlines (MAS) and earned a total salary of RM180,000. He also earned
a rental income of RM15,500 from letting out a property in Shanghai which was deposited in
a bank in that country. He received in Malaysia a foreign dividend income of RM23,300.


Explain with reasons whether each of Mr. Safuan’s income is subject to Malaysian tax.
(6 marks)

(b) Bigmac Sdn. Bhd. is a construction company based in Shah Alam. It incurred the following
capital expenditure during the year ended 31 December 2012:
A new Mercedes car for a director 322,000
A second hand Honda car for a manager 80,000
Heavy machinery 250,000

During the year ended 31 December 2014, the company:
– acquired new office equipment costing RM85,000;
– disposed of the heavy machinery (acquired in 2012) for RM160,000.

This question paper consists of 5 questions on 9 printed pages.


(i) Explain any THREE (3) conditions to be fulfilled in order to claim capital allowances.
(6 marks)

(ii) Compute the capital allowance for the years of assessment 2012 to 2014. (13 marks)
Total: 25 marks


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