CT TAX317 DEC2021 SAMPLE ANSWER PDF

Preview

Summary

UNIVERSITI TEKNOLOGI MARACOMMON TESTSUGGESTED ANSWERCOURSE:TAXATION 2COURSE CODE : TAXEXAMINATION : DECEMBER 2021QUESTION 1Aa. YA Basis Period Adjusted income/(loss) 2017 1/04/2016 - 30/ 0 6/2017 √ (50,000) √ 2018 1/07/2017 - 30/ 0 6/2018 √ 20,000 √ 2019 1/07/2018 - 30/06/2019 √ (85,000) √ 2020 1/07...

Description

CONFIDENTIAL

AC/DEC 2021/TAX317

UNIVERSITI TEKNOLOGI MARA COMMON TEST SUGGESTED ANSWER

COURSE

:

TAXATION 2

COURSE CODE

:

TAX317

EXAMINATION

:

DECEMBER 2021

© Hak Cipta Universiti Teknologi MARA

CONFIDENTIAL

CONFIDENTIAL

2

AC/DEC 2021/TAX317

QUESTION 1A a. YA 2017 2018 2019 2020 2021

b.

Basis Period 1/04/2016 - 30/06/2017 √ 1/07/2017 - 30/06/2018 √ 1/07/2018 - 30/06/2019 √ 1/07/2019 - 30/04/2020√ 1/05/2020 - 28/02/2021√

Adjusted income/(loss) (50,000) √ 20,000 √ (85,000) √ (12,000) √ (12,000) √ (10√ x ½ mark = 5 marks)

Revenue expenses incurred prior to the commencement date of business is treated as non-allowable expenses √ as a deduction against the gross income of the business because such expenses are not wholly and exclusively incurred in the production of the income. √ (2√ x 1 mark = 2 marks)

QUESTION 1B a.

b.

i.

Marble Sdn Bhd must submit its Form C to the IRB within seven months from the close of the accounting period √. Therefore, for YA 2021, the annual tax return is due on or before 31 October 2021 √.

ii.

The initial estimate of tax for YA 2021 must be furnished at least 30 days before the commencement of the basis period√, i.e., at least 30 days before 1 April 2020, which is on or before 1 March 2020√. (4√ x 1 mark = 4 marks)

i.

Basis period for YA 2021: 1/4/2020 – 31/3/2021 (12 months) Monthly installment = RM90,000 / 12 months = RM7,500 √ Instalment paid: No of Due installment 1 15/5/2020 2 15/6/2020 3 15/7/2020 4 15/8/2020

Amount RM 7,500 7,500 7,500 7,500

Cumulative amount RM 7,500 15,000 22,500 30,000√

Revise monthly tax installment = (Revised estimate – Installment paid) Remaining months = (RM150,000 – RM30,000) / 8 months = RM120,000 √ / 8 months√ = RM15,000

© Hak Cipta Universiti Teknologi MARA

CONFIDENTIAL

CONFIDENTIAL

ii.

3

AC/DEC 2021/TAX317

Penalty Actual tax payable (-) Revised estimates Shortfall (-) Margin of error (30%√ x RM280,000) Excess Penalty (10%√ x RM46,000√)

RM 280,000 (150,000) 130,000 √ 84,000 46,000 4,600 (8√ x ½ = 4 marks) (Total: 15 marks)

QUESTION 2 a. Multi Furniture Sdn Bhd Computation of ITP for YA 2021 (FYE 31/3/2021)

Net profit before tax Provision of inventory obsolescence Insurance premium on the export of furniture to Taiwan. The premium was paid to a Malaysian insurance company Repairs and maintenance of machineries Depreciation Dividend received from foreign investment Interest on fixed deposit from Maybank Bhd Compensation from a supplier for late delivery of raw materials Salaries and bonuses of normal employees Salaries and bonuses of disabled employees Employees Provident Fund (EPF) contribution Recruitment costs Training expenses for upgrading the workmanship of employees to increase the quality of the company’s products Advertisement expenses on Facebook and Instagram Accounting fees Auditing fees Legal fees on collection of trade debts Royalty paid to an Indonesian company for the use of patented design. The company remit to the Inland Revenue Board Malaysia the withholding tax and penalty on outstanding withholding tax on 30 Nov 2021 Cash donation to a school library in Kelantan [s 34(6)(g)] Donated computers to a public library in Kelantan [s 34(6)(g)]

© Hak Cipta Universiti Teknologi MARA

ADD RM 2,795,100 34,000

LESS RM √ √

NIL NIL 105,000

√ √ √

Nil

√

Nil Nil

√ √

Nil Nil Nil Nil

√ √ √ √

80,000 Nil

√ √

5,000

√

55,000 33,000

√ √

Nil

√

90,000

√

20,000

√

CONFIDENTIAL

CONFIDENTIAL

4

AC/DEC 2021/TAX317

ADD RM Scholarship awarded to three eligible full time students pursuing degree in engineering at UiTM. All the students are Malaysian citizen and resident. The total monthly income of the guardian for each student is RM4,000. DD under tax incentive for Industry4WRD Business zakat Bad debt on trade debts Increased in the general provision of doubtful debts Decreased in specific provision of doubtful debts Bad debt on loan given to an ex-director of the company Replacing the factory fence with a newly improved concrete fence Maintenance of motor vehicles Installation of security control and monitoring equipment in the factory area Cost of developing website (20% deductible for 5 years) AE = RM20k / 5 years = RM4k; NAE = RM16k

LESS RM

18,200 Nil 11,000

√ √ √

80,000

√

155,000 Nil

√ √

133,000 16,000

√ √

3,432,300 3,124,300

Less: Capital allowance (current year + b/f) STATUTORY BUSINESS INCOME √ Less: Unabsorbed business loss b/f

(144,400) 2,979,900 (41,000)

√

Add: Non-Business Income: Dividend received from foreign investment Interest on fixed deposit from Maybank Bhd AGGREGATE INCOME √

Nil 33,000 2,971,900

√ √

Less: Business zakat (Restricted to 2.5% AI = RM74,297.5) √ vs RM18,200 TOTAL INCOME / CHARGEABLE INCOME √

(18,200) 2,953,700 24% 708,888

√

Nil

√

(308,000)

ADJUSTED BUSINESS INCOME √

Tax rate (non-SME) Income tax payable

110,000

√

√

(40 √ x ½ marks = 20 marks) b.

Tax treatment: i. Cash donation to a school library in Kelantan: No adjustment is required because it is allowable expenses √ as stated in the specific deduction √ in arriving at the Adjusted Business Income. ii. Donation of computers to a public library in Kelantan: Non-allowable of RM5,000 √ in arriving at the Adjusted Business Income because donation exceeded the maximum deduction of RM100,000. (RM90,000 + RM15,000). √ (4 √ x ½ mark = 2 marks) (Total: 22 marks)

© Hak Cipta Universiti Teknologi MARA

CONFIDENTIAL

CONFIDENTIAL

5

AC/DEC 2021/TAX317

QUESTION 3A a.

Pioneer Status

Promoted Product Adjusted business income Add: Balancing charge Less: CA b/f CA current year STATUTORY BUSINESS INCOME Less: PS exemption @ 70% SBI Deemed Total Income @ 30% SBI Non-Promoted Product Adjusted Business Income Less: CA b/f : CA current year STATUTORY BUSINESS INCOME  Less: Unabsorbed business loss(NPP) b/f Add: Other Income Rental AGGREGATE INCOME  Less: CY business loss (NPP) Less: Approved Donation to Hospital Tanah Merah (restricted to 10% AI)  TOTAL INCOME  Add: Deemed Total Income @ 30% SBI  CHARGEABLE INCOME  EXEMPT INCOME ACCOUNT(EIA) PS exemption@70%SBI  Less: CY Business Loss (NPP) Less: Unabsorbed business loss (PP) b/f Amount credited to EIA 

© Hak Cipta Universiti Teknologi MARA

2022 RM’000

2023 RM’000

Nil  c/y (18,000) 23,000  Nil (23,000)  c/f (29,000) Nil Nil  Nil

140,000

23,000 (23,000)  c/f (21,000) Nil Nil c/f 14,000

9,000  (29,000)  (73,000)  47,000 32,900  14,100 190,000  (21,000)  (37,000)  132,000 (14,000) 

19,500  19,500

17,000 135,000

Nil (1,950) 

Nil (5,600)

17,550

129,400

Nil 17,550

14,100 143,500

Nil Nil Nil Nil

32,900 Nil (18,000)  14,900

CONFIDENTIAL

CONFIDENTIAL

b.

6

AC/DEC 2021/TAX317

Investment Tax Allowance

Promoted Product Adjusted business income Add: Balancing charge Less: CA b/f CA current year SBI Less: ITA utilized (Refer ITA working) SBI after exemption Non-Promoted Product Adjusted Business Income Less: CA b/f : CA current year SBI AGGREGATE SBI  Less: Unabsorbed business loss (NPP & PP) b/f Add: Other Income Rental AGGREGATE INCOME Less: CY business loss (NPP & PP)  Less: Approved Donation to Hospital Tanah Merah (restricted to 10% AI) TOTAL INCOME/CHARGEABLE INCOME  ITA Working Office Building Factory Building Machinery QCE ITA b/f Add: cy ITA, 60% QCE  Total ITA available Less: ITA utilized and credited to EIA (restricted to 70% SBI)  ITA c/f (unutilised) 70% SBI Amount Credited to EIA © Hak Cipta Universiti Teknologi MARA

2022 RM’000

2023 RM’000

Nil c / y (18,000) 23,000 Nil (23,000) c/f (29,000) Nil Nil Nil

140,000

23,000 (23,000) c/f 21,000 Nil Nil Nil c/f 14,000

9,000 (29,000) (73,000) 47,000 (32,900)  14,100

190,000 (21,000) (37,000) 132,000 146,100 (14,000) 

19,500 19,500

17,000  149,100

(18,000)

Nil

(1,950) Nil

(5,600) 143,500

Nil 26,000 26,000

120,000 120,000

15,600  15,600 Nil

15,600 72,000  87,600 (32,900)

15,600

54,700 

Nil

32,900

Nil 32,900  (36 x ½ marks = 18 marks) CONFIDENTIAL

CONFIDENTIAL

b.

7

AC/DEC 2021/TAX317

The best incentive option for EastMe Sdn Bhd will be ITA  incentive because: i.

The Chargeable Income of ITA (RM143,500) is lower than the Chargeable Income of PS (RM161,050) , which reduce the income tax liability of ESB, and

ii.

The Exempt Income Account of ITA (RM32,900) is higher than Exempt Income of PS (RM14,900)  which increase the exempt dividend available to shareholders. Pioneer Status Chargeable Income Exempt Income Account

RM 161,050 RM14,900

Investment Tax Allowance RM143,500 RM32,900 (4 x ½ mark = 2 marks)

QUESTION 3B i.

Agricultural project undertaken by a company in expanding, modernizing or diversifying its cultivation and farming business, including the business of rearing sheep and goats,  but excluding the business of rearing chicken and ducks. 

ii.

The period of tax relief if the company is eligible to claim for reinvestment allowance is 15 consecutive years  and the rate of reinvestment allowance is 60% from QCE.

iii.

Two examples for capital expenditure incurred on qualifying project related to their company’s activity. - the clearing and preparation of land  - the provision of irrigation or drainage system  - the provision of plant and machinery Or any other suitable answers (6 x ½ mark = 3 marks) (Total: 23 marks) END OF SUGGESTED SOLUTION

© Hak Cipta Universiti Teknologi MARA

CONFIDENTIAL...