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Certied Accounting Technician Examination Advanced Level

Preparing Taxation Computations (Malaysia)


Tuesday 15 December 2009

Time allowed Reading and planning: Writing:

15 minutes 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 24. 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 Certied Accountants

Paper T9 (MYS)

SUPPLEMENTARY INSTRUCTIONS 1. 2. 3. Calculations and workings should be made to the nearest RM. All apportionments should be made to the nearest whole month. 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 First Next Next Next Next Next Next Exceeding Resident company Paid up ordinary share capital RM2,500,000 or less More than RM2,500,000 Non-resident Company Individual First RM500,000 20% 25% Excess over RM500,000 25% 25% 25% 27% RM 2,500 2,500 15,000 15,000 15,000 20,000 30,000 100,000 (0 2,500) (2,501 5,000) (5,001 20,000) (20,001 35,000) (35,001 50,000) (50,001 70,000) (70,001 100,000) Rate % 0 1 3 7 12 19 24 27 Cumulative tax RM 0 25 475 1,525 3,325 7,125 14,325

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

(maximum) (maximum) (maximum) (maximum) (maximum) (maximum)

(each) (each) (each) (maximum) (maximum) (maximum) (maximum)

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

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

The value of the car benet equal to half the prescribed annual value (above) is taken if the car provided is more than ve (5) years old. Where a driver is provided by the employer, the value of the benet per month is xed at RM600.

[P.T.O.

Other benets RM per month Household furnishings, apparatus and appliances Semi-furnished with furniture in the lounge, dining room, or bedroom Semi-furnished with furniture as above plus air-conditioners and/or curtains and carpets Fully furnished premises Domestic help Gardener 70 140 280 400 300

Capital allowances Initial allowance (IA) Rate % 10 20 20 20 Annual allowance (AA) Rate % 3 14 20 10

Industrial buildings Plant and machinery general Motor vehicles and heavy machinery Ofce equipment, furniture and ttings

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

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 B C D 1 January 2009 to 31 December 2009 1 July 2008 to 30 June 2009 1 July 2008 to 31 December 2009 None of the above

An employment can ONLY arise where the relationship of master and servant subsists. The above statement is: A B C D True False True if the employer is a company True if the employer is a non-resident

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 RM18 million but will have collected only RM15 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 B C D RM2 million RM18 million RM15 million nil

Careless Sdn Bhd (nancial 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 B C D Annual allowance Initial allowance Balancing charge Balancing allowance

[P.T.O.

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 B C D RM10,000 RM5,000 RM1,000 nil

The computation of chargeable income for John for the year of assessment 2009 is as follows: RM Total income Less: Personal relief Wife relief EPF and life insurance Course fee Medical expense for parent Chargeable income RM 60,000

8,000 3,000 6,000 5,000 5,000

(27,000) 33,000

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

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 prots 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 B C D Sole proprietors Shareholders Partners Directors

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 B C D RM5,100 RM6,000 RM8,500 RM10,000

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 xed rate? A B C D Remuneration paid to the companys non-resident employee from India Technical fee to the US company for sending its engineer to Malaysia for 10 days to render the service Both the remuneration and the technical fee 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 B C D Within 14 days after the expiry of the taxable period At the end of the taxable period At the end of the nancial year Within 28 days after the expiry of the taxable period (20 marks)

[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 Ordinarys 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 RM Income Salary Interest on xed deposits in a Malaysian bank Single-tier dividend from a Malaysian company Foreign dividend remitted to Malaysia Rental income received Expenditure Deposit into the National Education Savings Scheme Contributions to the Employees Provident Fund Education insurance premium Medical insurance premium Books and magazines Personal computer for home use Cash donation to the school building fund (approved) Rental property expenses: Quit rent and assessment rates Mortgage payments (including mortgage interest of RM8,400) Extension of kitchen 87,500 3,000 1,880 500 Mrs Ordinary RM 52,000 12,000 2,800 5,720 1,870 610 3,490 600 9,600 5,000

5,000 9,625 5,000 1,000

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 (b) Mrs Ordinary. 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 gures comprising the stages in the computation of chargeable income. (27 marks) (14 marks) (13 marks)

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

(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 xed 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 Bhds estimated tax for the year of assessment 2010. (3 marks) (20 marks)

[P.T.O.

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 rst 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 Car park business Adjusted income Capital allowances brought forward current year Retail business Adjusted income Balancing charge Capital allowance Restaurant business Adjusted loss Interest Interest income from a loan given to another company RM 120,000 5,300 6,700 12,000 10,000 nil (102,000) 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. (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) (3 marks) (19 marks) (12 marks)

(ii) the restaurant business.

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(a) The Inland Revenue Board conducted a tax audit of Alis 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 Alis 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 Bengs 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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