CONFIDENTIAL 1 AC/JULY 2020/TAX 467/SET 1/SESSION 2

UNIVERSITI TEKNOLOGI MARA

FINAL ASSESSMENT

COURSE : TAXATION 1
COURSE CODE : TAX 467
EXAMINATION : JULY 2020
SET : SET 1
SESSION : SESSION 2
TIME : 2 HOURS

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

i. the Question Paper

ii. A four-page Appendix 1

4 Answer ALL questions in English

This examination paper consists of 6 printed pages

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 CONFIDENTIAL 2 AC/JULY 2020/TAX 467/SET 1/SESSION 2

QUESTION 3

Julia owns Crystal Gift Enterprise, a business that produces various types of crystal
souvenirs for tourists. The following is the Statement of Profit or Loss of her business for the
year ended 31 December 2019.

Notes RM RM
Sales 2,900,500
Less: Cost of sales
Opening stock of finished goods 745,200
Production cost 1 1,500,500
2,245,700
Closing stock of finished goods 2 (528,200) (1,717,500)
Gross profit 1,183,000

Add: Other incomes 3 170,000

1,353,000
Less: Expenses
Entertainment 4 37,700
Loss on disposal of Motor vehicle 5 7,100
Remuneration 6 441,700
Bad debts 7 21,000
Legal and professional fees 8 29,000
Lease rental 9 42,000
Utilities expenses 10 26,300
General expenses 11 115,000
Donations 12 77,700
Other expenses 13 14,200
(811,700)
Profit before tax 541,300

Notes:

1. Production cost consist of:

RM
Insurance premium paid to Fateh Sdn Bhd, a Malaysian insurance
company for insuring raw materials imported from Thailand 25,800
Depreciation of manufacturing equipment 62,000

2. Closing stock includes the deduction of provision for stock obsolescence written off
RM18,000

3. Other incomes consist of:

RM
Dividend from RS Sdn Bhd (single tier) 36,000
Interest on fixed deposit from Vietnam (foreign income) 90,000
Rental of a warehouse in Bangi 44,000
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4. Entertainment consist of:

RM
Cost of food and drinks at annual dinner for staff 15,500
Free gifts for customers who purchase more than RM100 12,200
Lunch with suppliers 10,000
37,700

5. The motor vehicle was a delivery van used for the business.

6. Remuneration consist of:

RM
Salaries (Note 1) 252,800
Bonus 78,200
Overtime 22,500
EPF (Note 2) 88,200
441,700

Note 1: Salaries includes:

RM24,000 paid to a disabled employee
RM60,000 paid to Julia
Remainder amount was paid to general employees

Note 2: EPF includes:

RM7,000 paid to Julia
Remainder amount was paid to general employees

7. Bad debts consist of:

RM
Specific provision 12,300
Trade bad debts written off 8,700
21,000

8. Legal and professional fees consist of:

RM
Legal fees for registration of new trademark 10,000
Annual subscription to Persatuan Peniaga Melayu Selangor 3,000
Accounting fees 12,500
Cost of filing tax return 3,500
29,000

9. Lease rental:
The leasing payment commenced on 1 January 2015 at RM2,000 per month in respect
of a car leased by the company. The cost of the car was RM98,000.

10. 20% of the utilities expenses were for personal use.

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11. General expenses consist of:

RM
Initial repairs on purchase of a used machine 58,000
Vehicle maintenance and fuel 57,000
115,000

12. Donations consist of:

RM
Contribution to Johor State Library (The business elected S44(8)) 26,000
Donations of five (5) computers to National Library (The business
elected S34(6)(g)) 17,500
Business zakat 34,200
77,700

13. Other expenses consist of:

RM
Speeding summons 2,000
Loan to ex-employee written off 5,500
Purchases of small assets 6,700
14,200

Additional information:

The balancing allowance and capital allowance claimed for the year of assessment 2019 are
RM25,800 and RM48,200 respectively.

Required:

a. List THREE (3) requirements for bad debts written off to be allowed as a deduction.

(3 marks)

b. Commencing with profit before tax, calculate the statutory business income of Julia for
the year of assessment 2019.

Note: You should indicate by the word ‘nil’ for any item referred to in the question which no
adjusting entry needs to be made in the computation.
(17 marks)
(Total: 20 marks)

QUESTION 4

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 CONFIDENTIAL 5 AC/JULY 2020/TAX 467/SET 1/SESSION 2

Farish and his wife Mariam, aged 48 years old and 43 years old respectively, are tax
residents for the year of assessment 2019. Below are the details of their incomes and
expenditures for the year of assessment 2019.

Farish

 Farish runs a business in Mersing since 2015. The adjusted business income was
RM107,000 and a business loss from year of assessment 2018 was RM10,000. During
the year, he disposed an asset resulting in a balancing allowance of RM3,100. The
capital allowance claims for year of assessment 2019 and 2018 were RM11,000 and
RM6,200 respectively.

 Farish received dividend of RM5,900 from Lembaga Tabung Haji and RM1,500 hibah
from Bank Islam.

 He resigned from his previous job in Cempaka Sdn Bhd and received a gratuity payment
of RM120,000. He has been working with the company for 20 years.

 Farish has a house in Senai, Johor. It has been rented out since June 2018. The monthly
rental income is RM1,400. During the year of assessment 2019, Farish incurred the
following expenses:
RM
Quit rent per annum 1,400
Interest on loan per month 250
Installation of air conditioner 3,300
Repair and maintenance 700

 In September 2019, he received RM3,000 as a commission from his neighbor, Liza for
securing buyer for her house.

Mariam

 Mariam is employed by DDB Sdn Bhd as an operation manager with a net monthly
salary of RM7,680 after deducting EPF of 11% and personal loan of RM1,220.

 Mariam received royalty of RM20,000 during the year of assessment 2019 for translation
of books requested by the Ministry of Higher Education.

Additional information:

1. Farish spent RM5,500 on her mother in law medical expenses. He also spent RM1,500
to purchase a wheelchair for his disabled mother who has been certified by Social
Welfare department. He took care of his mother since he is the only child in the family.

2. Farish paid life insurance premium of RM2,400 for him and medical insurance premium
of RM3,200 for his daughters - Qalisya and Qaseh.
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3. Both Farish and Mariam paid zakat amounting to RM7,000 and RM3,100 respectively
during the year.

4. Mariam made a deposit of SSPN amounting to RM300 per month for Qalisya.

5. Farish had spent RM1,500 on reading materials and RM100 per month for internet
subscription.

6. Mariam purchased a smartphone for RM2,750 during the year.

7. Farish donated RM13,300 in cash to approved organization and Mariam donated

RM1,300 in kind to public libraries.

8. Mariam pursued her studies in Master in Business Administration in UKM and paid
RM7,200 for her educational fees.

9. Mariam took care of her parents and elected for parental relief.

10. The couple were blessed with four children:

Harris - 24 years old, adopted (divorcee) and studying full time in UiTM.
Qayyum - 23 years old, studying full time in UUM.
Qalisya - 16 years old studying in MRSM Muar, Johor.
Qaseh - 5 years, adopted and disabled.

Note: Farish has elected for the child relief.

Required:

a. Calculate the income tax payable of Farish and Mariam for the year of assessment
2019.
(22 marks)
b. Explain briefly the eligibility for any relief on the fees if Mariam pursued her studies in
Bachelor of Arts degree at a local private college.
(3 marks)
(Total: 25 marks)

END OF QUESTION PAPER

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