Paper F6 (MYS) Taxation (Malaysia) Specimen Exam applicable from December Fundamentals Level Skills Module

Transcription

1 Fundamentals Level Skills Module Taxation (Malaysia) Specimen Exam applicable from ecember 2015 Time allowed Reading and planning: 15 minutes Writing: 3 hours This question paper is divided into two sections: Section LL 15 questions are compulsory and MUST be attempted Section LL SIX questions are compulsory and MUST be attempted Rates of tax and tables are printed on pages 2 4. o NOT open this question paper until instructed by the supervisor. uring reading and planning time only the question paper may be annotated. You must NOT write in your answer booklet until instructed by the supervisor. o NOT record any of your answers on the question paper. This question paper must not be removed from the examination hall. Paper F6 (MYS) The ssociation of hartered ertified ccountants

2 SUPPLEMENTRY INSTRUTIONS 1. alculations and workings should be made to the nearest. 2. ll apportionments should be made to the nearest whole month. 3. ll workings should be shown in Section. TX RTES N LLOWNES The following tax rates, allowances and values are to be used in answering the questions. Income tax rates Resident individuals hargeable income Rate umulative tax % First 5,000 (0 5,000) 0 0 Next 15,000 (5,001 20,000) Next 15,000 (20,001 35,000) Next 15,000 (35,001 50,000) 10 2,400 Next 20,000 (50,001 70,000) 16 5,600 Next 30,000 (70, ,000) 21 11,900 Next 150,000 (100, ,000) 24 47,900 Next 150,000 (250, ,000) ,650 Exceeding 400, Resident company Paid-up ordinary share capital First Excess over 500, ,000 2,500,000 or less 20% 25% More than 2,500,000 25% 25% Non-residents ompany 25% Individual 25% Personal reliefs and allowances Self 9,000 isabled self, additional 6,000 Medical expenses expended on parents (maximum) 5,000 Medical expenses expended on self, spouse or child with serious disease, including up to 500 for medical examination (maximum) 6,000 asic supporting equipment for disabled self, spouse, child or parent (maximum) 6,000 Purchase of sports equipment (maximum) 300 Study course fees for skills or qualifications (maximum) 5,000 Expenses on books for personal use (maximum) 1,000 Spouse relief 3,000 isabled spouse, additional 3,500 hild basic rate (each) 1,000 hild higher rate (each) 6,000 isabled child (each) 6,000 isabled child, additional (each) 6,000 Life insurance premiums and contributions to approved funds (maximum) 6,000 Private retirement scheme contributions, deferred annuity premiums (maximum) 3,000 Medical and/or education insurance premiums for self, spouse or child (maximum) 3,000 Purchase of a personal computer (maximum) 3,000 eposit for a child into the National Education Savings Scheme (maximum) 6,000 2

3 Rebates hargeable income not exceeding 35,000 Individual basic rate 400 Individual entitled to a deduction in respect of a spouse or a former wife 800 Value of benefits in kind ar and fuel scale ost of car Prescribed annual value of Prescribed annual value of (when new) private usage of car private petrol Up to 50,000 1, ,001 to 75,000 2, ,001 to 100,000 3,600 1, ,001 to 150,000 5,000 1, ,001 to 200,000 7,000 1, ,001 to 250,000 9,000 2, ,001 to 350,000 15,000 2, ,001 to 500,000 21,250 2, ,001 and above 25,000 3,000 The value of the car benefit equal to half the prescribed annual value (above) is taken if the car provided is more than five (5) years old. Where a driver is provided by the employer, the value of the benefit is fixed at 600 per month. Other benefits per month Household furnishings, apparatus and appliances Semi-furnished with furniture in the lounge, dining room or bedroom 70 Semi-furnished with furniture as above plus air-conditioners and/or curtains and carpets 140 Fully furnished premises 280 omestic help 400 Gardener 300 apital allowances Initial nnual allowance allowance (I) () Rate % Rate % Industrial buildings 10 3 Plant and machinery general Motor vehicles and heavy machinery Office equipment, furniture and fittings griculture allowance uildings for the welfare of or as living accommodation for farm employees nil 20 Other buildings used in the business nil 10 ll other qualifying agricultural expenditure nil 50 3 [P.T.O.

4 Real property gains tax Individuals Individuals ll (citizens and (non-citizens) other permanent persons residents) Rate Rate Rate % % % ate of disposal isposal within three years after the date of acquisition isposal in the fourth year after the date of acquisition isposal in the fifth year after the date of acquisition isposal in the sixth year after the date of acquisition or thereafter Goods and services tax (GST) Standard rate 6% Registration limit 500,000 4

5 Section LL 15 questions are compulsory and MUST be attempted Please use the grid provided on page two of the andidate nswer ooklet to record your answers to each multiple choice question. o not write out the answers to the MQs on the lined pages of the answer booklet. Each question is worth 2 marks. 1 Marker Sdn hd incurred the following expenses during the year of assessment 2015: Entertainment of suppliers 10,000 Leave passage for a director for a local trip 10,000 Sponsorship of arts and cultural activity (approved) performed by local artistes 510,000 What is the total amount of expense which will be ISLLOWE when calculating Marker Sdn hd s adjusted income for the year of assessment 2015? 530,000 25,000 30, ,000 2 angles Sdn hd makes up its accounts to 31 ecember and is required to calculate its initial estimate of tax payable for the year of assessment angles Sdn hd s estimate of tax payable for the year of assessment 2014 was 100,000. The company s draft tax computation for the year of assessment 2015 showed estimated income tax payable of 62,000. What is the minimum estimate of tax payable which can be submitted by angles Sdn hd for the year of assessment 2015? 62,000 85, ,000 52,700 3 Eco-Land Sdn hd acquired a shop lot for investment and letting purposes. Under which of the following scenarios will the rental income be assessed as a business source of income? Eco-Land Sdn hd owns another three properties which it also lets out Eco-Land Sdn hd owns only commercial properties Eco-Land Sdn hd actively advertises the space for rental Eco-Land Sdn hd actively provides comprehensive maintenance or support/ancillary services 4 Jack and Zila are in partnership and share their profits equally. The results of the partnership for the year of assessment 2015 are as follows: Provisional adjusted income 90,000 Jack and Zila s salaries (30,000 each) 60,000 Jack s family trip expenses 5,000 What is Jack s statutory income from the partnership for the year of assessment 2015? 42,500 55,000 60,000 47,500 5 [P.T.O.

6 5 Ought Inc entered into a contract with oleh Sdn hd to provide technical services for a period of ten days for 100,000. uring the ten-day period, Ought Inc s staff performed services in Malaysia for two days and spent the remaining eight days working in the UK office. oleh Sdn hd remitted the 100,000 on 15 pril What is the amount of withholding tax, if any, which should have been remitted by oleh Sdn hd to the Inland Revenue oard? 10,000 8,000 2, Mr ale owns an apartment which he rents out to tenants. uring the year of assessment 2015, his gross income from rental sources was 62,000 which included a refundable deposit of 2,000. The expenses incurred during the year were quit rent and assessment of 1,500 and installation costs of 3,000 for two new air-conditioners for the apartment (at the request of the tenants). The air-conditioners were installed for the first time in the apartment. What is Mr ale s statutory income from rental sources for the year of assessment 2015? 58,500 55,500 60,500 57,500 7 Nik is Malaysian tax resident and is employed by Sdn hd. Nik received interest income on 1 March 2015 from fixed deposits which were placed with a local bank. Nik also received dividends from a company listed on the Hong Kong Stock Exchange and insurance proceeds from an endowment policy. In relation to Nik s liability to Malaysian income tax, which of the following statements is/are correct? (1) The employment income is subject to income tax (2) The interest income derived from fixed deposits with a local bank is subject to income tax (3) The dividend income received from the Hong Kong listed company is tax exempt (4) The insurance proceeds received from the endowment policy are tax exempt 1 and 2 only 3 only 1, 3 and 4 only 1, 2, 3 and 4 8 HTR Sdn hd is not currently registered for goods and services tax (GST) but is monitoring the threshold to determine whether it will be required to register. HTR Sdn hd enters into the following categories of transaction: (1) Sales of standard rated supplies (2) Sales of zero rated supplies (3) Sales of capital assets (4) Rental of commercial premises Which of the above categories of supply should be taken into account by HTR Sdn hd in determining whether it has exceeded the GST registration threshold? 1, 2 and 4 only 3 and 4 only 1 and 2 only 1, 2, 3 and 4 6

7 9 kash works full time as a pilot and writes books on a part-time basis. kash wrote a book and received royalty income amounting to 42,000 in the year of assessment What is the amount of royalty income which is assessable to tax on kash for the year of assessment 2015? 22,000 42,000 32,000 30, Lai Yin Sdn hd donated cash of 1,000 and computers worth 9,000 to Tawau Orphanage, an approved Malaysian charitable organisation. Lai Yin Sdn hd s statutory income from business operations was 2,500 for the year of assessment Lai Yin Sdn hd also had interest income of 2,500 for the year of assessment What is the tax deduction in respect of donations which can be claimed by Lai Yin Sdn hd for the year of assessment 2015? 350 1, Meena, a Malaysian citizen, acquired an apartment on 10 pril 2010 and disposed of it on 13 September 2013 generating an allowable loss of 12,500 on the disposal. Meena acquired an office unit on 12 ecember 2012 for 300,000 and disposed of it on 16 November 2015 for proceeds of 340,000. She had incurred stamp duty of 1,500 on the acquisition of the office unit. The properties were held for investment purposes. What is Meena s gain subject to real property gains tax in respect of the disposal of the office unit? 40,000 16,000 38,500 28, TSG Sdn hd made the following payments in January 2015: Interest of 10,000 to its parent company in anada Royalty of 20,000 to a local franchise holder Purchase of equipment for 30,000 from a supplier in anada Rental of crane for 40,000 from a local supplier in Malaysia What is the amount of withholding tax on the payments made in January 2015 which should be remitted by TSG Sdn hd to the Inland Revenue oard? 3,000 10,000 3,500 4,500 7 [P.T.O.

8 13 ZP Supermarket Sdn hd is a retailer who is registered for goods and services tax (GST). The company recorded the following information in relation to invoices issued to customers in ecember ll amounts are stated exclusive of GST: Local sales cash Local sales credit Export sales credit 10 million 11 million 2 million ZP Supermarket Sdn hd offers its customers 30 days of credit. Therefore, payment in respect of the ecember 2015 credit sales (both to local customers and exports) was received in January What is the output tax payable by ZP Supermarket Sdn hd for the month of ecember 2015? 1,380, ,000 1,260, , Fajar Sdn hd, a manufacturing company with an issued share capital of 20 million, owned an acre of land which it acquired for 1,000,000 in The government compulsorily acquired the land and paid Fajar Sdn hd compensation of 1,200,000 under a sale and purchase agreement. What are the real property gains tax (RPGT) implications of the above transaction for Fajar Sdn hd? Fajar Sdn hd will not be subject to RPGT nor be required to submit a RPGT return to the Inland Revenue oard (IR) as the compulsory acquisition by the government will be treated as a no-gain no-loss transaction Fajar Sdn hd will be subject to RPGT and must submit a RPGT return to the IR within 30 days from the date of signing the sale and purchase agreement Fajar Sdn hd will be subject to RPGT and must submit a RPGT return to the IR within 60 days from the date of signing the sale and purchase agreement Fajar Sdn hd will not be subject to RPGT as the compulsory acquisition by the government will be treated as a no-gain no-loss transaction but it must still submit a RPGT return to the IR 15 Pole Sdn hd makes up its accounts annually to 31 ecember. On 1 July 2014, the company acquired a passenger vehicle for the production manager under a hire purchase agreement. etails of the asset acquired under the hire purchase agreement are as follows: ash price of the passenger vehicle 305,000 eposit paid during the year of assessment ,000 apital portion of instalments paid during ,000 Interest portion of instalments paid during ,000 apital portion of instalments paid during ,000 Interest portion of instalments paid during ,000 What is the amount of capital allowances claimable by Pole Sdn hd in respect of the above asset for the year of assessment 2015? 20,000 10,000 22,000 61,000 (30 marks) 8

9 Section LL SIX questions are compulsory and MUST be attempted Please write your answers to all parts of these questions on the lined pages within the andidate nswer ooklet. 1 Oxygen Sdn hd (OS) is a manufacturer of digital products based in Kuala Lumpur, which makes up its accounts annually to 30 June. etails of the non-current assets acquired by OS in the basis period for the year of assessment 2014 are shown below: sset description Qualifying expenditure (i) Factory building 1,000,000 (ii) Various items of office equipment 60,000 The office equipment was all acquired on 6 January On 20 pril 2015, one of the items of equipment, which had cost 10,000, was damaged in a fire and it was written off for commercial reasons. There was no insurance coverage for the asset damaged. uring the board of directors meeting on 2 June 2015, it was determined that there was an increase in demand for OS s products in Malaysia and the finance manager was instructed to look into constructing a storage warehouse exclusively for the Malaysian market. He is considering the following two options: Option 1 To construct a warehouse within the curtilage of the current factory premises. Option 2 To construct a warehouse 20 kilometres away in Port Klang, Malaysia. Required: (a) (b) (c) ompute the residual expenditure and balancing charge or balancing allowance on the office equipment written off during the year of assessment 2015 and determine the balance of qualifying plant expenditure and residual expenditure for the remaining office equipment carried forward to the year of assessment Note: You should assume that the provisions of Paragraph 71 of the Income Tax ct 1967 are NOT applicable and therefore no claw back of capital allowances claimed for the assets disposed of within two years of acquisition will be made. (5 marks) ompute the industrial building allowance for the years of assessment 2014 and 2015 for the factory building and the residual expenditure carried forward to the year of assessment (2 marks) Explain the income tax implications of each of the two options for the construction of the warehouse from the perspective of claiming industrial building allowance and advise which would be more tax efficient. (3 marks) (10 marks) 9 [P.T.O.

10 2 (a) (i) Explain the responsibilities of Malaysian companies both existing companies and new companies for the assessment, estimation and payment of tax liabilities, and the submission of tax returns under the self-assessment system. (6 marks) (ii) Explain if there are any exceptions to the self-assessment responsibilities outlined in (i) for new companies with a paid-up share capital of less than 2,500,000. (2 marks) (b) SOS hd makes up its accounts to 31 ecember annually. The company estimated its tax payable for the year of assessment 2015 as 100,000 and paid monthly instalments to the Inland Revenue oard (IR) in accordance with this estimate. SOS hd submitted its tax return for the year of assessment 2015 to the IR by the due filing date. The tax return showed a final tax liability of 180,000. Required: ompute the penalty payable by SOS hd in respect of the underestimation of its tax for the year of assessment (2 marks) (10 marks) 3 On 12 January 2010, Esther acquired a piece of land for 2,000,000, paying stamp duty of 30,000 and professional fees of 20,000. On 1 March 2012, Esther transferred the land to her husband, Yee, without any valuable consideration. Yee immediately built a storage building for 490,000 on the piece of land. In September 2012, Yee received an offer from cre Sdn hd to acquire the piece of land and received a deposit of 10,000. cre Sdn hd subsequently decided not to pursue the acquisition and the deposit was forfeited to Yee. On 6 February 2015, Yee disposed of the piece of land for 3,500,000 to Zen Sdn hd. Yee incurred 9,000 on valuation fees and 1,000 on legal fees in relation to the disposal of the land. Required: (a) Explain the real property gains tax implication of the gift of land from Esther to Yee on 1 March (3 marks) (b) ompute the gain subject to real property gains tax (RPGT) arising from the disposal of the land by Yee to Zen Sdn hd on 6 February learly identify the disposal price and the acquisition price. Notes: 1. You are NOT required to compute the real property gains tax. 2. You should indicate by the use of the word nil any item referred to in the question for which no adjusting entry needs to be made in the tax computation. (7 marks) (10 marks) 10

11 4 P Sdn hd, is in the business of manufacturing tiles and has an annual sales turnover of 10,000,000. P Sdn hd is registered for goods and services tax (GST). P Sdn hd recorded the following transactions in the period 1 September 2015 to 30 September ll supplies are stated exclusive of GST and all purchases/acquisitions are stated inclusive of GST: Supplies Sales of tiles to GST registered businesses 600,000 Sales of tiles to non-gst registrants 10,000 Sales of scrap tiles (damaged inventory) to GST registered businesses 1,000 Purchases/acquisitions onference table 10,600 Inventory (stock) of raw clay 212,000 Medical treatment of staff at Hospital 5,300 Entertainment of staff at Hotel K 1,060 Required: (a) (b) State P Sdn hd s relevant taxable period for GST purposes and the deadline for P Sdn hd to submit its GST return for this period. (2 marks) ompute the net GST payable by P Sdn hd. learly identify both the output tax payable and the input tax recoverable and any amounts in respect of which input tax is not claimable (blocked). (8 marks) (10 marks) 11 [P.T.O.

12 5 Space Tech hd (ST), a company with an issued share capital of 10 million, makes up its accounts annually to 30 September. ST is in the business of manufacturing telecommunication equipment for both the local Malaysian market and for export. The statement of profit or loss of ST for the financial year ended 30 September 2015 is as follows: Note 000s 000s Sales 24,000 Less: ost of sales 1 (18,000) Gross profit 6,000 dd: Other income Gain on disposal of vacant land 500 Interest income ,530 Less: Expenses ontributions 3 21 onations to unapproved institutions 32 Foreign exchange gain 4 (115) Statutory audit fees 65 Marketing expenses Motor vehicle expenses Salaries and allowances 7 3,709 Sundry expenses 8 1 (4,408) Profit before tax 2,122 Notes: (1) The cost of sales includes obsolete inventories written off of 36,000 and depreciation of plant, property and equipment of 2,350,000. (2) The interest income arose on a loan advanced to a subsidiary. (3) ontributions comprise: Expenditure relating to the company s social responsibility by building a bus stop for the public (ST received all necessary approvals) 10,000 Scholarship expenses for a Malaysian student to study for a degree at a local university registered with the relevant Ministry (the student was a full-time student and their parents monthly income was 4,500 per month) 6,000 ash sponsorship of a customer s annual dinner 5,000 21,000 (4) The foreign exchange gain comprises: Foreign exchange loss realised on the disposal of investments 35,000 Foreign exchange gain from export sales (unrealised) (150,000) (115,000) 12

13 (5) Marketing expenses comprise: Expenses for maintaining a overseas sales office for the promotion of exports to the Vietnam market 500,000 (6) Motor vehicle expenses include the following lease rentals: Year of assessment ost hief marketing officer s car (non-commercial) 305, , ,000 Van (commercial) 165,000 60,000 60,000 (7) Salaries and allowances include allowances of 40,000 paid to the sales and marketing team to defray expenses incurred to entertain customers and 4,000 of overseas leave passage for a director. (8) Sundry expenses comprise: nnual general meeting (GM) expenses 1,000 (9) The capital allowances have been computed at 1,300,000 for the year of assessment Required: (a) ompute Space Tech hd s chargeable income for the year of assessment Note: You should start your computation with the profit before tax figure of 2,122,000 and indicate by the use of the word nil any item referred to in the question for which no adjusting entry needs to be made in the tax computation. (13 marks) (b) ST is considering the acquisition of proprietary rights to a patented industrial design to improve its manufacturing technology processes. ST has heard that a special tax deduction of 20% (over five years) should be available in respect of the purchase of proprietary rights, provided certain conditions are met. Required: State the conditions which must be met before a company can claim a special deduction for the cost of the acquisition of proprietary rights. (2 marks) (15 marks) 13 [P.T.O.

14 6 Spitz, a Malaysian resident, married Ono, a Japanese citizen, on 21 ugust Ono had arrived in Malaysia for the first time on 1 ugust 2015 and started employment as a fashion model in Malaysia from 2 September Spitz has operated a café business but after several years of losses he decided to shut down this business on 31 October For the last two years Spitz has also been employed as an airline pilot by eroclass irlines, but he will cease this employment with effect from 1 January 2016 and his last day of employment will be 31 ecember Spitz has decided to move to Japan with Ono. Ono has also tendered her resignation and her last day of employment will also be 31 ecember The couple do not expect to return to Malaysia for at least three years. oth Spitz and Ono will leave Malaysia for Japan on 5 January etails of Spitz s income, benefits and expenditures for the year ended 31 ecember 2015 are shown below. Spitz s café business for the period ended 31 October 2015: Profit before taxation 500 In arriving at the above the following were included: (i) epreciation (3,506) (ii) Gain on disposal of non-current assets 26,966 Spitz s employment income and benefits-in-kind for the year 2015: Salary 240,000 onus 40,000 Service excellence award (cash) 2,500 Fully furnished living accommodation. eroclass irlines paid a monthly rental of 12,500 per month for the accommodation which included 2,500 for the furniture 150,000 omestic servant provided for the whole year (hired and paid for by eroclass irlines) 12,000 Spitz incurred the following expenditure in 2015: Employees provident fund contribution 30,800 contribution-in-kind donation to a project of national interest approved by the Minister, equivalent to: 55,650 Spitz is fluent in several languages. In 2015, he received royalties of 22,000 from the Ministry of Education for the translation of a German book on airline safety for use in local colleges and universities. Required: (a) ssuming Spitz and Ono do not elect for combined assessment for income tax, compute the chargeable income of Spitz for the year of assessment Note: You should indicate by the use of the word nil or exempt, where appropriate, any item referred to in the question for which no adjusting entry needs to be made in the tax computation. (13 marks) (b) State, giving reasons, whether Ono is tax resident in Malaysia for the year of assessment (2 marks) (15 marks) End of Question Paper 14

15 nswers

16 Fundamentals Level Skills Module, Paper F6 (MYS) Taxation (Malaysia) Specimen Exam nswers and Marking Scheme Section 1 (50% x 10,000) + 10,000+ (510, ,000) = 25,000 2 Tutorial note: ompanies must furnish estimates of tax payable for a year of assessment which are not less than 85% of the estimates or revised estimates of tax payable for the prior year of assessment. 3 4 ivisible income = 90,000 60,000 5,000 = 25,000 Jack = 30, ,000 + (25,000/2) = 47, ,000 x 2 days/10 days = 20,000 x 10% = 2,000 6 (62,000 2,000) 1,500 = 58, Tutorial note: The determination of taxable turnover for GST registration purposes includes all taxable supplies but specifically excludes disposals of capital assets. 9 Royalty income 42,000 Less: Exemption (use of literary work) (20,000) 22, , ,500 = 5,000 x 10% restriction = isposal consideration 340,000 cquisition cost 300,000 dd: Stamp duty 1,500 (301,500) hargeable gain (G) 38,500 Less: Schedule 4 exemption (higher of 10% of G or 10,000) (10,000) Less: llowable loss (apartment) (12,500) Gain subject to RPGT 16,000 17

17 12 (10,000 x 15%) + (20,000 x 10%) = 3,500 Marks 13 (10 million + 11 million) x 6% = 1,260, for Y 2015 QPE = 50,000 x 20% = 10,000 2 marks each 30 18

18 Section Marks 1 (a) Oxygen Sdn hd apital allowances Office equipment Qualifying expenditure office equipment 60,000 Y 2014 Initial allowance (I) (20%) nnual allowance () (10%) 30% allowances claimed in year of assessment (Y) Y 2015 ssets written off balancing adjustment ost of asset written off 10,000 RE 10,000 (100% 30%) 7,000 1 isposal proceeds 0 alancing allowance 7,000 Qualifying plant expenditure 60,000 Less: isposal assets written off (10,000) Qualifying plant expenditure 50,000 RE (100% 30%) 35,000 Y 2015 (10%) [50,000 x 10%] (5,000) RE carried forward to Y ,000 5 (b) Factory building Qualifying building expenditure 1,000,000 Y 2014 Initial allowance (I) (10%) 100,000 nnual allowance () (3%) 30,000 (130,000) Residual expenditure (RE) 870,000 Y 2015 nnual allowance () (3%) (30,000) RE carried forward to Y ,000 2 (c) Option 1: the warehouse building would be eligible for industrial building allowance (I) as the warehouse is within the curtilage of the factory building. 1 Option 2: the warehouse building will not be within the curtilage of a factory building and is not to be used exclusively for the storage of goods for export or for the storage of goods to be imported, processed and re-exported. s such it will not be eligible for I. 1 Therefore, option 1 would be more tax efficient as the warehouse building would be eligible for I

19 Marks 2 (a) (i) Self-assessment system for companies Existing companies Under the self-assessment system in Malaysia, a taxpayer company: (i) has to compute and assess its own tax liability: the tax payable as per the tax return is a deemed assessment and is deemed agreed; (ii) has to furnish an estimate of income tax payable no later than 30 days before the beginning of the basis period; (iii) is allowed to revise its tax estimate in the sixth month and/or ninth month of the basis period; (iv) is required to pay the estimated amount of income tax payable to the Inland Revenue oard (IR) in equal monthly instalments by the 15th day of the month, beginning from the second month of the relevant basis period; (v) has to submit its tax returns within seven months from the close of its accounting year; (vi) has to settle any balance of income tax payable or on before the last day of the seventh month following the close of the accounting year; (vii) is subject to the penalty regime for non-compliance of due dates or underestimation of tax. New companies Under the self-assessment system in Malaysia, a taxpayer company which commences business in a year of assessment: (viii) is required to furnish an estimate of income tax payable within three months from the date of commencement of its operations. (ix) has to commence its monthly instalment payments in the sixth month of the relevant basis period. SIX items only required, 1 mark each, maximum 6 Marking note: redit will also be given for any other acceptable factors not shown above. (ii) Exception for new SME companies new company with a paid-up share capital of 2,500,000 and below is not required to furnish an estimate of income tax payable and not required to pay income tax payable in monthly instalments for the year of assessment in which it commences and the following year of assessment. To benefit from this exception, the company must not be part of a group of companies which includes a company with a paid-up share capital of more than 2,500, (b) Penalty for the underestimate of tax Final tax payable 180,000 Estimated tax 100,000 ifference 80,000 Less: 30% of final tax (30% of 180,000) (54,000) Excess subject to penalty 26,000 Penalty at 10% 2, Esther and Yee Real property gains tax (RPGT) (a) Esther Gift of land to Yee The transfer of real property as a gift between parent and child, grandparent and grandchild, or husband and wife is treated as at no gain no loss. 1 Therefore, there will be no real property gains tax payable by Esther on the gift she made to her husband, Yee. 1 The acquisition price of the property for Yee will be the acquisition price incurred by the donor, Esther, and any permitted expenses incurred by Esther

20 (b) Marks Yee Gain subject to real property gains tax (RPGT) on disposal of the land isposal consideration 3,500,000 1 Less: Permitted expenses Enhancement costs (storage building) (490,000) 1 Incidental costs (9, ,000) (10,000) 1 isposal price 3,000,000 cquisition consideration 2,000,000 1 dd: Stamp duty 30,000 Professional fees 20,000 Less: eposit forfeited (10,000) 1 cquisition price (2,040,000) hargeable gain (G) 960,000 Less: Schedule 4 exemption higher of 10% of G or 10,000 (96,000) 1 Gain subject to RPGT 864, P Sdn hd (a) s P Sdn hd has annual sales turnover in excess of 5,000,000, it should submit its goods and services tax (GST) returns on a monthly basis. The taxable period is, therefore, from 1 September 2015 to 30 September The due date for P Sdn hd to submit its GST return (form GST-03) is no later than the last day of the month following the end of the taxable period, i.e. on or before 31 October (b) Supplies Output tax Sales of tiles to registered traders (600,000 x 6%) 36,000 Sales of tiles to non-registered traders (10,000 x 6%) Sales of scrap (1,000 x 6%) ,660 Purchases/acquisitions Input tax reclaimable onference table (10,600 x 6%/106%) Raw clay (212,000 x 6%/106% ) 12,000 1 Medical expenses (staff) (blocked) Nil 1 Entertainment (staff) (1,060 x 6%/106%) ,660 Net GST payable (36,660 12,660) 24, Tutorial note: The input tax credit on the staff medical expenses cannot be reclaimed. 21

21 5 Space Tech hd Marks (a) hargeable income for the year of assessment 2015 (asis period 1 October 2014 to 30 September 2015) Note 000s 000s + Profit before taxation 2,122 Inventories written off 1 Nil epreciation 1 2,350 Gain on disposal of vacant land 500 Interest income 2 30 Expenditure on bus stop 3 Nil 1 Scholarship for study at a local university (double deduction) ash sponsorship of a customer s dinner 3 5 onations to unapproved institutions 32 Foreign exchange loss capital Foreign exchange gain trade but unrealised udit fees Nil Expenses for maintaining sales office (double deduction) Lease rental chief marketing officer Lease rental van 6 Nil Entertainment allowances for marketing team (50% x 40,000) Leave passage 7 4 nnual general meeting (GM) expenses 8 1 1,186 4,679 (1,186) djusted income 3,493 Less: apital allowances (1,300) Statutory income 2,193 dd: Interest income 30 ggregate income 2,223 onations (unapproved) Nil Total/hargeable income 2, (b) The conditions to be satisfied in order to claim the special deduction for the acquisition of proprietary rights are that the claimant company: must be at least 70% Malaysian owned; and must be a resident company acquiring proprietary rights for industrial designs, patents and trademarks which have been registered under the relevant laws for its own manufacturing business

22 6 Spitz and Ono Marks (a) Spitz omputation of chargeable income for the year of assessment [Section 4(a)] usiness income afé business Profit before tax 500 dd/less epreciation 3,506 Gain on disposal of non-current assets 26, ,966 4,006 (26,966) djusted loss (22,960) Statutory income from business Nil [Section 4(b)] Employment [Section 13(1)(a)] Salary 240,000 onus 40,000 Service excellence award 2,500 Less: Exempt [Para 25, Sch 6] (2,000) 280,500 1 [Section 13(1)(b)] Fully furnished accommodation (280 x 12 months) 3,360 omestic servant (400 x 12 months) 4,800 8,160 [Section 13(1)(c)] Living accommodation 30% of Section 13(1)(a) [(30% x 280,500) = 84,150 1 efined value ((12,500 2,500) x 12] = 120,000 1 Lower 84,150 djusted income/statutory income from employment 372,810 [Section 4 (d)] Royalty income from tranlation of book 22,000 Less: Exemption [Para 32, Sch 6] (12,000) 10,000 1 ggregate income 382,810 Less: urrent year loss [Section 44 (2)] (22,960) 1 359,850 Less: onations ontribution-in-kind to project of national interest (approved) 55,650 Restricted to 7% of aggregate income (7% x 382,810) 26,797 (26,797) 1 Total income 333,053 Less: Personal reliefs Self 9,000 Employees provident fund (maximum) 6,000 (15,000) hargeable income 318, (b) Ono Residence Ono is a non-resident for the year of assessment 2015 as she was present in Malaysia for a period of less than 182 days during the year 2015 (ugust ecember 2015)