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TAX267 SS FEB2022

Taxations (Universiti Teknologi MARA)

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CONFIDENTIAL 1 AC/FEB 2022/TAX267

UNIVERSITI TEKNOLOGI MARA

FINAL EXAMINATION
ANSWER SCHEME

COURSE : TAXATION 1
COURSE CODE : TAX267
EXAMINATION : FEBRUARY 2022

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CONFIDENTIAL 2 AC/FEB 2022/TAX267

QUESTION 1

A. Two circumstances where income tax liability arises:

i. The transaction must be ‘income’ in nature and such income is accrued in or

derived from Malaysia √√

ii. The transaction must be ‘income’ in nature and it is received in Malaysia from
outside Malaysia (foreign source income) √√
(1√ x 1 mark = 4 marks)
B.
i. Section 82- She is required to keep sufficient records for a period of 7 years √
from the end of the year in relation to the business income
ii. When she has committed an offence under Section 119A√ upon conviction, she
is liable to a fine of not less than RM300 and not more than to RM10,000 √ or to
imprisonment not exceeding 1 year or, to both √
(4 X 1 mark = 4 marks)

C. Differentiate between the original assessment and the composite assessment

Composite assessment, it will be raised if the following happen:
 a taxpayer make default in furnishing return in accordance with s77(1) or 77A(1) 
 a taxpayer fails to give notice of chargeability 
 a taxpayer makes an incorrect return by omitting or understating any income 
 a taxpayer gives any incorrect information affecting his own chargeability √

(4 x 1 mark = 4 marks)

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CONFIDENTIAL 3 AC/FEB 2022/TAX267

D.

No. of days Status/

YA Period of stay Section Reason

2017 4/10/2017–3/12/2017 61 R Stay in Malaysia less than

182 days and the period is
13/12/2017–25/12/2017 13 s 7(1)(b) linked to YA 2018 for 182
26/12/2017-31/12/2017 (6) TA days consecutively
including TA.
74

2018 1/1/2018-3/1/2018 (3) TA R Stay in Malaysia at least

182 days
4/1/2018 – 31/8/2018 240 s 7(1)(a) 
1/9/2018 – 30/9/2018 -
1/10/2018-31/12/2018 92
332
2019 1/1/2019 – 30/3/2019 89 R Stay in Malaysia at least
182 days
1/7/2019 – 20/10/2019 112 s 7(1)(a) 
201

2020 1/5/2020 – 10/6/2020 41 R Resident in 3 immediate

preceding YAs
1/7/2019 – 31/7/2017 31 s 7(1)(d)  (2019,2018 & 2017)  and
72 resident for immediate
following YA (2021) 
2021 12/04/2021 – 17/7/2021 97 R Stay in Malaysia for at
least 90 days and 3 out
s7(1)(c)  of 4 immediate preceding
years (YA 2020, 2019,
2018) either resident or in
Malaysia for at least 90
days or more

(16 x ½ mark = 8 marks)

(Total: 20 marks)

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CONFIDENTIAL 4 AC/FEB 2022/TAX267

QUESTION 2

Adam
Computation of Statutory Employment Income for Year of Assessment 2021
RM RM RM
Villa Hotel & Spa
Section 13(1)(a)
Salary (6,230 x 100/89 x 5 months) 35,000 √√
Reimbursement 2,400 √ 37,400

Section 13(1)(b)
Car (7,000/2 x 5/12) 1,458 √√
Fuel (1,800 x 5/12) 750 √√
Driver (600 x 5 months) 3,000 √
Utility bills 3,200 √
Fully furnished (3,360 x 4/12) 1,120 √√ 9,528

Section 13(1)(c)
Defined value = 1,800 x ½ √ x 5 √ 4,500
or
30% x Section 13(1)(a) WIL √
30% x 37,400√ 11,220
4,500 x 4/5 √ 3,600 √ OF

Section 13(1)(d)
Unapproved fund (60% x 50,000) 30,000 √√

Section 13(1)(e)
Compensation for loss of employment
(60,000- (9 √ x 20,000 √ exempted) NIL √
Gross/ Statutory employment income- Villa 80,528
Hotel & Spa

Sunrise Enterprise Berhad

Section 13(1)(a)
Salary (8,000 x 5) 40,000 √
Entertainment allowance (2,000 x 5) 10,000 √
Share option (2.50-1.50) x 5,000 5,000 √√ 55,000

Section 13(1)(b)
Medical benefits (exempted) NIL √
Gross employment income 55,000

Less: Allowable expense

Entertainment expenses (8,500) √
Statutory employment income- Sunrise 46,500
Enterprise Berhad
Aggregate statutory employment income 127,028
(28 x ½ mark = 14 marks)

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CONFIDENTIAL 5 AC/FEB 2022/TAX267

QUESTION 3

Computation of Statutory Business Income of Smellgood Bakery for the YA 2021

RM RM
Net profit as per SOPL 246,288√
Add: Adjustment for drawing (1,750 - 1,400) 350√
246,638
Less: Non-business income
Dividend 4,200√
Rent received 2,400√
Gain on disposal of van 1,850√ (8,450)
238,188
Add: Non-allowable expenses
Encik Muhammad - Salary 36,000√
- Bonus 3,000√
- EPF 6,000√
Salary & bonus - Alia Nil√
EPF - Alia (3,600 vs 19% x 19,500= 3,705) Nil√
- Zaki (3,000 vs 19% x 15,600= 2,964) 36√
Carriage inwards & outwards Nil √
Flight ticket - Natasha 380√
Water & electricity - personal (1/3) 1,149√
Insurance - medical insurance Encik Muhammad 1,200√
- educational insurance for children 1,320√
- van Nil√
Entertainment - hampers (50%) – (30% x 2,500) 375√
- Langkawi (100%) Nil√
- potential clients 500√
Fees & donations - trade debt collector Nil√
- donation to approved institution 1,000l√
- business loan application fee Nil√
- penalty for late renewal license 250√
Depreciation 6,000√
Bad debts - trade debt Nil√
- loan to employees 2,445√
Tax - quit rent Nil√
- road tax Nil√
- Encik Muhammad income tax 4,860√
Repair & maintenance - renovation 5,000√
- new oven 2,700√
Rent - motorbike used by Nazli 2,500√ 74,715
312,903
Less: Double deduction
Salary and bonus - Zaki (disabled) (15,600) √
Adjusted business income 297,303
Add: Balancing charge 1,360√
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CONFIDENTIAL 6 AC/FEB 2022/TAX267

Less: Capital allowance (4,000) √

Statutory business income 294,663

36√ x ½ mark = 18 marks

QUESTION 4

A. Additional lifestyle reliefs

i. purchase of sport equipment, entrance fee to sport facilities and registration fee for
sport competition√ for self, spouse or child √ up to RM500√
ii. purchase of personal computer, smartphone or tablet√ for self, spouse or child and
not for business use up to RM2,500√. (Additional deduction for purchase made within
the period of 1st June 2020 to 31st December 2021√)
(6 √ x 1 mark = 6 marks)

B.
Computation of Income Tax Payable for the YA 2021
Encik Puan
RM Shukri Zaima
RM RM
Section 4(a)
Business Income:
Adjusted income 60,000 √
+ Balancing charges 6,000 √
(-) Capital allowance - current (8,000) √
(-) Capital allowance b/f (5,200) √
Statutory income 52,800
(-) Business loss b/f (4,300) √
Net statutory income 48,500

Section 4(b)
Salary 240,000 √

Section 4(c)
Dividend income - Amanah Saham Nasional Nil √
Dividends - Singapore Nil √

Section 4(d)
Royalty:
Musical composition 21,000
(-) Exemption (20,000) √ 1,000 √

Rental income
Rental income 19,200 √
Less: wholly and exclusively expense

Quit rent (1,800) √

Renovation Nil √
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CONFIDENTIAL 7 AC/FEB 2022/TAX267

Repair (2,500) √
Adjusted Income 14,900

Section 4(f)
Commission income 7,000 √
Aggregate Income √ 70,400 241,000

Less: Donation

Donation in-kind Nil √ Nil √

Total Income √ 70,400 241,000

Less: Reliefs
Personal relief (9,000) √ (9,000) √
Life insurance Restricted to (3,000) √
Medical and education insurance 4,800 + 2,400
= 7,200
Restricted to (3,000) √√
Medical expense
Encik Shukri
– Daniel (serious disease) + fertility treatment 8,000 +12,000
= 20,000
Restricted to (8,000) √√

Puan Zaima
- annual medical checkup – Daniel (850)√
Child relief:
Danish (8,000) √
Danial (disabled) (6,000) √
Rizal (8,000) √
Lifestyle expenses
Books + Gym membership + Smartphone 700+
1,200 + 600
= 2,500
Restricted to (2,500) √

IT gadget relief (additional)

Smartphone Restricted to (2,500) √
EPF – Puan Zaima (4,000) √
Chargeable Income √ 33,400 214,150
Tax payable:
First 20,000 √ 150
Next 13,400 x 3% √ 402

First 100,000 √ 10,700

Next 114,150 x 24%√ 27,396
Income tax payable 552 38,096
Less: Rebates
Chargeable income < RM35,000 400 √ -

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CONFIDENTIAL 8 AC/FEB 2022/TAX267

Zakat (8,000) √
Net Income tax payable 152 30,096

40√ x ½ mark = 20 marks

(Total: 26 marks)

QUESTION 5

A. The company is eligible√ to claim special allowance of 100% on small value assets√. The
value of assets not exceeding RM2,000 each √ and maximum is RM20,000 √ for each year
of assessment.
(4√x ½ mark = 2 marks)

B. J&B Sdn Bhd

Factory

RM
Cost of land NIL √
Professional fees (90% x 50,000) 45,000 √
Construction cost 450,000 √
Wiring and plumbing 80,000 √
Cost of internal road 60,000 √
Total 635,000

10% rule
The office (15%) does not √ qualify for industrial building allowance since it is used more
than 10% of the whole building√

YA 2019 √ QBE (85% X 635,000) 539,750 √√

-IA (10%) (53,975) √
-AA (3%) (16,193) √
RE 469,582
YA2020 -AA (3%) (16,193) √
RE 453,389
YA2021 -AA (3%) (16,193) √
RE 437,196

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CONFIDENTIAL 9 AC/FEB 2022/TAX267

Car

YA 2020√ Deposit 35,000 √ Max QE

Instalment (10,000 x 9) 90,000 √√
QE 125,000 100,000

QE 100,000 √
-IA (20%) (20,000) √
-AA (20%) (20,000) √
RE 60,000
YA 2021 -AA (20%) (20,000) √
RE 40,000

Rental payment does not qualify √ as QBE because it is revenue expenditure√

24√ x ½ mark = 12 marks

C. Garden Fresh Sdn Bhd

Clearing Labor
YA land Seedling Storeroom quarters
QAE 32,000 57,000 45,000 120,000
Rate 50% 50% 10% 20%

2019 √ AA 16,000 √ 28,500 √

2020 AA 16,000 √ 28,500 √ 4,500 √

2021 AA 4,500 x 24,000

10/12 x10/12 =
= 3,750 √√ 20,000 √√

AC √ 30,000 √ 57,000 √ 8,250 √ 20,000 √

Cost of land and equipment are non-qualifying agriculture expenditure√

16 √ x ½ mark = 8 marks
(Total: 22 marks)

END OF SUGGESTED SOLUTION

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