Malaysian Institute of Accountants

(Established under the Accountants Act 1967)

Institut Akauntan Malaysia
(Diperbadankan di bawahAktaAkauntan 1967)

QUALIFYING EXAMINATION
Taxation
Date : 15 March 2018
Time : 2.15 pm – 5.30 pm
Reading and Planning : 15 minutes

Paper: Taxation
Writing : 3 hours

INSTRUCTIONS TO CANDIDATES:

This question paper contains 6 questions on 17 printed

pages.

Answer ALL questions.

Answer Questions 1, 2 and 3 in separate booklet(s) from

Questions 4, 5 and 6.

Do not open this paper until instructed by the invigilator.

During reading and planning time only the question paper

may be annotated. You must NOT write in your answer
booklet until instructed by the invigilator.

UNIVERSITI TEKNOLOGI MARA

Examination Body
CONFIDENTIAL 2 MIAQE MARCH 2018

• The following tax rates are to be used in answering the questions.

Income tax rates

(a) Companies 24%

(b) Small companies

Chargeable income: On first RM500,000 19%
Subsequent Balance 24%

(c) Resident individuals

Chargeable Income Rate Cumulative Tax

RM RM
First 2,500 0 0
Next 2,500 0 0
On 5,000 0
Next 5,000 1 50
On 10,000 50
Next 10,000 1 100
On 20,000 150
Next 15,000 5 750
On 35,000 900
Next 15,000 10 1,500
On 50,000 2,400
Next 20,000 16 3,200
On 70,000 5,600
Next 30,000 21 6,300
On 100,000 11,900
Next 50,000 24 12,000
On 150,000 23,900
Next 100,000 24 24,000
On 250,000 47,900
Next 150,000 24.5 36,750
On 400,000 84,650
Next 200,000 25 50,000
On 600,000 134,650
Next 400,000 26 104,000
On 1,000,000 238,650
Exceeding 1,000,000 28

(d) Non-resident individuals 25%

CONFIDENTIAL 3 MIAQE MARCH 2018

• Benefits-in-kind (BIK) scale rates as per Inland Revenue Board (IRB) guidelines

Cost of car when new Annual Annual

prescribed prescribed
benefit of benefit of
motorcar petrol
RM RM RM
Up to 50,000 1,200 600
50,001 - 75,000 2,400 900
75,001 - 100,000 3,600 1,200
100,001 - 150,000 5,000 1,500
150,001 - 200,000 7,000 1,800
200,001 - 250,000 9,000 2,100
250,001 - 350,000 15,000 2,400
350,001 - 500,000 21,250 2,700
500,001 and above 25,000 3,000

The value of the car benefit equivalent to half of the above rates is taken if the car
provided is more than five years old.

• Prescribed value of household furnishings, apparatus and appliances

Category Type of Benefit Annual

Prescribed
value of BIK
provided
RM
1 Semi-furnished with furniture in the lounge,
dining room or bedroom. 840
2 Semi-furnished with furniture as in Category 1 and one
or two of the following:
• air-conditioners 1,680
• curtains and alike
• carpets
3 Fully furnished with benefits as in Category 1 and 2 3,360
plus one or more of kitchen equipment, crockery,
utensils and appliances.

Other benefits RM per month

Household servant 400

Gardener 300
Driver 600
CONFIDENTIAL 4 MIAQE MARCH 2018

• Rates of Capital Allowances

Motor Vehicles/ Plant & Computers Others Industrial

Heavy Machinery Machinery Building

Initial allowance 20% 20% 20% 20% 10%

Annual allowance 20% 14% 80% 10% 3%

• Real property gains tax

With effect from 01.01.2014 the tax rates that apply depending on the holding
period from the date of acquisition of the asset at follows:

Period of Disposal Company Individual Individual

(Citizens and (Non-Citizens)
Permanent Resident)
(%) (%) (%)
Within 3 years 30 30 30
In the 4th year 20 20 30
In year 5 15 15 30
In its 6th year onwards 5 0 5

• Goods and services tax (GST)

Standard rate 6%
Registration limit RM500,000
CONFIDENTIAL 5 MIAQE MARCH 2018

QUESTION 1

Ravi Three Star Manufacturing Sdn Bhd (‘the company’) is a Malaysian resident company
engaged in manufacturing of car seats. The company has a paid up capital of RM5 million of
which eighty- one percent (81%) are held by Malaysian citizens.

The company closes its accounts on 31 December each year, and has appended the
following results for the period ended 31 December 2017:

Ravi Three Star Manufacturing Sdn Bhd

Statement of profit or loss for the year ended 31 December 2017

Note RM’000 RM’000

Sales 539,000
Less: Cost of sales 296,000
Gross profit 243,000
Add: Other income
Dividend 1 61
Interest 2 50
Insurance recovery 3 60 171
243,171
Less: Expenses
Remuneration 4 1,560
Compensation to director 5 175
Loan interest 6 120
Entertainment 7 580
Depreciation 119
Repair and maintenance 8 480
Bad and doubtful debts 9 870
Motor vehicle expenses 10 185
Lease charges 11 360
Advertisement and publicity 12 1,050
Professional fees 13 100
Insurance 14 120
Foreign exchange loss 15 60
Donation 16 100 5,879
Profit before taxation 237,292

The company has provided the following notes and information to the accounts:

Notes to the accounts:

1. Dividend

A single tier dividend of RM35,000 was received in November 2017 from investment
in a local public listed company. Another RM26,000 was received from investments
in a company in Thailand. The amount was remitted to Malaysian in early December
2017.
CONFIDENTIAL 6 MIAQE MARCH 2018

2. Interest

The company charges interest on late settlement; and accordingly RM50,000 was
received from customers who settled their trading debts late in 2017.

3. Insurance recovery

The company received RM60,000 from an insurance company for some inventory
destroyed in factory fire.

4. Remuneration

The remuneration charges paid to Encik Rudi Ahmad, a managing director who holds
30% of the company’s shares are as follows:

Particulars RM’000
(a) Salary 470
(b) EPF contribution 108
(c) One free holiday trip to Thailand 30
Total 608

5. Compensation to director

Encik Richard Tan who was with the operations department for more than 10 years
was found to be in declining health. He was asked to resign voluntarily, and on
compassionate grounds, the following compensation package was negotiated:

(i) A lump sum payment of RM150,000 upon tendering his voluntary resignation;
and

(ii) An annual pension of RM25,000 payable for the next five years. The pension
is conditional on Encik Richard Tan not disclosing or divulging any information
pertaining to the company’s operation, management and other matters.

On 1 May 2017 he was paid RM175,000 [RM150,000 plus RM25,000] upon his letter
of resignation being accepted by the company’s Board of Directors.

6. Loan interest

During the year 2017 the company incurred the following expenses:

(i) Interest on a loan taken to invest in a local company amounting RM20,000;

(ii) Interest on a loan taken to invest in a company in Thailand amounting
RM15,000; and
(iii) Interest on a loan taken to purchase inventory amounting RM85,000
CONFIDENTIAL 7 MIAQE MARCH 2018

7. Entertainment

The entertainment expenditure details are as follows:

Particulars RM'000
(a) Entertainment of suppliers 320
(b) Entertainment allowance of marketing staff 140
(c) Annual dinner for staff 40
(d) Gift to customers for purchases above RM2,000 30
(e) Promotion expenses of launching a new sports car seat 50
Total 580

8. Repair and maintenance

The following expenses were incurred during the year and charged under repair and
maintenance:

(a) Extending the administrative and showroom amounting RM350,000.

(b) The factory roof leaked badly and was replaced with an improved quality tiles
at a cost of RM30,000
(c) RM100,000 was spent on the maintenance of the plant and machinery.

9. Bad and doubtful debts

During the year, the company write off long overdue trade debts totaling RM180,000
as the recovery prospects were negligible.

Based on the company’s experience, a general provision of 10% of the outstanding

debtors as at 31 December 2017 amounting to RM400,000 was made.

A provision of RM200,000 was made on several customers who are either

experiencing slow business or had filed for bankruptcy.

RM40,000 advanced made to an old customer, and RM50,000 to a long time supplier
were written off during the year.

10. Motor vehicle expenses

The company incurred RM30,000 due to traffic offences such as speeding and illegal
parking. These expenses were incurred by its marketing staff in the course of
carrying out their employment duties.

During the year, the company acquired a badly damaged trailer for RM5,000 and
spent RM100,000 for repairs [A new trailer would have cost RM200,000]. Capital
allowance was claimed on the RM5,000.

RM55,000 refers to the repairs and maintenance of the company motor vehicles
used in the business.
CONFIDENTIAL 8 MIAQE MARCH 2018

11. Lease charges

A new saloon car, which cost RM890,000, was leased in July 2017 and a lease rental
payment of RM80,000 was paid during the year. Another RM160,000 was paid for
the lease of a production machine to meet seasonal demand.

The company renegotiated a more advantageous term for the factory during the year,
and in return for a premium of RM120,000 to the owner, the revised lease
agreement for the remaining 15-year period was signed in October 2017.

12. Advertisement and publicity

The company also has its own brand that is properly registered in Malaysia, and
RM150,000 was spent to promote this brand name in the course of sponsoring an
approved international event held in Kuala Lumpur.

The company acquired the rights to a proprietary patent for RM750,000 in 2017 from
a foreign company and was properly registered in its name in the same year.

The company sponsored several art and cultural activities during the year in
connection with the promotion of its products. It spent RM500,000 on local art
activities and RM400,000 on foreign art activities. Both activities had been formally
approved by the Minister in charge of arts, culture and heritage.

13. Professional fees

A trade related dispute arose with a third party (‘the party’). The party then filed a civil
suit for damages. The court ordered the company to pay RM45,000 in damages to
the plaintiff. The legal fees incurred to defend the civil suit was RM10,000.

Other details of the professional fees incurred during the year are as follows:

Particulars of expenditure RM’000

(a) Secretarial fees 15
(b) Income tax filing fees 20
(c) GST appeal 10
Total 45

14. Insurance

Expenditure relating to insurance are as follows:

Particulars of expenditure RM’000

(a) Amount paid to a local insurance firm for import of raw 30
materials
(b) Insurance premium paid to a foreign firm for export of its 40
product
(c) Fire insurance relating to its inventories and machineries 50
Total 120
CONFIDENTIAL 9 MIAQE MARCH 2018

15. Foreign exchange loss

The foreign exchange loss for the current year are as follows:

(a) RM20,000 realised loss was on the import of trading stock.

(b) RM10,000 realised loss on import of machinery spare parts.
(c) RM30,000 realised loss was incurred on the import of a production machine
in December 2017.

16. Donation

As part of its corporate social responsibility, the company made a donation in kind
worth RM100,000 to an approved Malaysian charitable body during Chinese New
Year in February 2017.

17. Other information:

For the year of assessment 2017, the company is claiming capital allowance of
RM46,019,000 on its qualifying plant and machinery and other assets used in the
business.

Required:

Based on the information given, compute the chargeable income of Ravi Three Star
Manufacturing Sdn Bhd for the year of assessment 2017.

Note:
Your computation should start with the profit before taxation figure and follow the description
used in the profit and loss account, and where applicable the description used in the notes to
the accounts. In making your tax adjustments to the entries, you should indicate ‘Nil’ where
no adjustments are made or are not required. You do not need to explain the adjustments
that you are making.
(20 marks)

QUESTION 2

A. Encik Manaf had acquired a landed property from Encik Zainal for RM308,516. He
signed the agreement on 16 August 2014 and settled the payment on 1 October
2014. He had taken a loan for this purpose. The property ownership was then
transferred to his name on 25 November 2014. In acquiring the property, Encik
Manaf incurred stamp duty of RM5,170 and legal fees of RM2,610.

Upon acquisition, Encik Manaf spent RM42,507 on renovating the property. On 11

April 2015, the property was partially damaged by fire and he received compensation
of RM27,199. On 16 September 2015, the property was affected by flood, and he
was paid a compensation of RM27,177 from the developer. He also managed to
make an insurance recovery of RM13,575 from his insurer.
CONFIDENTIAL 10 MIAQE MARCH 2018

On 31 October 2016, Encik Manaf was approached by a buyer, Encik Ali to

purchasethe property. Encik Ali paid a deposit of RM7,000 and he proceeded to
make an application for a bank loan. Encik Ali however, was not successful in his
application and Encik Manaf forfeited the deposit.

Encik Manaf’s brother had filed a claim for the ownership of the property. Encik
Manaf then hired a lawyer who successfully defend his right to total ownership. The
legal fee was RM8,647.

Encik Manaf sold the property to Mr George for RM397,767, and an agreement for
the sale was signed on 16 April 2017. The payment was settled on 17 June 2017.
The ownership was transferred to Mr George on 17 July 2017.

In securing a buyer for the property, Encik Manaf had incurred the following
expenditure:

▪ valuation fee totaling RM6,171

▪ brokerage fee totaling RM8,638
▪ advertisement expenses totaling RM1,097

Encik Manaf had incurred an interest charge of RM57,630 on the bank loan he took
to buy the property.

Required:

In relation to the Real Property Gains Tax 1976 (as amended), compute the
chargeable gain arising from the disposal of the property, after exemption under
Schedule 4 of the said Act.

Note: Ignore any tax effects and implications arising on account of the application of
the Goods and Services Tax Act 2014 (as amended) in the determination of the
chargeable gain.

(10 marks)

B. MJ Holdings Sdn Bhd (‘the company’) is a Malaysian incorporated resident

investment holding company with a paid up capital of RM7 million. It closes the
accounts on 31 December each year.

Its income is derived mainly from investments. The investments consists of fixed
deposit in local financial institutions, shares in companies listed on the Bursa
Malaysia and some real properties including shop lots. There is no support or
maintenance services provided for the shop lots.

The company has produced the following result for the financial year ended 31
December 2017:
CONFIDENTIAL 11 MIAQE MARCH 2018

MJ Holdings Sdn Bhd

Statement of profit or loss for the year ended 31 December 2017
Gross income RM RM
Fixed deposit interest 100,171
Rent - shop lot 81,754
Dividends (Malaysian single tier)
Investment 1 26,952
Investment 2 117,915 144,867
Gains from realization of investment 120,000
Total gross income 446,792
Less: Expenses
Director's remuneration 80,777
Staff salary 48,466
Accounting and secretarial fees 16,159
Audit fees 32,073
Interest charges (loan for investments) 62,888
Printing and stationary 3,230
Management expenses 45,233
Office rent 80,640
Quit rent and assessment (shop lots ) 3,257
Entertainment 4,845
Depreciation 7,000 384,568
Net profit 62,224

Single tier dividends were received from the investments made in two lots of shares and
rental income from the shop lot. The details of the investment are as follows:

Cost of investment RM
Shop lot 1,179,150
Investment 1 - shares 2,080,806
Investment 2 - shares 1,173,500
Total cost of investments 4,433,456

MJ Holdings Sdn Bhd took substantial loans to make the investments in the shop lots and
the shares, for which interest charges incurred were charged in the accounts.

Required:

With reference to the Income Tax Act 1967 (as amended), compute the chargeable income
of MJ Holdings Sdn Bhd for the year of assessment 2017. You must show all the relevant
workings.
(10 marks)
CONFIDENTIAL 12 MIAQE MARCH 2018

QUESTION 3

A. Georgiana Aroma Sdn Bhd (‘the company) is a Malaysian company associated with
a famous Italian designer perfume house. The company makes various types of
scents, perfumes and fragrances in its factory in Cyberjaya, with professional and
technical input from its Italian partner.

The company exports products to Japan, China and Europe. Owing to stiff
competition, especially from Korea, the company’s profit began to decline. At a
recent Board of Director’s meeting, in which some Italian executives also took part in
an advisory capacity, the company made a decision to downsize the workforce and
cut down production of certain line of perfumes.

In the first phase, older employees were retrenched, especially those without critical
skills. The company paid the retrenched older employees a sum of RM5 million and
this amount was charged to the accounts for the year ended 31 December 2017. The
second phase will be put into effect next year.

Required:

With reference to the Income Tax Act 1967 (as amended), discuss whether the
compensation of RM5 million paid by Georgiana Aroma Sdn Bhd would be deductible
in arriving at the adjusted income from its business for the year of assessment 2017.

Note: Candidates are encouraged to quote the relevant provisions of the law and
case laws where appropriate.
(Total: 5 marks)

B. Mr. Alex Tan was the marketing executive of 1Malaysia Enterprise Sdn Bhd (‘the
company’) and holds 40% of the company’s shares. Part of his duties includes
collection of outstanding debts from big account customers who are way behind in
their settlement. He also has the authority to write off those debts that, in his view are
not recoverable. The company’s Board of Director’s (‘the Board’) rely on his
judgement, and accept such practice since frequently cases where legal action are
taken to recover debts, besides costing a tidy sum in legal fees, have very little effect
on recovery of the outstanding debts.

In the last two years it was found that an unusual large sums of bad debts were
written off by Mr. Alex Tan. At Board meetings, he gave some vague reasons for the
write offs. Towards the end of the year, the other members of the Board were not
satisfied and arranged for a team of auditors to check out the write offs. Audit checks
showed that the debts were in fact collected but was not brought into account in the
company’s books. It later transpired that Mr. Alex Tan had used the money to
gamble. The auditors also found that Mr. Alex Tan is also indebted to illegal money
lenders, making any recovery from him impossible. They recommended to the Board
to write off that sum [sums collected but not accounted for in the company’s books] in
the profit or loss account for the year ended 31 December 2017.
CONFIDENTIAL 13 MIAQE MARCH 2018

Required:

Based on the information provided, discuss whether 1Malaysia Enterprise Sdn Bhd
could claim the sum written off as an expense deductible in arriving at the adjusted
business income under the Income Tax Act 1967 (as amended). You are encouraged
to quote relevant case laws to support your discussion.
(5 marks)

QUESTION 4

A. Mr Seto, a Japanese citizen, was employed as an engineer by Tenaga Sdn Bhd for
turnkey project. He arrived in Malaysia for the first time on 20 May 2012 and his
contract with the company began on 1 June 2012 and ended on 31 August 2017. He
left Malaysia permanently on 30 September 2017. Details of his stay in Malaysia are
as follows:

Year Periods of stay Note

2012 20 May to 17 July
19 November to 31 December
2013 1 January to 15 April 1
1 May to 20 August
2014 10 April to 30 September
5 November to 12 December
2015 1 February to 30 May
2016 15 January to 10 April 2
2017 1 July to 30 September

Notes:

1. Mr Seto was in the Australia from 16 April 2013 to 30 April 2013 attending an
academic conference.

2. Mr Seto was in Japan from 1 January 2016 to 14 January 2016 for a holiday.

Required:

Determine the residence status of Mr Seto for the years of assessment 2012 to 2017.
Give reasons and quote the relevant provisions of the Income Tax Act 1967 to
support your answer.
(5 marks)

B. (i) Explain the tax implications of non-compliance with withholding tax

provisions.
(3 marks)

(ii) State whether withholding tax is applicable or not, to each of the following
payments. If applicable, state the amount of withholding tax due and the due
date to remit the tax. If not applicable, state the reason why:
CONFIDENTIAL 14 MIAQE MARCH 2018

a. Advance payment of 15% was paid on 28 July 2017 upon issuance of

an interim invoice so that services can commence. The technical
services was provided by a non-resident company to Hafiz Sdn Bhd
valued at RM500,000. The services were performed in Malaysia in
August 2017 and balance of the payment for the services rendered
was paid on 7 September 2017.

b. Puteri Sdn Bhd signed a technical service agreement with a non-

resident company valued at RM300,000. Puteri Sdn Bhd was required
to pay a deposit of 5% upon signing the agreement on 1 October
2017. The balance was paid upon issuance of the invoice on 9
November 2017 after the services were performed. The services were
performed in Malaysia and Puteri Sdn Bhd has paid according to the
terms of the agreement.

c. Afeeq Sdn Bhd signed a technical service agreement with a non-

resident company valued at RM800,000. Afeeq Sdn Bhd was required
to pay a deposit of 10% upon signing the agreement on 23 December
2016. The deposit was refunded upon completion of the service. Full
payment for the service rendered in Malaysia was paid after the
completion of the service on 18 February 2017.
(9 marks)

(iii) Encik Johan transfers his bungalow house to his daughter, Puan Shafiqa,
aged 25 and married. The house is located in Petaling Jaya, Selangor and
every month Mr Johan received rental of RM5,000 from the tenant. An
assumption is made that the settlement is irrevocable and Mr Johan used the
rental income for the year of assessment 2017 for his own purposes.

Required:

Briefly discuss the tax treatment for the rental income received by Encik Johan for
the year of assessment 2017.
(3 marks)
(Total: 20 marks)

QUESTION 5

A. Given below is the information pertaining to the tax returns of Encik Eman and his
wife, Puan Farah for the year of assessment 2017:

Encik Eman

Encik Eman, a Malaysian resident works with Safura Holdings Bhd since 1 July 2008.
With effect from 1 January 2017, the company paid him a monthly salary and
entertainment allowance of RM15,000 and RM5,000 respectively. He claimed that
entertainment allowances received from the company during the year 2017 have
been fully spent for entertaining the company’s clients. In addition, the company also
provides Encik Eman the following benefits during the year 2017:
CONFIDENTIAL 15 MIAQE MARCH 2018

(i) A fully furnished apartment with annual value of RM40,000, including the
value for the furniture of RM600 a month.

(ii) A servant with a salary of RM800 a month paid by Encik Eman and
reimbursed by the company.

(iii) A golf club corporate membership with entrance fee of RM2,500 and a
monthly subscription of RM250 paid by the company.

(iv) A mobile phone under the company’s name. The phone bills paid by the
company for the year 2017 amounted to RM900.

(v) A new car which was purchased in April 2016 for RM180,000; and a driver
with monthly salary of RM1,000 paid by the company. Fuel was provided by
the company.

(vi) A holiday package to Europe for which the company paid for the air tickets,
meals and accommodation of RM8,000, RM4,000 and RM5,000 respectively.

(vii) Medical expenses of RM3,500 for Encik Eman and his family.

(viii) Tuition fees for his children of RM400 a month.

(ix) For the year of assessment 2017, Encik Eman made the following claims:

- Child relief for three schooling children, all are below 18 years old.
- RM900 for purchase of books for his children.
- RM2,600 for the purchase of smartphone for his own use.
- Contribution to EPF is 9% of his salary.
- RM6,800 for his parents medical expenses.
- Zakat payment of RM12,000 to Lembaga Zakat Selangor (LZS).

Puan Farah

Puan Farah is a Malaysian resident, and operates a food catering partnership

business with her partner, Melly. Puan Farah received a statutory income from her
partnership business with Melly amounting to RM121,000 for the year of assessment
2017.

Puan Farah provided the following information for the year of assessment 2017:

- She purchased basic supporting equipment of RM5,500 for her

mother.
- Life Insurance premium for herself paid during the year was
RM4,800.
- She paid RM3,600 and RM4,500 for her children’s medical and
education insurance premiums respectively.
- She donated RM8,800 to an approved charitable institution.

Required:
CONFIDENTIAL 16 MIAQE MARCH 2018

a) Compute the statutory income from employment of Encik Eman for the year of
assessment 2017.
(8 marks)

b) Compute the income tax payable (if any) by Encik Eman and Puan Farah for
the year of assessment 2017.
(9 marks)

B. Firstworld Sdn Bhd is to commence business and seeks your advice about the
Goods and Services Tax (GST) which was implemented by the Government of
Malaysia on 1 April 2015.

Required:

Explain the followings:

(i) The threshold for a business to apply for GST license.

(1 mark)

(ii) Zero-rated supply and give two (2) examples.

(2 marks)
(Total: 20 marks)

QUESTION 6

A. Encik Khairul, an entrepreneur and a director of several companies died on 1 July

2017. He was a resident and domiciled in Malaysia at the time of his death. He left
behind a wife, Puan Kamilia (resident and not working) and two children. His brother,
Encik Kaharuddin (non-resident) is appointed as the executor of his estate. Encik
Kaharuddin provided the following information for the basis year 2017:

RM
1. Manufacturing business
Adjusted income 200,000
Adjusted loss brought forward from year of assessment 2016 44,000
Capital allowance for year of assessment 2017 12,000
Capital allowance brought forward from year of assessment 2016 10,000
Balancing charge for year of assessment 2017 28,000

2. Directors fees
Received in April 2017 from a Malaysian resident company 60,000
Received in June 2017 from a foreign company 50,000

3. Gratuity
Gratuity paid by a company in September 2017 to the executor on
behalf of Encik Khairul’s family. 200,000

4. Dividend income
Received from Malaysian resident company in June 2017
(single tier). 12,000
Received from a foreign company in August 2017(remitted) 16,000
CONFIDENTIAL 17 MIAQE MARCH 2018

5. Annuity payable
Annuity payable to Puan Kamilia in 2017 24,000

6. Distributions made to his children in 2017 (not an annuity)

Shima (non-resident), 21 years old, studying in an Australian
University. 7,000
Faris (resident), 20 years old, studying in a Malaysian University. 5,000

7. Executor fees paid during the year 2017 26,000

8. Encik Khairul donated two units of computer to an approved

institution in February 2017. 4,500

9. Medical insurance premium paid for the period 1 January 2017 until
30 June 2017. 2,400

10. Purchase of books spent in January 2017 for Encik Khairul’s 800
children.

Required:

Compute the income tax payable by the deceased and the executor of the estate of
the deceased for the year of assessment 2017.
(5 marks)

B. Bersatu Sdn Bhd (BSB), a resident company has been granted investment tax
allowance for its promoted product. The production day of the promoted product
was on 1 July 2016. The business operation is located in Negeri Sembilan.

The projected statutory income of BSB are RM1,500,000; RM1,600,000;

RM2,000,000 for the year of assessment 2016, 2017 and 2018 respectively. The
qualifying capital expenditure amounted to RM1,000,000 is incurred in the year of
assessment 2016 but none in the year of assessment 2017 and 2018.

BSB closes its account on 31 December annually.

Required:

With reference to the investment tax allowance, advise Bersatu Sdn Bhd on the
following matters:

(i) The duration of the tax relief period; and

(2 marks)

(ii) The amount of investment tax allowance that could be utilised (if any) in the
year of assessment 2016, 2017 and 2018.
(Support your answer with relevant computations)
(3 marks)
(Total: 10 marks)

END OF QUESTION PAPER