TAX667 Test 1 May\'21-SS PDF

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TAX 667SUGGESTED SOLUTION –TEST 1 (MAY 2021)Solution Q a) D (R & D) 9/12 (RM)Exec ( R ) 3/12 (RM) Sec 4(a) Business income Laundry business Adjusted income (loss: 15k) Add: Balancing charge √ Less: Capital allowance √Nil 27, (15,000) Statutory business income 12,000 9,000 3, Restaurant business ...

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TAX 667 SUGGESTED SOLUTION –TEST 1 (MAY 2021) Solution Q1 a) D (R & D) 9/12 (RM) Sec 4(a) Business income Laundry business Adjusted income (loss: 15k) Add: Balancing charge √ Less: Capital allowance √ Statutory business income Restaurant business Adjusted income Less: Capital allowance Statutory business income Aggregate Statutory Business Income Less: unabsorbed business loss Net Statutory Bus Income Sec 4(c) Dividend & interest income Glosev Sdn Bhd (exempted) √ Foreign dividend from Australia (exempted) √ Interest from FD in RHB Bank Foreign interest income from Thailand (exempted) √ Sec 4(d) Rental Rental (30,000 + 1,300) √√ Aggregate income Less: current year business loss Approved donation (restricted to 10% of AI) √ Executor fees (NA) Annuity Payable Total income Less: Personal Relief Self- relief & disabled (9000 + 6000) Special relief Wife relief Basic supporting equipment (restricted to) Medical examination (restricted to) Chargeable income√ Tax payable for executor: On the first RM10,000 √ OF On the next RM3,575 x 1% √ OF Tax Payable b)

Nil 27,000 (15,000) 12,000 100,000 (10,000) 90,000

Exec ( R ) 3/12 (RM)

9,000

3,000

67,500√ 76,500 (20,000) √ 56,500

22,500√ 25,500 25,500

Nil Nil 3,000√ Nil 31,300

23,475 79,975 (11,250) √ (5,000) √

63,725

7,825 36,325 (3,750) √ Nil√ (10,000) √ 22,575

(15,000) √ √ (9,000) √ (4,000) √ (6,000) √ (500) √ 38,225

13,575

50.00 35.75 85,75 (26 √ x ½ = 13 marks)

The annuity received by Suhaila is taxable √ under Section 4(e) √ of the Income Tax Act 1967. (2 √ x 1 = 2 marks) (Total: 15 marks)

Solution Q2 a. Business income: Malaysia Gross business income Less: Revenue expenses – trustee fee for managing business - other revenue expenses Capital expenses Adjusted Business Income Less: CA Statutory Business Income Business income: Indonesia Statutory Business Income (exempted) Dividend – single tier (exempted) Interest from FD in BIMB Interest from FD in Bank Mandiri (remitted) (exempted) Adjusted Rental Income AGGREGATE INCOME Less : Trustee’s fee : Annuity : Donation to Perak State Govt TOTAL INCOME (TTI / TDI) Less: Section 61(2)  Irfan Note 1  Alisya Less: Accumulated Trust – Hadif (2,500x 12 = 30,000) CHARGEABLE INCOME/ Net DI TAX PAYABLE @ 24%√

TTI (RM)

TDI (RM)

450,000

450,000

√ (14,000) √ (3,000) Nil√ 433,000 (9,500) √ 423,500

(14,000) (3,000) (45,000)√ 388,000 Nil√ 388,000

Nil√ Nil√ 12,500√ Nil√ √ 30,000 466,000 Nil√ (42,000)√ √ (10,000) 414,000

48,000√ 4,500√ 12,500 8,000√ 30,000 491,000 (8,000)√ (38,000)√ (10,000) 435,000

(95,000) √OF (154,179) √OF 164,821 39,557

(30,000) √ 405,000

√

Note 1: Deemed Trust Total Income = Net DI / DI x TTI (Adjusted for Accumulation) = RM405,000/ 435,000 x 414,000 = RM385,448√ OF RM 385,448

Discretionary (60% x 385,448) = 231,269

Non-Discretionary (40%√ x 385,448 = 154,179)

Irfan (R ) and Harraz (NR) – (several beneficiaries)

Alisya ( R) (single beneficiary)

Share of Trust Total Income Or Sum received from trust (WIL) Irfan ( R ) 231,269x 95,000/210,000 = RM104,622 Sum received = RM 95,000 Ordinary Source = RM 95,000 (lower) Share of TTI :

Harraz (NR) 231,269x 115,000/210,000 = RM126,647 = RM115,000 = RM115,000 (lower) (26√ x ½ = 13 marks)

b.

If section 61(2) is applied, Harraz who is a Non Resident beneficiary will be entitled to claim the tax credit under S.110(8) √. Hence, his tax payable is reduced. √ (2√ x1 = 2 marks) (Total marks: 15 marks)

Solution Q3 A. Please indicate TRUE of FALSE for the statements below: i. FALSE ii. TRUE iii. FALSE iv. FALSE v. TRUE

(5 / x 1 mark= 5 marks)

B. Great Specialist Hospital is eligible for ITA of 100% on the qualifying capital expenditure / incurred within a period of 5 years. / Qualifying capital expenditure in relation to private healthcare facilities means capital expenditure incurred in relation building, plant and machinery, medical devices or other facilities in accordance with criteria set out by the Ministry of Finance / and used for the purpose of the qualifying project and shall be verified by the Ministry of Health. The amount exempted is deducted against 100% of Statutory income for each YA /. Any unutilized ITA can be c/f to subsequent YAs until it is fully utilized. / (5 / x 1 mark= 5 marks) (Total: 10 marks)...