QUESTION 1

Mr Elvis a non- resident died in Malaysia on 30 April 2018. He was domiciled at the time of
death. According to his will, Mr Cheah, a tax resident, was appointed as an executor of his
estate. Mr Cheah provides the income and expenditure of the estate of Mr Elvis for the
basis year 2018 as follows:
RM
Business income:
Trading Business
Adjusted income 360,000
Capital allowance 40,000
Unabsorbed capital allowance from the year of assessment 2017 60,000

Manufacturing Business
Adjusted loss 30,000
Balancing charge 16,000
Capital allowance 4,000

Rental Income (House in Shah Alam)

Gross income 60,300
Tax deductible expenses 15,000
Renovation expenses 22,000

Royalty
Received on 10 January 2018 for the publication of a literary book 30,100

Interest
Received from:
CIMB Bank , credited on 1 March 2018 5,000
Public Bank Bhd , credited on 11 August 2018 7,100

Dividend (gross)
Received from:
Profound Bhd - paid on 19 March 2018 5,000
Co-operative society in Malaysia - paid on 8 September 2018 7,000

Other income
Royalty income received from an American company, only
RM10,000 was remitted to Malaysia on 10 June 2018. 20,000

Expenditures incurred during the year of assessment 2018 are as follows:

i. Annuity of RM5,000 per month is to be paid to Mr Elvis’s wife (Shirley) by the executor.
Amount actually paid is RM30,000.

ii. The executor fees of RM30,000 is to be paid to Mr Cheah in December 2018.

iii. Cash donation of RM 2000 to an approved charitable institution on 10 April 2018.

iv. During the year 2018, Mr Cheah paid RM9,000 (not an annuity) to Mr Elvis’s only
daughter (Trisha). Thrisha is not married and studying at Universiti Malaya, Malaysia.

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Required:

a. Compute the income tax payable of Mr. Elvis and executor of his estate for the year of
assessment 2018.
(12 marks)

b. State the deadline for the Inland Revenue Board to raise assessment on the deceased’s
income if his executor informed the Inland Revenue Board of the death on 5.2. 2019.
(3 marks)
(Total: 15 marks)

QUESTION 2

Encik Daud died on 31 August 2018. A trust, resident in Malaysia was created under the
terms of his will. His wife, Puan Raihana and four children are the beneficiaries of the trust
income. Information pertaining to the trust is as follows:

i. Puan Raihana is to receive annuity of RM18,000 per annum. However, for the year of
assessment 2018, she only received RM10,000.

ii Encik Daud’s first child, is the sole beneficiary of the non-discretionary portion from
the distributable income of the trust. [One third (1/3) of the trust money was used for
this purpose]

iii. The second and the third child are to be paid such sums as the trustees think fit out
of the discretionary portion.

iv. RM10,000 per annum is to be accumulated for the fourth child until she attains the
age of twenty one.

The income and expenditure of the trust body for the year ended 31 December 2018 is as
follows:
RM
Adjusted income from business (Malaysia) 95,000
Balancing Charge 5,000
Capital Allowance 19,000
Balancing Allowance 2,000
Rental (Thailand) - only RM40,000 remitted to Malaysia 56,000
Dividend (Malaysia) - credited on 1 March 2018 (single tier system) 10,000
Interest income (Malaysia) 37,000
Trustee’s fees 10,000
Donations to approved institutions 8,000

Additional information:

In 2018, the beneficiaries received the following sums from the trust:

Amount received in Malaysia

RM
First child 30,000
Second child 28,000
Third child 29,000

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All beneficiaries are resident in Malaysia except for the second child who is working
overseas.

Required:

For the year of assessment 2018,

a. Calculate the income tax payable by the trust body if Section 61(2) is not to be
applied.
(6 marks)

b. Calculate the ordinary source for the first, second and third child.
(Round up to the nearest ringgit)
(4 marks)

c. With respect to the first and the second child:

- Calculate the chargeable income;
- State the type of tax rate applicable to them.
(3 marks)

d. State two circumstances under which a trust body will become a non-resident in
Malaysia.
(2 marks)
(Total: 15 marks)

QUESTION 3

RQ Tour Sdn Bhd was incorporated in Mac 2018 to carry on a tour operating business. The
company is keen to have both foreign and local tourist as its client and has obtained a
licence under the Tourism Industry Act 1992 to carry out such activities.

Required:

a) Advise RQ Tour Sdn Bhd on the tax incentives available to the company.
b) State the conditions applicable for the above incentives..
( 5 MARKS)

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