UNIVERSITI TEKNOLOGI MARA

COMMON TEST 2

COURSE : TAXATION 1
COURSE CODE : TAX267
DATE : MARCH 2017
TIME : 1 HOUR AND 30 MINUTES

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of two (2) questions.

2. Answer ALL questions in the Answer Booklet. Start each answer on a new page.

3. Do not bring any material into the examination room unless permission is given by
the invigilator.

4. Please check to make sure that this examination pack consists of :

i) the Question Paper

ii) Appendix 1
iii) an Answer Booklet – provided by the Faculty

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

This examination paper consists of 6 printed pages

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CONFIDENTIAL 2 AC/MAR 2017/TAX267

QUESTION 1

A. Briefly explain any three conditions for the eligibility of course for self-improvement relief.
(3 marks)

B. Hanif (resident) had three wives, Maimun, Laila and Anis (residents) since the basis
year 1986. However, Hanif divorced the Maimun and Laila in January 2016 and married
Krisdayanti (non-resident) in December 2017. In the previous years, Krisdayanti resided
in US and just arrived in Malaysia on 22 November 2017. Now, all of them resided in
Kuala Lumpur. For the basis year 2017, they earned multiple sources of income as
follows:

Hanif

1. Hanif had two types of business; an audit firm and a restaurant. His earnings were as
follows:

Audit firm Restaurant

(RM) (RM)
Adjusted business income/(Loss) 42,000 (12,000)
Unabsorbed capital allowance b/f 1,000 -
Capital allowance for the current year 12,000 10,000
Balancing allowance - 5,500
Balancing charge - 15,000
Unabsorbed loss b/f - 30,000

2. Hanif also received rental income from renting out a piece of land in Selangor. He rented
out the land since 1 March 2017. Below are the income and expenses that he received
during the year.

RM
Monthly rental 2,500
Advance rental 5,000
Non-refundable deposit 5,000
Advertisement cost (1st tenant) 3,300
Legal fees to sign rental agreement 2,000
Upkeep of land (incurred in January – February 2017) 1,500
Annual interest on loan 6,000

3. Since 2015, Hanif joined the cultural performance club in Bangsar. During the year, his
group has made 10 cultural performances in Malaysia and also a few Asian countries
and received RM250,000. All the performances was approved by Ministry of Tourism
except for performance in Thailand (received payment of RM25,000).

4. Hanif was instructed by the family court to pay monthly alimony to his ex-wife, Maimun
and Laila amounted RM400 and RM250 per month respectively since June 2016.
Anis

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1. Anis is a research assistant of ISO Research Centre situated in Selangor and she
earned an income of RM5,340 per month after the deduction of EPF. She has been
working there since the past four years.

2. One of her researches had been commercialized and verified by the Minister of Science,
Technology and Environment in the basis year 2017. For the current basis year, statutory
income for the commercialization of the scientific research was RM50,000.

3. In December 2016, Anis involved in a tragic road accident and became permanently
disabled. Since then, she received a deferred annuity of RM2,500 per month.

Krisdayanti

1. Krisdayanti was married to a Malaysian famous artist, Rosham Noor previously.

However, the couple divorced in October 2016 due excessive scandal caused by
Rosham and he was required to pay her an alimony of RM120,000 in May 2017.

2. Krisdayanti received monthly rental income of RM12,000 from renting her house terrace
house in US since December 2016.

3. She received dividend from her investment in company in United State amounted to
RM34,000.

4. During the year, Krisdayanti managed to sold 2 pieces of her paintings and earned
RM50,000.

Additional information

Hanif

1. Hanif and Anis were blesses with 5 children

Adam, 25 years old Working as an architect, single

Mia, 23 years old Married, studying full time UNIMAS, working part time as a
cashier at Tesco and earned RM600 per month.
Farish, 18 Studying at Matriculation in Perak
Intan, 17 years old Currently pursuing her Degree at UIAM (Fast track student)
Damia, 15 years old Schooling at Sek Men Keb Selangor, Handicapped

P/s:
Anis claimed child relief on Intan & Damia

2. Hanif paid RM2,400 for dental treatment for scaling and cleaning for his father.

3. He paid the medical treatment for his mother who was hospitalized in Hospital in
Singapore due to serious hearing problems amounted to RM15,000 and immediately
purchased hearing aids for his mother amounted RM3,500.

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4. He purchased spectacles for his daughther, Intan amounted to RM1,200.

5. He bought an Iphone 8 plus for Krisdayanti amounted to RM4,000

6. He purchased 2 set of swimming suits for Intan and Damia amounted to RM300.

7. He donated RM21,000 cash to Library of Sekolah Menengah Kebangsaan Hitam.

8. He paid zakat amounted to RM3,000 during the year.

Anis

1. During the year, Anis deposited monthly fixed amount of RM500 into Damia’s SSPN
account. However in July 2017, she made a withdrawal of RM2,000 to purchased laptop
for Damia. The balance brought forward from YA 2016 was RM4,300.

2. Anis has parents aged 62 years old. During the year, she claimed parental care for both
of her parents. However, her older sister and her brother also want to claim the same
relief. Her mother stayed in her sister’s house in Australia since 2016.

3. She bought insurance premium on her life and Mia and paid of RM250 and RM150
respectively.

4. She made full medical check-up at Pantai Medical Centre and incurred RM700.

5. She contributed RM4,000 for private retirement scheme during the year.

6. She donated clothing and shoes to Persatuan Bulan Sabit Merah amounted to RM5,000

7. She made cash donation to Rumah Anak Yatim penyayang (Approved) amounted to
RM25,000.

Required:

Compute the income tax papayble for Hanif, Anis and Krisdayanti for the year of assessment
2017. Krisdayanti elected for joint assessment. (Round up to the nearest RM).

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CONFIDENTIAL 5 AC/MAR 2017/TAX267

QUESTION 2

Cempaka Sari (accounting year end 31 December) owned the following assets:

Honda Civic car

On 10 November 2014, the business bought the car at a cost of RM120,000. The car was
used for the non-commercial purpose which is for the use of manager. On 30 June 2016, the
car was sold at a price of RM90,000. The disposal has a commercial justification from the
Inland Revenue Board.

Facsimile machine

The facsimile machine costing RM1,200 was acquired on 28 January 2015.

Office equipment

On 3 July 2015, the business bought new office equipment on hire purchase on the following
terms:

Cash price : RM40,000

Deposit : RM5,000 (Paid on 3/7/2015)
No of Installment : 70 Months (Beginning 1/8/2015)
Usage : 20% for personal use

Required:

a) Compute the capital allowances, balancing charges or balancing allowances (if any) for
the above assets for all the relevant years of assessment up to year of assessment
2016.
(12 marks)

b) When the asset was disposed within two years of acquisition, the tax authorities would
‘clawback’ all capital allowances given by way of balancing charge in the year of disposal
unless the business can provide commercial justification. Give THREE (3) examples of
these commercial justification.
(3 marks)
(Total: 15 marks)

END OF QUESTION PAPER

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