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QUESTION 1 [20 marks]

Encik Muzafar was domiciled in Malaysia and also a resident in Malaysia during year 2015. The
following information is in respect of the income of Encik Muzafar for the year ended 31
December 2015.

Business 1 (year ended 31.5.15)


Adjusted loss RM70,000
Balancing charge RM25,000
Capital allowance RM30,000

Business 2 (year ended 31.12.15)


Adjusted Income RM380,000
Capital allowance RM90,000
Balancing allowance RM30,000
Balancing charge RM55,000
Unabsorbed capital allowance from basis year 2014 RM22,000
Unabsorbed adjusted loss from basis year 2014 RM53,000

Dividend – received from a Malaysia company on


10 September 2015 RM10,000

Interest received from Lembaga Tabung Haji account


on 31 Mac 2015 RM44,000

Adjusted rental income received from a condominium


in Kelana Jaya, Selangor RM90,000

Advance rental income for Jan 2016 received on 20


December 2015 RM7,500

Royalty for the translation received from the Ministry of


Higher Education on 15 August 2015 RM34,000

On 31 May 2015, Encik Muzafar died at the Pantai Medical Centre owing to a serious heart
problem. Since he was not married, his sister, Puan Zarina was appointed as the executor of his
estate.

Puan Zarina is a non resident in Malaysia in the year of assessment 2015. She is paid RM400 per
month for her services as the administration of the estate. Puan Marlia, Encik Muzafar’s mother, is
paid an annuity of RM5,200 per month out of the income of the estate.
ATXB 333 Semester 1 2016/2017

Required:

a) Compute the chargeable income of Encik Muzafar and of the estate of Encik Muzafar for the
year of assessment 2015.
[14 marks]

b) Compute the tax payable of Encik Muzafar and of the estate of Encik Muzafar for the year of
assessment 2015.
[3 marks]

c) Identify the changes to your answer in (a) above, if the decease person (Encik Kamal) was not
domiciled but resident in Malaysia for tax purposes. [Computation is not required]
[3 marks]

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ATXB 333 Semester 1 2016/2017

QUESTION 2 [20 marks]

A resident trust body, MHH Trust was established in 2010. The beneficiaries, namely Rahman,
Rafidah, Rizal and Azura are all Malaysian. The following are the information regarding the
income of the trust body for year ended 31 December 2015.

Business income (Malaysia)


Gross income RM420,000
Capital expenditure RM50,000
Balancing allowance RM25,000
Capital allowances RM45,000

Dividend income (Malaysia)


Paid on 1 July 2015 (gross) RM25,000

Interest income (from fixed deposits in Singapore)


Remitted into Malaysia on 15 March 2015 RM32,000

Rental income
Adjusted income (Malaysia) RM90,000
Non-Malaysian income (remitted into Malaysia
on 2 September 2015) RM30,000

Additional information:
1) Renovation expenses incurred after the receipt of Malaysian rental income is RM20,000.
2) The trust body donated RM34,000 in YA 2015 to an approved institution.
3) A sum of RM100,000 was distributed to Yusof (brother) for the year ended 31 December
2015.
4) The following terms are stated in the will:
i) A sum of RM5,000 per month as annuity to be paid to Faridah (wife).
ii) Azura, a minor beneficiary, is attributable for an accumulation of RM45,000 from
the trust income each year until she attained the age of 23 years or married,
whichever is the earlier.
iii) Rahman is entitled to have 1/4 of the distributable income (non-discretionary) and
received a distribution of RM240,000 from trust body for the year ended 2015.
iv) Rafidah and Rizal are to be paid such sums as the trustees deem fit (discretionary)
and received a distribution of RM140,000 and RM120,000 respectively from trust
body for the year ended 2015.

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ATXB 333 Semester 1 2016/2017

Required:

a) Compute total income of the trust body for the year of assessment 2015.
[6 marks]

b) Compute the distributable income of trust body for the year of assessment 2015.
[5 marks]

c) Compute the statutory income for each beneficiary for the year of assessment 2015.
[5 marks]

d) Explain any TWO (2) categories the types of trust.


[4 marks]

- END OF QUESTION PAPER –

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ATXB 333 Semester 1 2016/2017

QUESTION 1 [20 marks]

d) Compute the chargeable income of Encik Muzafar and of the estate of Encik Muzafar for the
year of assessment 2015.

En. Muzafar Pn. Zarina


1 Jan – 31 May 1 June – 31 Dec
RM RM
Business 1 (31/5/215)
Adjusted loss Nil
(-) CA (25,000)
(+) BC 25,0000
SI Nil Nil

Business 2 (31/12/15)
Adjusted income 380,000
(-) CA (90,000)
(-)unabsorbed CA (22,000)
(-) BA (30,000)
(+) BC 55,000
SI 293,000
(-) unabsorbed adjusted loss (53,000)
Net SI 240,000
*240,000 x 5/12 100,000of
*240,000 x 7/12 140,000of

Dividend Exempted Exempted


Interest Exempted -

Adjusted rental
*90,000 x 5/12 37,500
*90,000 x 7/12 52,500
Advanced rental 7,500

Royalty (34,000 – 12,000) 22,000

Aggregate income 137,500 222,000


(-) Current year loss *70,000 x 5/12 (29,167) -
(-) Annuity payable *5,200 x 12 (62,400)
(-) Administration fees -
(-) Approved donation - -
Total income 108,333 159,600
(-) Personal relief (9,000) (9,000)
Chargeable income 99,333 150,600

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ATXB 333 Semester 1 2016/2017

e) Compute the tax payable of Encik Muzafar and of the estate of Encik Muzafar for the year of
assessment 2015.
En. Muzafar Pn. Zarina
RM RM
CI 99,333 150,600
Tax payable:
On the first RM 70,000 5,600
On the next RM 29,333 x 21% 6,160
11,759.93 of

On the first RM 150,000 23,900


On the next RM 600 x 24% 144
24,044 of

f) Identify the changes to your answer in (a) above, if the decease person (Encik Kamal) was not
domiciled but resident in Malaysia for tax purposes. [Computation is not required]

If the decease person was not domiciled but resident in Malaysia, the changes are:
 The deceased is entitled to the personal relief
 The executor will not entitled to the specialized relief of RM9,000. However, with
effect from YA 2009, a deduction of RM9,000 will be allowed to arrive at the
chargeable income, irrespective of the residence status of the executor
 If the deceased have the property physically in Malaysia

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ATXB 333 Semester 1 2016/2017

QUESTION 2 [20 marks]

e) Compute total income of the trust body for the year of assessment 2015.

RM RM
Business Income (Malaysia)
Gross income 420,000
(-) Capital expenditure Nil
Adjusted income 420,000
(-) CA (45,000)
(-) BA (25,000)
SI 350,000

Dividend income Exempted


Interest income Exempted

Rental income:
Malaysia 90,000
(-) Renovation expenses Nil
Adjusted income 90,000

Non Malaysia Exempted


Aggregate income 440,000
(-) annuity payable (RM5,000 x 12) (60,000)
(-) approved donation
RM34,000 v 10% of AI (34,000) of
Total Trust Income 346,000

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ATXB 333 Semester 1 2016/2017

f) Compute the distributable income of trust body for the year of assessment 2015.
RM RM
Business Income (Malaysia)
Gross income 420,000
(-) Capital expenditure (50,000)
Adjusted income 370,000
(-) CA (45,000)
(-) BA (25,000)
SI 300,000

Dividend income 25,000


Interest income 32,000

Rental income:
Malaysia 90,000
(-) Renovation expenses (20,000)
Adjusted income 70,000

Non Malaysia 30,000


Aggregate income 457,000
(-) annuity payable (RM5,000 x 12) (60,000)
(-) approved donation
RM34,000 v 10% of AI (34,000) of
Distribution income before 363,000
(-) Accumulation (45,000)
Net DI 318,000

g) Compute the statutory income for each beneficiary for the year of assessment 2015.
 Distribution income (D)
= RM 318,000 x 3/4
= RM 238,500
 Distribution income (ND)
= RM 318,000 x 1/4
= RM 79,500

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ATXB 333 Semester 1 2016/2017

Statutory Income Non-discretionary

RM346,000 x 79,500 / 363,000

= RM75,777 @ RM240,0000 of

Rahman RM 75,777

Discretionary

RM346,000 x 238,500 / 363,000

= RM227,330 @ RM 140K + 120Kof

Rafidah RM227,330 x 140,000 / 260,000

= RM 122,408

Rizal RM227,330 x 120,000 / 260,000

= RM 104,921

Azura Received accumulation trust RM45,000 , is capital income, therefore not


subjected to tax

Faridah Received annuity income, section 4(e), which is RM60,000

h) Explain any TWO (2) categories the types of trust.

The most common types of trusts are:

 Fixed trust
Under fixed trust, the beneficiary are entitled to a fixed share of the capital and or
income. The trust will spell out exactly the share of the capital and or income to
which the beneficiary are entitled to.

 Discretionary Trust
This trust gives the trustee some measure of discretion to act in administering the
trust. This flexibility is useful and therefore this is a very popular form of trust. The
discretion could apply to the income, capital or the both.

 Unit Trust
This type of trust is more of an investment business which distribute proceeds only to
those who subscribe to the trust in defined shares. The beneficial interest is divided
into units and sold to unit holders as investment.

[4 marks]