Fundamentals Level – Skills Module

Time allowedReading and planning: 15 minutesWriting: 3 hours

This question paper is divided into two sections:

Section A – ALL 15 questions are compulsory and MUST be attempted

Section B – ALL SIX questions are compulsory and MUST be attempted

Rates of tax and tables are printed on pages 2–4.

Do NOT open this question paper until instructed by the supervisor.

During reading and planning time only the question paper may beannotated. You must NOT write in your answer booklet until instructedby the supervisor.

Do NOT record any of your answers on the question paper.

This question paper must not be removed from the examination hall.

Paper F6

(MYS

)

Taxation(Malaysia)

Specimen Exam applicable from December 2015

The Association of Chartered Certified Accountants

SUPPLEMENTARY INSTRUCTIONS

1. Calculations and workings should be made to the nearest RM.2. All apportionments should be made to the nearest whole month.3. All workings should be shown in Section B.

TAX RATES AND ALLOWANCESThe following tax rates, allowances and values are to be used in answering the questions.

Income tax ratesResident individualsChargeable income Rate Cumulative tax

RM RM % RMFirst 5,000 (0 – 5,000) 0 0Next 15,000 (5,001 – 20,000) 1 150Next 15,000 (20,001 – 35,000) 5 900Next 15,000 (35,001 – 50,000) 10 2,400Next 20,000 (50,001 – 70,000) 16 5,600Next 30,000 (70,001 – 100,000) 21 11,900Next 150,000 (100,001 – 250,000) 24 47,900Next 150,000 (250,001 – 400,000) 24·5 84,650Exceeding 400,000 25

Resident companyPaid-up ordinary share capital First Excess over

RM500,000 RM500,000RM2,500,000 or less 20% 25%More than RM2,500,000 25% 25%

Non-residentsCompany 25%Individual 25%

Personal reliefs and allowancesRM

Self 9,000Disabled self, additional 6,000Medical expenses expended on parents (maximum) 5,000Medical expenses expended on self, spouse or child with serious disease, including up to RM500 for medical examination (maximum) 6,000Basic supporting equipment for disabled self, spouse, child or parent (maximum) 6,000Purchase of sports equipment (maximum) 300Study course fees for skills or qualifications (maximum) 5,000Expenses on books for personal use (maximum) 1,000Spouse relief 3,000Disabled spouse, additional 3,500Child – basic rate (each) 1,000Child – higher rate (each) 6,000Disabled child (each) 6,000Disabled child, additional (each) 6,000Life insurance premiums and contributions to approved funds (maximum) 6,000Private retirement scheme contributions, deferred annuity premiums (maximum) 3,000Medical and/or education insurance premiums for self, spouse or child (maximum) 3,000Purchase of a personal computer (maximum) 3,000Deposit for a child into the National Education Savings Scheme (maximum) 6,000

2

RebatesChargeable income not exceeding RM35,000 RMIndividual – basic rate 400Individual entitled to a deduction in respect of a spouse or a former wife 800

Value of benefits in kind

Car and fuel scale

Cost of car Prescribed annual value of Prescribed annual value of(when new) private usage of car private petrol

RM RM RMUp to 50,000 1,200 60050,001 to 75,000 2,400 90075,001 to 100,000 3,600 1,200100,001 to 150,000 5,000 1,500150,001 to 200,000 7,000 1,800200,001 to 250,000 9,000 2,100250,001 to 350,000 15,000 2,400350,001 to 500,000 21,250 2,700500,001 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 thanfive (5) years old.

Where a driver is provided by the employer, the value of the benefit is fixed at RM600 per month.

Other benefits

RM per monthHousehold furnishings, apparatus and appliancesSemi-furnished with furniture in the lounge, dining room or bedroom 70Semi-furnished with furniture as above plus air-conditioners and/or curtains and carpets 140Fully furnished premises 280

Domestic help 400Gardener 300

Capital allowancesInitial Annual

allowance allowance(IA) (AA)

Rate % Rate %Industrial buildings 10 3Plant and machinery – general 20 14Motor vehicles and heavy machinery 20 20Office equipment, furniture and fittings 20 10Agriculture allowanceBuildings for the welfare of or as living accommodation for farm employees nil 20Other buildings used in the business nil 10All other qualifying agricultural expenditure nil 50

3 [P.T.O.

Real property gains tax

Individuals Individuals All(citizens and (non-citizens) otherpermanent personsresidents)Rate Rate Rate% % %

Date of disposalDisposal within three years after the date of acquisition 30 30 30Disposal in the fourth year after the date of acquisition 20 30 20Disposal in the fifth year after the date of acquisition 15 30 15Disposal in the sixth year after the date of acquisition or thereafter 0 5 5

Goods and services tax (GST)

Standard rate 6%Registration limit RM500,000

4

Section A – ALL 15 questions are compulsory and MUST be attempted

Please use the grid provided on page two of the Candidate Answer Booklet to record your answers to each multiplechoice question. Do not write out the answers to the MCQs on the lined pages of the answer booklet.Each question is worth 2 marks.

1 Marker Sdn Bhd incurred the following expenses during the year of assessment 2015:

– Entertainment of suppliers RM10,000– Leave passage for a director for a local trip RM10,000– Sponsorship of arts and cultural activity (approved) performed by local artistes RM510,000

What is the total amount of expense which will be DISALLOWED when calculating Marker Sdn Bhd’s adjustedincome for the year of assessment 2015?

A RM530,000B RM25,000C RM30,000D RM520,000

2 Bangles Sdn Bhd makes up its accounts to 31 December and is required to calculate its initial estimate of tax payablefor the year of assessment 2015. Bangles Sdn Bhd’s estimate of tax payable for the year of assessment 2014 wasRM100,000. The company’s draft tax computation for the year of assessment 2015 showed estimated income taxpayable of RM62,000.

What is the minimum estimate of tax payable which can be submitted by Bangles Sdn Bhd for the year ofassessment 2015?

A RM62,000B RM85,000C RM100,000D RM52,700

3 Eco-Land Sdn Bhd 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?

A Eco-Land Sdn Bhd owns another three properties which it also lets outB Eco-Land Sdn Bhd owns only commercial propertiesC Eco-Land Sdn Bhd actively advertises the space for rentalD Eco-Land Sdn Bhd 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 ofassessment 2015 are as follows:

– Provisional adjusted income RM90,000– Jack and Zila’s salaries (RM30,000 each) RM60,000– Jack’s family trip expenses RM5,000

What is Jack’s statutory income from the partnership for the year of assessment 2015?

A RM42,500B RM55,000C RM60,000D RM47,500

5 [P.T.O.

5 Ought Inc entered into a contract with Boleh Sdn Bhd to provide technical services for a period of ten days forRM100,000. During the ten-day period, Ought Inc’s staff performed services in Malaysia for two days and spent theremaining eight days working in the UK office. Boleh Sdn Bhd remitted the RM100,000 on 15 April 2015.

What is the amount of withholding tax, if any, which should have been remitted by Boleh Sdn Bhd to the InlandRevenue Board?

A RM10,000B RM8,000C RM2,000D RM0

6 Mr Bale owns an apartment which he rents out to tenants. During the year of assessment 2015, his gross incomefrom rental sources was RM62,000 which included a refundable deposit of RM2,000. The expenses incurred duringthe year were quit rent and assessment of RM1,500 and installation costs of RM3,000 for two new air-conditionersfor the apartment (at the request of the tenants). The air-conditioners were installed for the first time in the apartment.

What is Mr Bale’s statutory income from rental sources for the year of assessment 2015?

A RM58,500B RM55,500C RM60,500D RM57,500

7 Nik is Malaysian tax resident and is employed by ABC Sdn Bhd.

Nik received interest income on 1 March 2015 from fixed deposits which were placed with a local bank. Nik alsoreceived dividends from a company listed on the Hong Kong Stock Exchange and insurance proceeds from anendowment 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

A 1 and 2 onlyB 3 onlyC 1, 3 and 4 onlyD 1, 2, 3 and 4

8 HTR Sdn Bhd is not currently registered for goods and services tax (GST) but is monitoring the threshold to determinewhether it will be required to register. HTR Sdn Bhd 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 Bhd in determining whetherit has exceeded the GST registration threshold?

A 1, 2 and 4 onlyB 3 and 4 onlyC 1 and 2 onlyD 1, 2, 3 and 4

6

9 Akash works full time as a pilot and writes books on a part-time basis. Akash wrote a book and received royaltyincome amounting to RM42,000 in the year of assessment 2015.

What is the amount of royalty income which is assessable to tax on Akash for the year of assessment 2015?

A RM22,000B RM42,000C RM32,000D RM30,000

10 Lai Yin Sdn Bhd donated cash of RM1,000 and computers worth RM9,000 to Tawau Orphanage, an approvedMalaysian charitable organisation. Lai Yin Sdn Bhd’s statutory income from business operations was RM2,500 forthe year of assessment 2015. Lai Yin Sdn Bhd also had interest income of RM2,500 for the year of assessment 2015.

What is the tax deduction in respect of donations which can be claimed by Lai Yin Sdn Bhd for the year ofassessment 2015?

A RM350B RM1,000C RM700D RM500

11 Meena, a Malaysian citizen, acquired an apartment on 10 April 2010 and disposed of it on 13 September 2013generating an allowable loss of RM12,500 on the disposal.

Meena acquired an office unit on 12 December 2012 for RM300,000 and disposed of it on 16 November 2015 forproceeds of RM340,000. She had incurred stamp duty of RM1,500 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?

A RM40,000B RM16,000C RM38,500D RM28,500

12 TSG Sdn Bhd made the following payments in January 2015:

– Interest of RM10,000 to its parent company in Canada– Royalty of RM20,000 to a local franchise holder– Purchase of equipment for RM30,000 from a supplier in Canada– Rental of crane for RM40,000 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 Bhd to the Inland Revenue Board?

A RM3,000B RM10,000C RM3,500D RM4,500

7 [P.T.O.

13 ZAP Supermarket Sdn Bhd is a retailer who is registered for goods and services tax (GST). The company recorded thefollowing information in relation to invoices issued to customers in December 2015. All amounts are stated exclusiveof GST:

RMLocal sales – cash 10 millionLocal sales – credit 11 millionExport sales – credit 2 million

ZAP Supermarket Sdn Bhd offers its customers 30 days of credit. Therefore, payment in respect of the December2015 credit sales (both to local customers and exports) was received in January 2016.

What is the output tax payable by ZAP Supermarket Sdn Bhd for the month of December 2015?

A RM1,380,000B RM660,000C RM1,260,000D RM600,000

14 Fajar Sdn Bhd, a manufacturing company with an issued share capital of RM20 million, owned an acre of land whichit acquired for RM1,000,000 in 2013.

The government compulsorily acquired the land and paid Fajar Sdn Bhd compensation of RM1,200,000 under a saleand purchase agreement.

What are the real property gains tax (RPGT) implications of the above transaction for Fajar Sdn Bhd?

A Fajar Sdn Bhd will not be subject to RPGT nor be required to submit a RPGT return to the Inland Revenue Board(IRB) as the compulsory acquisition by the government will be treated as a no-gain no-loss transaction

B Fajar Sdn Bhd will be subject to RPGT and must submit a RPGT return to the IRB within 30 days from the dateof signing the sale and purchase agreement

C Fajar Sdn Bhd will be subject to RPGT and must submit a RPGT return to the IRB within 60 days from the dateof signing the sale and purchase agreement

D Fajar Sdn Bhd will not be subject to RPGT as the compulsory acquisition by the government will be treated as ano-gain no-loss transaction but it must still submit a RPGT return to the IRB

15 Pole Sdn Bhd makes up its accounts annually to 31 December. On 1 July 2014, the company acquired a passengervehicle for the production manager under a hire purchase agreement.

Details of the asset acquired under the hire purchase agreement are as follows:

RMCash price of the passenger vehicle 305,000Deposit paid during the year of assessment 2014 40,000Capital portion of instalments paid during 2014 70,000Interest portion of instalments paid during 2014 5,000Capital portion of instalments paid during 2015 100,000Interest portion of instalments paid during 2015 10,000

What is the amount of capital allowances claimable by Pole Sdn Bhd in respect of the above asset for the yearof assessment 2015?

A RM20,000B RM10,000C RM22,000D RM61,000

(30 marks)

8

Section B – ALL SIX questions are compulsory and MUST be attempted

Please write your answers to all parts of these questions on the lined pages within the Candidate Answer Booklet.

1 Oxygen Sdn Bhd (OSB) is a manufacturer of digital products based in Kuala Lumpur, which makes up its accountsannually to 30 June.

Details of the non-current assets acquired by OSB in the basis period for the year of assessment 2014 are shownbelow:

Asset description Qualifying expenditureRM

(i) Factory building 1,000,000(ii) Various items of office equipment 60,000

The office equipment was all acquired on 6 January 2014. On 20 April 2015, one of the items of equipment, whichhad cost RM10,000, was damaged in a fire and it was written off for commercial reasons. There was no insurancecoverage for the asset damaged.

During the board of directors’ meeting on 2 June 2015, it was determined that there was an increase in demand forOSB’s products in Malaysia and the finance manager was instructed to look into constructing a storage warehouseexclusively 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) Compute the residual expenditure and balancing charge or balancing allowance on the office equipmentwritten off during the year of assessment 2015 and determine the balance of qualifying plant expenditureand residual expenditure for the remaining office equipment carried forward to the year of assessment 2016.

Note: You should assume that the provisions of Paragraph 71 of the Income Tax Act 1967 are NOT applicableand therefore no claw back of capital allowances claimed for the assets disposed of within two years ofacquisition will be made. (5 marks)

(b) Compute the industrial building allowance for the years of assessment 2014 and 2015 for the factorybuilding and the residual expenditure carried forward to the year of assessment 2016. (2 marks)

(c) Explain the income tax implications of each of the two options for the construction of the warehouse fromthe perspective of claiming industrial building allowance and advise which would be more tax efficient.

(3 marks)

(10 marks)

9 [P.T.O.

2 (a) (i) Explain the responsibilities of Malaysian companies – both existing companies and new companies – forthe assessment, estimation and payment of tax liabilities, and the submission of tax returns under theself-assessment system. (6 marks)

(ii) Explain if there are any exceptions to the self-assessment responsibilities outlined in (i) for newcompanies with a paid-up share capital of less than RM2,500,000. (2 marks)

(b) SOS Bhd makes up its accounts to 31 December annually. The company estimated its tax payable for the yearof assessment 2015 as RM100,000 and paid monthly instalments to the Inland Revenue Board (IRB) inaccordance with this estimate.

SOS Bhd submitted its tax return for the year of assessment 2015 to the IRB by the due filing date. The tax returnshowed a final tax liability of RM180,000.

Required:

Compute the penalty payable by SOS Bhd in respect of the underestimation of its tax for the year ofassessment 2015. (2 marks)

(10 marks)

3 On 12 January 2010, Esther acquired a piece of land for RM2,000,000, paying stamp duty of RM30,000 andprofessional fees of RM20,000. On 1 March 2012, Esther transferred the land to her husband, Yee, without anyvaluable consideration.

Yee immediately built a storage building for RM490,000 on the piece of land.

In September 2012, Yee received an offer from Acre Sdn Bhd to acquire the piece of land and received a deposit ofRM10,000. Acre Sdn Bhd 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 RM3,500,000 to Zen Sdn Bhd. Yee incurred RM9,000on valuation fees and RM1,000 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 2012.(3 marks)

(b) Compute the gain subject to real property gains tax (RPGT) arising from the disposal of the land by Yee toZen Sdn Bhd on 6 February 2015. Clearly 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

4 CBP Sdn Bhd, is in the business of manufacturing tiles and has an annual sales turnover of RM10,000,000.CBP Sdn Bhd is registered for goods and services tax (GST).

CBP Sdn Bhd recorded the following transactions in the period 1 September 2015 to 30 September 2015. Allsupplies are stated exclusive of GST and all purchases/acquisitions are stated inclusive of GST:

Supplies

RMSales of tiles to GST registered businesses 600,000Sales of tiles to non-GST registrants 10,000Sales of scrap tiles (damaged inventory) to GST registered businesses 1,000

Purchases/acquisitions

RMConference table 10,600Inventory (stock) of raw clay 212,000Medical treatment of staff at AA Hospital 5,300Entertainment of staff at Hotel K 1,060

Required:

(a) State CBP Sdn Bhd’s relevant taxable period for GST purposes and the deadline for CBP Sdn Bhd to submitits GST return for this period. (2 marks)

(b) Compute the net GST payable by CBP Sdn Bhd. Clearly identify both the output tax payable and the inputtax recoverable and any amounts in respect of which input tax is not claimable (blocked). (8 marks)

(10 marks)

11 [P.T.O.

5 Space Tech Bhd (STB), a company with an issued share capital of RM10 million, makes up its accounts annually to30 September. STB is in the business of manufacturing telecommunication equipment for both the local Malaysianmarket and for export.

The statement of profit or loss of STB for the financial year ended 30 September 2015 is as follows:

Note RM’000s RM’000sSales 24,000Less: Cost of sales 1 (18,000)

–––––––Gross profit 6,000Add: Other incomeGain on disposal of vacant land 500Interest income 2 30

–––––530

–––––––6,530

Less: ExpensesContributions 3 21Donations to unapproved institutions 32Foreign exchange gain 4 (115)Statutory audit fees 65Marketing expenses 5 500Motor vehicle expenses 6 195Salaries and allowances 7 3,709Sundry expenses 8 1

––––––(4,408)–––––––

Profit before tax 2,122–––––––

Notes:

(1) The cost of sales includes obsolete inventories written off of RM36,000 and depreciation of plant, property andequipment of RM2,350,000.

(2) The interest income arose on a loan advanced to a subsidiary.

(3) Contributions comprise:

RMExpenditure relating to the company’s social responsibility by building a bus stop for the public (STB received all necessary approvals) 10,000Scholarship 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 RM4,500 per month) 6,000Cash sponsorship of a customer’s annual dinner 5,000

–––––––21,000–––––––

(4) The foreign exchange gain comprises:

RMForeign exchange loss realised on the disposal of investments 35,000Foreign exchange gain from export sales (unrealised) (150,000)

––––––––(115,000)––––––––

12

(5) Marketing expenses comprise:

RMExpenses for maintaining a overseas sales office for the promotion of exportsto the Vietnam market 500,000

(6) Motor vehicle expenses include the following lease rentals:

Year of assessmentCost 2014 2015RM RM RM

Chief marketing officer’s car (non-commercial) 305,000 110,000 110,000Van (commercial) 165,000 60,000 60,000

(7) Salaries and allowances include allowances of RM40,000 paid to the sales and marketing team to defrayexpenses incurred to entertain customers and RM4,000 of overseas leave passage for a director.

(8) Sundry expenses comprise:

RMAnnual general meeting (AGM) expenses 1,000

(9) The capital allowances have been computed at RM1,300,000 for the year of assessment 2015.

Required:

(a) Compute Space Tech Bhd’s chargeable income for the year of assessment 2015.

Note: You should start your computation with the profit before tax figure of RM2,122,000 and indicate by theuse of the word ‘nil’ any item referred to in the question for which no adjusting entry needs to be made in thetax computation. (13 marks)

(b) STB is considering the acquisition of proprietary rights to a patented industrial design to improve itsmanufacturing technology processes.

STB has heard that a special tax deduction of 20% (over five years) should be available in respect of the purchaseof 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 theacquisition of proprietary rights. (2 marks)

(15 marks)

13 [P.T.O.

6 Spitz, a Malaysian resident, married Ono, a Japanese citizen, on 21 August 2015. Ono had arrived in Malaysia forthe first time on 1 August 2015 and started employment as a fashion model in Malaysia from 2 September 2015.

Spitz has operated a café business but after several years of losses he decided to shut down this business on 31 October 2015.

For the last two years Spitz has also been employed as an airline pilot by Aeroclass Airlines, but he will cease thisemployment with effect from 1 January 2016 and his last day of employment will be 31 December 2015.

Spitz has decided to move to Japan with Ono. Ono has also tendered her resignation and her last day of employmentwill also be 31 December 2015. The couple do not expect to return to Malaysia for at least three years. Both Spitzand Ono will leave Malaysia for Japan on 5 January 2016.

Details of Spitz’s income, benefits and expenditures for the year ended 31 December 2015 are shown below.

Spitz’s café business for the period ended 31 October 2015:

RMProfit before taxation 500In arriving at the above the following were included:(i) Depreciation (3,506)(ii) Gain on disposal of non-current assets 26,966

Spitz’s employment income and benefits-in-kind for the year 2015:

RMSalary 240,000Bonus 40,000Service excellence award (cash) 2,500Fully furnished living accommodation. Aeroclass Airlines paid a monthly rental of RM12,500 per month for the accommodation which included RM2,500 for the furniture 150,000Domestic servant provided for the whole year (hired and paid for by Aeroclass Airlines) 12,000

Spitz incurred the following expenditure in 2015:

RMEmployees’ provident fund contribution 30,800A 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 RM22,000 from the Ministry of Education forthe translation of a German book on airline safety for use in local colleges and universities.

Required:

(a) Assuming Spitz and Ono do not elect for combined assessment for income tax, compute the chargeableincome of Spitz for the year of assessment 2015.

Note: You should indicate by the use of the word ‘nil’ or ‘exempt’, where appropriate, any item referred to inthe 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 2015. (2 marks)

(15 marks)

End of Question Paper

14

Answers

Fundamentals Level – Skills Module, Paper F6 (MYS) Specimen Exam AnswersTaxation (Malaysia) and Marking Scheme

Section A

1 B

(50% x RM10,000) + RM10,000+ (RM510,000 – RM500,000) = RM25,000

2 B

Tutorial note: Companies must furnish estimates of tax payable for a year of assessment which are not less than85% of the estimates or revised estimates of tax payable for the prior year of assessment.

3 D

4 D

Divisible income = RM90,000 – RM60,000 – RM5,000 = RM25,000Jack = RM30,000 + RM5,000 + (RM25,000/2) = RM47,500

5 C

RM100,000 x 2 days/10 days = RM20,000 x 10% = RM2,000

6 A

(RM62,000 – RM2,000) – RM1,500 = RM58,500

7 C

8 A

Tutorial note: The determination of taxable turnover for GST registration purposes includes all taxable suppliesbut specifically excludes disposals of capital assets.

9 A

RMRoyalty income 42,000Less: Exemption (use of literary work) (20,000)

–––––––22,000–––––––

10 D

RM2,500 + RM2,500 = RM5,000 x 10% restriction = RM500

11 B

RM RMDisposal consideration 340,000Acquisition cost 300,000Add: Stamp duty 1,500

––––––––(301,500)––––––––

Chargeable gain (CG) 38,500Less: Schedule 4 exemption (higher of 10% of CG or RM10,000) (10,000)Less: Allowable loss (apartment) (12,500)

––––––––Gain subject to RPGT 16,000

––––––––

17

Marks12 C

(RM10,000 x 15%) + (RM20,000 x 10%) = RM3,500

13 C

(RM10 million + RM11 million) x 6% = RM1,260,000

14 D

15 B

CA for YA 2015 QPE = RM50,000 x 20% = RM10,000

–––2 marks each 30

–––

18

Section B Marks

1 (a) Oxygen Sdn Bhd – Capital allowances

Office equipment

RM RMQualifying expenditure – office equipment 60,000YA 2014Initial allowance (IA) (20%)Annual allowance (AA) (10%)

30% allowances claimed in year of assessment (YA) 2014 1

YA 2015Assets written off – balancing adjustmentCost of asset written off 10,000

–––––––RE RM10,000 (100% – 30%) 7,000 1Disposal proceeds 0 ½

–––––––Balancing allowance 7,000 ½

–––––––

Qualifying plant expenditure 60,000Less: Disposal – assets written off (10,000) ½

–––––––Qualifying plant expenditure 50,000RE (100% – 30%) 35,000 ½YA 2015AA (10%) [50,000 x 10%] (5,000) ½

–––––––RE carried forward to YA 2016 30,000 ½

––––––– –––5

–––

(b) Factory building

RM RMQualifying building expenditure 1,000,000YA 2014Initial allowance (IA) (10%) 100,000 ½Annual allowance (AA) (3%) 30,000 (130,000) ½

–––––––– ––––––––––Residual expenditure (RE) 870,000YA 2015Annual allowance (AA) (3%) (30,000) ½

––––––––––RE carried forward to YA 2016 840,000 ½

–––––––––– –––2

–––

(c) Option 1: the warehouse building would be eligible for industrial building allowance (IBA) 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 usedexclusively for the storage of goods for export or for the storage of goods to be imported, processed and re-exported. As such it will not be eligible for IBA. 1½

Therefore, option 1 would be more tax efficient as the warehouse building would be eligible for IBA. ½ –––3

–––10–––

19

Marks2 (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 deemedassessment and is deemed agreed;

(ii) has to furnish an estimate of income tax payable no later than 30 days before the beginning ofthe 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 Board (IRB)in equal monthly instalments by the 15th day of the month, beginning from the second month ofthe 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 monthfollowing 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 ayear of assessment:

(viii) is required to furnish an estimate of income tax payable within three months from the date ofcommencement 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: Credit will also be given for any other acceptable factors not shown above.

(ii) Exception for new ‘SME’ companies

A new company with a paid-up share capital of RM2,500,000 and below is not required to furnish anestimate of income tax payable and not required to pay income tax payable in monthly instalments forthe year of assessment in which it commences and the following year of assessment. To benefit fromthis 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 RM2,500,000. 2

–––

(b) Penalty for the underestimate of tax

RMFinal tax payable 180,000Estimated tax 100,000 ½

––––––––Difference 80,000 ½Less: 30% of final tax (30% of 180,000) (54,000) ½

––––––––Excess subject to penalty 26,000

––––––––Penalty at 10% 2,600 ½

–––2

–––10–––

3 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. 1

–––3

–––

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Marks(b) Yee – Gain subject to real property gains tax (RPGT) on disposal of the land

RM RMDisposal consideration 3,500,000 1Less: Permitted expensesEnhancement costs (storage building) (490,000) 1Incidental costs (9,000 + 1,000) (10,000) 1

––––––––––Disposal price 3,000,000Acquisition consideration 2,000,000 1Add: Stamp duty 30,000 ½

Professional fees 20,000 ½Less: Deposit forfeited (10,000) 1

––––––––––Acquisition price (2,040,000)

––––––––––Chargeable gain (CG) 960,000Less: Schedule 4 exemption – higher of 10% of CG or RM10,000 (96,000) 1

––––––––––Gain subject to RPGT 864,000

–––––––––– –––7

–––10–––

4 CBP Sdn Bhd

(a) As CBP Sdn Bhd has annual sales turnover in excess of RM5,000,000, it should submit its goods andservices tax (GST) returns on a monthly basis. The taxable period is, therefore, from 1 September 2015 to 30 September 2015. ½ + ½

The due date for CBP Sdn Bhd 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 2015. 1

–––2

–––

(b) Supplies Output taxRM

Sales of tiles to registered traders (600,000 x 6%) 36,000 ½Sales of tiles to non-registered traders (10,000 x 6%) 600 1Sales of scrap (1,000 x 6%) 60 1

–––––––36,660–––––––

Purchases/acquisitions Input taxreclaimable

RMConference table (10,600 x 6%/106%) 600 1Raw clay (212,000 x 6%/106% ) 12,000 1Medical expenses (staff) (blocked) Nil 1½ Entertainment (staff) (1,060 x 6%/106%) 60 1

–––––––12,660–––––––

Net GST payable (36,660 – 12,660) 24,000 1––––––– –––

8–––10–––

Tutorial note: The input tax credit on the staff medical expenses cannot be reclaimed.

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Marks5 Space Tech Bhd

(a) Chargeable income for the year of assessment 2015(Basis period 1 October 2014 to 30 September 2015)

Note RM’000s RM’000s– +

Profit before taxation 2,122Inventories written off 1 Nil ½Depreciation 1 2,350 ½Gain on disposal of vacant land 500 ½Interest income 2 30 ½Expenditure on bus stop 3 Nil 1Scholarship for study at a local university (double deduction) 3 6 1Cash sponsorship of a customer’s dinner 3 5 ½Donations to unapproved institutions 32 ½Foreign exchange loss – capital 4 35 1Foreign exchange gain – trade but unrealised 4 150 ½Audit fees Nil ½Expenses for maintaining sales office (double deduction) 5 500 1Lease rental – chief marketing officer 6 110 1Lease rental – van 6 Nil ½Entertainment allowances for marketing team (50% x 40,000) 7 20 1Leave passage 7 4 ½Annual general meeting (AGM) expenses 8 1 ½

–––––– ––––––1,186 4,679––––––

(1,186)––––––

Adjusted income 3,493Less: Capital allowances (1,300) ½

––––––Statutory income 2,193Add: Interest income 30 ½

––––––Aggregate income 2,223Donations (unapproved) Nil ½

––––––Total/Chargeable income 2,223

–––––– –––13–––

(b) The conditions to be satisfied in order to claim the special deduction for the acquisition of proprietary rightsare 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. 1 + 1–––2

–––15–––

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Marks6 Spitz and Ono

(a) Spitz – Computation of chargeable income for the year of assessment 2015

– +RM RM

[Section 4(a)]Business income – Café businessProfit before tax 500 ½Add/LessDepreciation 3,506 ½Gain on disposal of non-current assets 26,966 1

–––––––– ––––––––26,966 4,006

––––––––(26,966)––––––––

Adjusted loss (22,960)––––––––

Statutory income from business Nil[Section 4(b)]Employment[Section 13(1)(a)]Salary 240,000 ½Bonus 40,000 ½Service excellence award 2,500 ½Less: Exempt [Para 25C, Sch 6] (2,000) 1

––––––––280,500

[Section 13(1)(b)]Fully furnished accommodation (280 x 12 months) 3,360 ½Domestic servant (400 x 12 months) 4,800 ½

––––––––8,160

[Section 13(1)(c)]Living accommodation30% of Section 13(1)(a) [(30% x 280,500) = 84,150 1Defined value ((12,500 – 2,500) x 12] = 120,000 1Lower 84,150 ½

––––––––Adjusted income/statutory income from employment 372,810[Section 4 (d)]Royalty income from tranlation of book 22,000 ½Less: Exemption [Para 32A, Sch 6] (12,000) 10,000 1

–––––––– ––––––––Aggregate income 382,810Less: Current year loss [Section 44 (2)] (22,960) 1

––––––––359,850

Less: DonationsContribution-in-kind to project of national interest (approved) 55,650 ½Restricted to 7% of aggregate income (7% x 382,810) 26,797 (26,797) 1

––––––––Total income 333,053Less: Personal reliefsSelf 9,000 ½ Employees’ provident fund (maximum) 6,000 ½

––––––––(15,000)––––––––

Chargeable income 318,053–––––––– –––

13–––

(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 (August–December 2015). 1 + 1

–––2

–––15–––

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