KOLEJ UNIVERSITI TUNKU ABDUL RAHMAN

FACULTY OF ACCOUNTANCY, FINANCE AND BUSINESS

ACADEMIC YEAR 2021/2022

BACHELOR OF ACCOUNTING (HONOURS)

BBFT2013 TAXATION

COURSEWORK TEST 2

DATE: 6 SEPTEMBER 2021, MONDAY TIME: 06.30PM – 08.00PM

(1 Hour 30 Minutes)

Instructions to Candidates:

Answer ALL TWO (2) questions.

 This is an open book online assessment. You MUST answer the assessment questions on your own
without any assistance from other persons.

 You must submit your answers within the following time frame allowed for this online assessment:
o The deadline for the submission of your answers is half an hour from the end time of this
online assessment.

 Penalty as below WILL BE IMPOSED on students who submit their answers late as follows:
o The final marks of this online assessment will be reduced by 10 marks for answer scripts that
are submitted within 30 minutes after the deadline for the submission of answers for this
online assessment.
o The final marks of this online assessment will be downgraded to zero (0) mark for any answer
scripts that are submitted after one hour from the end time of this online assessment.

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.

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BBFT2013 TAXATION

The following rates and allowances are to be used for all the questions in this paper unless
specified otherwise in the relevant question(s):

Rates of income tax

(a) (i) Resident company (paid-up capital not exceeding RM2.5 million and gross business
income not more than RM50 million)
Chargeable Income: First RM600,000 17%
Remainder 24%
(ii) Resident company (paid-up capital exceeding RM2.5 million or gross business income
more than RM50 million) 24%
(b) Non-resident company 24%
(c) Non-resident individual 30%
(d) Resident individual

Chargeable Income Calculations (RM) Rate % Tax (RM)

0 - 5,000 On the First 5,000 0 0
On the First 5,000 0
5,001 - 20,000 Next 15,000 1 150
On the First 20,000 150
20,001 - 35,000 Next 15,000 3 450
On the First 35,000 600
35,001 - 50,000 Next 15,000 8 1,200
On the First 50,000 1,800
50,001 - 70,000 Next 20,000 13 2,600
On the First 70,000 4,400
70,001 - 100,000 Next 30,000 21 6,300
On the First 100,000 10,700
100,001 - 250,000 Next 150,000 24 36,000
On the First 250,000 46,700
250,001 - 400,000 Next 150,000 24.5 36,750
On the First 400,000 83,450
400,001 - 600,000 Next 200,000 25 50,000
On the First 600,000 133,450
600,001 - 1,000,000 Next 400,000 26 104,000
On the First 1,000,000 237,450
1,000,001 - 2,000,000 Next 1,000,000 28 280,000
On the First 2,000,000 517,450
Exceeding 2,000,000 Next ringgit 30 ….........

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BBFT2013 TAXATION

Motorcars and related benefits – value assessable extracted from Public Ruling No. 11/2019 issued
by the Inland Revenue Board.
Cost of car (when new) Annual value of BIK Fuel per annum
RM RM RM
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.

Household furnishings, appliances, etc: RM

(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 1,680 per annum
conditioner, curtains and carpets. (RM140 per month)
(iii) Fully-furnished with benefits as in (i) and (ii) above plus, one or more 3,360 per annum
of kitchen equipment, crockery, utensils and appliances (RM280 per month)

Other benefits RM
Driver 7,200 per annum
Gardener 3,600 per annum
Domestic servant 4,800 per annum

Personal Reliefs RM
Self 9,000
Self – disabled 6,000 (additional)
Spouse 4,000
Spouse – disabled 5,000 (additional)
Children
Normal child below 18 years old 2,000 each
Normal / disabled child 18 years old and above, and in higher education:
- Overseas universities or similar establishments 8,000 each
- Local universities, colleges or similar establishments 8,000 each
Disabled child 6,000 each
Medical expenses incurred for parent(s) 8,000 (maximum)
Medical expenses on serious disease, fertility treatment and vaccination 8,000 (maximum)
Medical examination 1,000 (maximum)
Basic supporting equipment 6,000 (maximum)
Fees for acquiring skills and qualification 7,000 (maximum)
Contributions to approved fund or scheme 4,000 (maximum)
Takaful / life insurance premium (taxpayer: private sector) 3,000 (maximum)
Takaful / life insurance premium (taxpayer: public sector) 7,000 (maximum)
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BBFT2013 TAXATION

Private retirement scheme, deferred annuity premium 3,000 (maximum)

Education and medical insurance premiums 3,000 (maximum)
Lifestyle relief 2,500 (maximum)
Child care fees for a child aged 6 years and below 3,000 (maximum)
Purchase of breastfeeding equipment 1,000 (maximum)
Deposit into the Skim Simpanan Pendidikan Nasional (SSPN) 8,000 (maximum)
Contribution to SOCSO 250 (maximum)
Domestic travelling expenses - accommodation & entrance fee 1,000 (maximum)
Special lifestyle relief - personal computer, smartphone or tablet 2,500 (maximum)
Additional lifestyle relief - sports 500 (maximum)

Personal income tax rebates RM

Individual rebate: chargeable income does not exceed RM35,000 - self 400
- spouse 400
Zakat and fitrah Amount paid by
taxpayer

Capital Allowances Initial Allowance Annual Allowance

Industrial buildings 10% 3%
Office equipment, furniture and fittings 20% 10%
Plant and machinery – general 20% 14%
Motor vehicles, heavy machinery 20% 20%

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BBFT2013 TAXATION

For this paper, assume that the year ending 31 December 2021 has elapsed where relevant.

Answer ALL TWO (2) questions.

Question 1

Jati Sdn. Bhd. (JSB) is engaged in the manufacture and sale of wood products. JSB is 100% owned by
Malaysian individuals and with a paid-up ordinary share capital of RM2 million. The income statement
for the year ended 30 June 2021 is as follows:

Note RM’000 RM’000

Turnover 18,280
Less: Cost of sales 1 (5,590)
12,690
Add: Other income 2 300
12,990

Less: Expenses
Depreciation 1,600
Freight and insurance 3 300
Bad and doubtful debts 4 360
Professional fees 5 200
Staff remuneration 6 6,025
Repairs and maintenance 7 1,080
Miscellaneous expenses 8 325 (9,890)

Net profit before taxation 3,100

Notes:

1. Cost of sales includes a provision for stock obsolescence amounting to RM450,000.

2. Other income
RM’000
Gain on disposal of a cutting machine (Note 9). 30
Fixed deposit interest from Maybank Berhad. 220
Late payment interest charged to trade receivables. 50
300

3. Freight and insurance include a premium paid on the export credit insurance of RM25,000
taken from a company approved by the Minister of Finance.

4. Bad and doubtful debts

RM’000
Bad debt written off (trade) 80
Increase in general allowance (trade) 300
Decrease in specific allowance (non-trade) (20)
360

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BBFT2013 TAXATION

Question 1 (Continued)

5. Professional fees
RM’000
Secretarial fee 8
Tax filing fee 12
Legal expenses incurred in connection with:
- Renewing a bank loan; 20
- Obtaining a trading license; 50
- Legal actions were taken against trade customers for debt collection. 110
200

6. Staff remuneration
RM’000
Salaries and wages
- Staff 3,500
- Senior management 1,500
The Employees Provident Fund (EPF) contribution is at the rate of 15% for
staff and 20% for senior management. 825
Entertainment allowances paid to sales and marketing staff to entertain the
company’s clients. 200
6,025

7. Repairs and maintenance

RM’000
Extension of the existing factory warehouse 700
Replacement of factory roof tiles due to blown off by a storm. 300
Routine machinery maintenance such as engine tune-ups, oil changes, radiator
flushing, etc. 80
1,080

8. Miscellaneous expenses included the following:

RM’000
Annual general meeting expenses. 25
Food and drink for launching a new product. 10
Acquisition of design for its new product. 200
Loss of cash due to the accountant was robbed when he was on the way to the
bank to deposit the daily cash collections. 50

9. Capital allowances have been computed at RM1,350,000 for the year of assessment 2021.
This amount has not taken into consideration the above notes, where relevant.

The cutting machine (see Note 2) was purchased at a cost of RM350,000 on 15 Feb 2017 for
use in JSB’s business. This cutting machine was disposed of in May 2021 for RM80,000 and
replaced with a new automated machine for RM800,000. Both machines are NOT heavy
machinery.

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BBFT2013 TAXATION

Question 1 (Continued)

Required:

(a) Based on the above notes, compute the capital allowances and balancing charge/balancing
allowance of the relevant assets for the years of assessment up to 2021. (6 marks)

(b) Compute the tax payable of Jati Sdn. Bhd. for the year of assessment 2021. You are to indicate
‘NIL’ in your computation for every item that does not require any tax adjustment. (28 marks)

(c) Explain the income tax treatment of the following expenses:

(i) Legal expenses incurred in connection with obtaining a trading license (Note 5);
(2 marks)

(ii) Replacement of factory roof tiles due to blown off by a storm (Note 7); (2 marks)

(iii) Annual general meeting expenses (Note 8). (2 marks)

[Total: 40 marks]

Question 2

Rapid Sdn. Bhd. (RSB), a company resident in Malaysia, recently has entered into an agreement with
China Railway Construction Corporation Limited (CRCC) for a new MRT project in Kuala Lumpur.
The total payment of this MRT project is RM500 million where 60% of the payment is for the supply
of materials and equipment and the balance for installation and supervision services.

CRCC will register and set up a branch in Malaysia and a team of CRCC’s engineers will be in Malaysia
to supervise the project over a period of five years from 1 October 2021.

Required:

(a) Advise on the withholding tax responsibilities of RSB. (6 marks)

(b) Assuming the chargeable income is RM100 million, compute the net tax payable or repayable
of CRCC for the year of assessment 2021. (2 marks)

(c) Explain when the 3% withholding tax in respect of the tax account of the employees of CRCC
be refunded. (2 marks)
[Total: 10 marks]

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This question paper consists of 2 questions on 7 printed pages.