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Preparing Taxation Computations _Malaysia_

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					                                                                     Paper T9 (MYS)
Certified Accounting Technician Examination
Advanced Level




Preparing Taxation
Computations
(Malaysia)
Tuesday 15 December 2009




Time allowed
Reading and planning:     15 minutes
Writing:                  3 hours
This paper is divided into two sections:
Section A – ALL TEN questions are compulsory and MUST
            be attempted
Section B – ALL FOUR questions are compulsory and MUST
            be attempted
Tax rates and allowances are on pages 2–4.
Do NOT open this paper until instructed by the supervisor.
During reading and planning time only the question paper may
be annotated. You must NOT write in your answer booklet until
instructed by the supervisor.
This question paper must not be removed from the examination hall.




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.

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

                                                  Income tax rates
     Resident individuals
     Chargeable income                                                       Rate           Cumulative tax
                           RM                                                 %                 RM
     First                 2,500                  (0 – 2,500)                  0                     0
     Next                  2,500                (2,501 – 5,000)                1                   25
     Next                 15,000               (5,001 – 20,000)                3                  475
     Next                 15,000              (20,001 – 35,000)                7                1,525
     Next                 15,000              (35,001 – 50,000)               12                3,325
     Next                 20,000              (50,001 – 70,000)               19                7,125
     Next                 30,000             (70,001 – 100,000)               24               14,325
     Exceeding           100,000                                              27
     Resident company
     Paid up ordinary share capital                  First                          Excess over
                                                   RM500,000                        RM500,000
     RM2,500,000 or less                             20%                               25%
     More than RM2,500,000                           25%                               25%
     Non-resident
     Company                                                                            25%
     Individual                                                                         27%




                                                         2
                                        Personal reliefs and allowances
                                                                                                   RM
Self                                                                                              8,000
Disabled self, additional                                                                         6,000
Medical expenses expended for parents                                            (maximum)        5,000
Medical expenses expended on self, spouse or child with serious
disease, including up to RM500 for medical examination                           (maximum)        5,000
Basic supporting equipment for disabled self, spouse, child or parent            (maximum)        5,000
Purchase of sports equipment                                                     (maximum)          300
Fees expended for skills or qualifications                                        (maximum)        5,000
Expenses on books for personal use                                               (maximum)        1,000
Spouse relief                                                                                     3,000
Disabled spouse, additional                                                                       3,500
Child                                                                            (each)           1,000
Child – higher rate                                                              (each)           4,000
Disabled child                                                                   (each)           5,000
Life insurance premiums and contributions to approved provident funds            (maximum)        6,000
Medical or education insurance premiums for self, spouse or child                (maximum)        3,000
Purchase of a personal computer                                                  (maximum)        3,000
Deposit for a child into the National Education Savings Scheme                   (maximum)        3,000


                                                    Rebates
Chargeable income not exceeding RM35,000                                                            RM
Individual                                                                                          400
Individual who has been given a deduction in respect of a spouse or former wife                     800


                                            Value of benefits in kind
Car scale
       Cost of car                               Prescribed annual value of
      (when new)                                    private usage of car
          RM                                                RM
Up to            50,000                                     1,200
50,001     to    75,000                                     2,400
75,001     to 100,000                                       3,600
100,001 to 150,000                                          5,000
150,001 to 200,000                                          7,000
200,001 to 250,000                                          9,000
250,001 to 350,000                                        15,000
350,001 to 500,000                                        21,250
500,001 and above                                         25,000
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 per month is fixed at RM600.




                                                        3                                                       [P.T.O.
                                                 Other benefits
                                                                                              RM 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
Domestic help                                                                                     400
Gardener                                                                                          300


                                              Capital allowances
                                                   Initial allowance (IA)                  Annual allowance (AA)
                                                           Rate %                                 Rate %
Industrial buildings                                          10                                      3
Plant and machinery – general                                 20                                     14
Motor vehicles and heavy machinery                            20                                     20
Office equipment, furniture and fittings                        20                                     10


                                           Sales tax and service tax
                                                                                                  Rate %
Sales tax                                                                                          10
Service tax                                                                                          5




                                                       4
Section A – ALL TEN questions are compulsory and MUST be attempted
Please use the space provided on the inside cover of the Candidate Answer Booklet to indicate your chosen answer to
each multiple choice question.
Each question within this section is worth 2 marks.

1   Madam Premala is employed with A Sdn Bhd from 1 July 2008 to 31 December 2009.

    What is the basis period for the year of assessment 2009 in respect of employment income for Madam Premala?
    A   1 January 2009 to 31 December 2009
    B   1 July 2008 to 30 June 2009
    C   1 July 2008 to 31 December 2009
    D   None of the above


2   ‘An employment can ONLY arise where the relationship of master and servant subsists.’

    The above statement is:
    A   True
    B   False
    C   True if the employer is a company
    D   True if the employer is a non-resident


3   In 2009, Mr Ong, a sports equipment dealer, received orders for his goods amounting to RM2 million. By 31 December
    2009, he will have issued invoices for RM1·8 million but will have collected only RM1·5 million in respect of those
    orders.

    State the amount Mr Ong should recognise as his gross income from his business for the year of assessment
    2009:
    A   RM2 million
    B   RM1·8 million
    C   RM1·5 million
    D   nil


4   Careless Sdn Bhd (financial year-end: 31 December) purchased a projector at a cost of RM15,000 on 1 March 2008
    and used it in its business. Capital allowances were claimed for the projector in the year of assessment 2008. On
    4 December 2009, the asset was damaged beyond repair and had to be discarded without any disposal value.

    Which of the following allowances should Careless Sdn Bhd claim for the year of assessment 2009 in respect of
    the projector?
    A   Annual allowance
    B   Initial allowance
    C   Balancing charge
    D   Balancing allowance




                                                          5                                                     [P.T.O.
5   On 7 December 2009, Jamal received a dividend of RM10,000 from Klever Sdn Bhd, a company he founded on
    1 February 2009.

    State the amount of dividend income that Jamal should report in his annual tax return for the year of assessment
    2009?
    A   RM10,000
    B   RM5,000
    C   RM1,000
    D   nil


6   The computation of chargeable income for John for the year of assessment 2009 is as follows:
                                                RM                 RM
    Total income                                                  60,000
    Less:
    Personal relief                            8,000
    Wife relief                                3,000
    EPF and life insurance                     6,000
    Course fee                                 5,000
    Medical expense for parent                 5,000             (27,000)
                                              ––––––             –––––––
    Chargeable income                                             33,000
                                                                 –––––––
                                                                 –––––––

    What is the amount of rebate due to John for the year of assessment 2009?
    A   nil
    B   RM400
    C   RM700
    D   RM800


7   Mr Aei, Miss Bee and Mr Cee agree to set up a comics shop. Mr Aei contributes RM100,000 as start up capital, while
    Miss Bee and Mr Cee work full-time at the shop. They share the profits and losses from the comics business in the ratio
    of 2:1:1.

    What are Mr Aei, Miss Bee and Mr Cee in relation to the comics business?
    A   Sole proprietors
    B   Shareholders
    C   Partners
    D   Directors


8   For the year of assessment 2008, Besar Sdn Bhd had originally estimated its tax payable at RM6,000. In the ninth
    month of the basis period, the company revised its tax estimate to RM10,000.

    For the year of assessment 2009, what is the minimum amount that Besar Sdn Bhd may estimate its tax
    payable?
    A   RM5,100
    B   RM6,000
    C   RM8,500
    D   RM10,000




                                                           6
9   In 2009, Matahari Sdn Bhd employed an accountant from India and also engaged an engineering company from the
    US to advise on solar energy.

    Which of the following payments by Matahari Sdn Bhd is/are subject to withholding tax at a fixed rate?
    A   Remuneration paid to the company’s non-resident employee from India
    B   Technical fee to the US company for sending its engineer to Malaysia for 10 days to render the service
    C   Both the remuneration and the technical fee
    D   50% of the remuneration and the technical fee


10 BuatanMalaysia Sdn Bhd is a licenced manufacturer for sales tax purposes.

    When is sales tax payable by BuatanMalaysia Sdn Bhd to the customs authorities?
    A   Within 14 days after the expiry of the taxable period
    B   At the end of the taxable period
    C   At the end of the financial year
    D   Within 28 days after the expiry of the taxable period

                                                                                                            (20 marks)




                                                           7                                                     [P.T.O.
Section B – ALL FOUR questions are compulsory and MUST be attempted

1   Mr Ordinary is a plant manager of a manufacturing company. Throughout the year 2009, Mr Ordinary was provided
    with the free use of a six-year-old car that cost RM120,000 when new. No fuel was provided. Mr Ordinary’s employer
    also provided him and his family with two leave passages to Langkawi and Kuching respectively in 2009. The leave
    passages cost a total of RM3,800.
    In addition to her employment income, Mrs Ordinary received rental income from a real property she owned.
    Details regarding the income and expenditure of Mr and Mrs Ordinary for the year ended 31 December 2009 are
    expected to be as follows:
                                                                             Mr Ordinary         Mrs Ordinary
                                                                                 RM                  RM
    Income
    Salary                                                                      87,500              52,000
    Interest on fixed deposits in a Malaysian bank                                3,000                   –
    Single-tier dividend from a Malaysian company                                1,880                   –
    Foreign dividend remitted to Malaysia                                          500                   –
    Rental income received                                                                          12,000
    Expenditure
    Deposit into the National Education Savings Scheme                           5,000               2,800
    Contributions to the Employees Provident Fund                                9,625               5,720
    Education insurance premium                                                  5,000                   –
    Medical insurance premium                                                        –               1,870
    Books and magazines                                                              –                 610
    Personal computer for home use                                                   –               3,490
    Cash donation to the school building fund (approved)                         1,000                   –
    Rental property expenses:
         Quit rent and assessment rates                                                                600
         Mortgage payments (including mortgage interest of RM8,400)                                  9,600
         Extension of kitchen                                                                        5,000
    The personal computer replaced the old computer that Mrs Ordinary had bought four years ago for their children. The
    old computer, worth about RM300, was donated to the school library by Mrs Ordinary.
    Mr Ordinary claims the child relief in respect of their two children, who both attend the neighbourhood primary
    school.

    Required:
    Assuming that Mrs Ordinary does not elect for joint assessment, compute the chargeable income and the income
    tax payable for the year of assessment 2009 by:
    (a) Mr Ordinary; and                                                                                      (14 marks)

    (b) Mrs Ordinary.                                                                                         (13 marks)
    Notes:
    (1) 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.
    (2) Marks will be awarded for the use of accurate technical terms to describe the figures comprising the stages in
        the computation of chargeable income.

                                                                                                             (27 marks)




                                                           8
2   (a) JualBeli Sdn Bhd, a trading company, recorded movements in its fixed assets for the year ended 30 September
        2009 as follows:
                                              Qualifying plant       Residual                Disposal
                                               expenditure          expenditure               value
                                                    RM                  RM                     RM
        Fixed assets brought forward
        Motor car                                  90,000                18,000                  10,000
        Furniture and fittings                      12,000                 4,800           Not disposed of
        Air conditioning system                    50,000                19,000           Not disposed of
        Computers                                  36,000                    nil                   2,500
        Additions of fixed assets
        Packaging equipment                      240,000
        Delivery van                             110,000

        Required:
        In respect of JualBeli Sdn Bhd for the year of assessment 2009:
        (i)   Compute the capital allowances claimable in respect of the fixed assets brought forward from the year of
              assessment 2008 that have not been disposed of as at the end the year of assessment 2009;
                                                                                                           (3 marks)
        (ii) Compute the initial and annual allowances claimable in respect of the new assets acquired in the year of
             assessment 2009;                                                                              (5 marks)
        (iii) Compute the balancing allowance(s) or balancing charge(s) arising in respect of the fixed assets that have
              been disposed of in the year of assessment 2009.                                               (3 marks)

    (b) JualBeli Sdn Bhd closes its accounts annually to 30 September.

        Required:
        (i)   State, with reasons, the due date by which JualBeli Sdn Bhd must submit its tax return for the year of
              assessment 2009;                                                                            (3 marks)
        (ii) State, with reasons, the due date for payment of the balance of tax payable, if any, by JualBeli Sdn Bhd
             for the year of assessment 2009;                                                               (3 marks)

        (iii) State, with reasons, the due date for the submission of JualBeli Sdn Bhd’s estimated tax for the year of
              assessment 2010.                                                                              (3 marks)

                                                                                                            (20 marks)




                                                          9                                                     [P.T.O.
3   Biz-Savvy Sdn Bhd operates three businesses – a retail business which has been running for many years, a car park
    and, since January 2009, a restaurant.
    Biz-Savvy Sdn Bhd has been operating the car park for about two years. Gross takings in the first 17 months had
    been averaging RM10,000 a month. However, since June 2009, the average monthly turnover has increased to
    RM15,000.
    In January 2009, Biz-Savvy Sdn Bhd started a restaurant business. For the year ended 31 December 2009, the
    restaurant is expected to register a turnover of RM500,000.
    For the year ended 31 December 2009, Biz-Savvy Sdn Bhd expects the following results:
                                                                  RM          RM
    Car park business
    Adjusted income                                                        120,000
    Capital allowances – brought forward                         5,300
                       – current year                            6,700
    Retail business
    Adjusted income                                                         12,000
    Balancing charge                                            10,000
    Capital allowance                                               nil
    Restaurant business
    Adjusted loss                                                         (102,000)
    Interest
    Interest income from a loan given to another company                    12,800
    Biz-Savvy Sdn Bhd made a cash donation of RM12,500 to an approved organisation on 8 March 2009.
    There is an unabsorbed loss of RM26,800 from the car park business brought forward from the year of assessment
    2008.

    Required:
    (a) Compute the total income for Biz-Savvy Sdn Bhd for the year of assessment 2009.                  (12 marks)

    (b) State, with reasons, whether the service tax provisions are applicable at any time in 2009 to:
        (i)   the car park business; and/or                                                                (4 marks)
        (ii) the restaurant business.                                                                      (3 marks)

                                                                                                         (19 marks)




                                                           10
4   (a) The Inland Revenue Board conducted a tax audit of Ali’s tax returns for the past several years, all of which had
        been submitted on time.
        On 1 December 2009, the Inland Revenue Board issued two assessments on Ali: an original assessment for
        the year of assessment 2002 based on Ali’s tax return, and an additional assessment for the year of assessment
        2007.
        Ali thinks that the original assessment is out of time while the additional assessment is excessive.

        Required:
        (i)   With reference to the assessment for the year of assessment 2002 on Ali, explain the provisions relating
              to the statutory time limit for making assessments in the Income Tax Act;                    (5 marks)
        (ii) Explain, in relation to Ali, the requirements of valid appeals against the two assessments made on him by
             the Inland Revenue Board.                                                                       (4 marks)

    (b) Born and bred in Malaysia, Ah Beng never left Malaysia until 1 February 2006 when he went overseas for tertiary
        education.
        While undertaking his education overseas, Ah Beng only stayed two months (December and January) each year
        in Malaysia.
        On 1 December 2009, Ah Beng returned to Malaysia and he intends to be based in Malaysia henceforth.

        Required:
        Determine Ah Beng’s residence status for each of the four years of assessment 2006 to 2009 inclusive.
                                                                                                        (5 marks)

                                                                                                               (14 marks)




                                                 End of Question Paper




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