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04-03 - Taxation TAXATION SUGGESTED SOLUTION 1(a Net profit...

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Taxation TAXATION SUGGESTED SOLUTION 1 (a) Freeze Fast Sdn. Bhd., Computation of Tax Payable for YA 2003 + - RM RM Net profit before tax 2,233,320 less: other income: Dividend 15,120 Interest NIL add: Expenses not allowed: Salary NIL Bonus NIL Professional fees: Protection of co’s trade mark NIL Trade debt recovery NIL New lease 13,000 Issue of shares 9,000 Secretarial fees NIL Tax filing fees NIL Accounting fees NIL Consultancy fees 25,000 Miscellaneous expenses: Sub. to trade association - entrance 2,000 - annual NIL O’seas holiday 6,000 Donation 18,000 Theft by sales manager 10,000 Entertainment: Kongsi-raya 15,000 Corporate membership - entrance 120,000 - monthly NIL Miscellaneous expenses: Depreciation 80,000 Gain on sale of van 15,000 Fine 4,000 Lease rental - Toyota 40,000 - Perdana 2,000 EPF - (2% x 360,000) 7,200 Provision for bad debts - w/off 5,000 - general provision 60,000 - recovered 12,000 Training and research 27,000 1
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Taxation Repairs and maintenance - landscaping 20,000 - repairs NIL - renovation 43,000 Insurance - factory NIL - importation 13,000 Advertising NIL Compensation NIL _________ 2,712,520 82,120 (82,120) Adjusted income 2,630,400 Less: Cap. All- C/Y 60,000 B/F 15,000 (75,000) Statutory income 2,555,400 Less: Loss B/F (23,000) _________ 2,532,400 Add: Other income Dividend (15,120 x 100 ) 21,000 72 Aggregate income 2,553,400 Less: Approved donation (subject to 5% of aggregate, if applicable) (18,000) Total/chargeable income 2,535,400 Tax @28% on 2,535,400 = RM709,912 Less: Tax credit (28% x 21,000) = 5,880 Tax Payable RM704,032 2
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Taxation 1 (b) (i) The following conditions must be fulfilled: o he must be carrying on a business o he must incur qualifying expenditure on the asset o the qualifying asset must be in use for the purposes of his business at the end of the relevant basis period, and o he must be the owner of the asset at the end of the relevant basis period. 1 (b) (ii) Melati Sdn. Bhd. is entitled to claim both the initial and annual allowance since it is the owner of the building and used the building in the business. IA 10% is claimed in YA 1998 and AA 2% is claimed through out the leasing period, but with effect from YA 2002 is 3%. Mawar Sdn. Bhd . is entitled to claim annual allowance upon the expiration of the lease in 2003. Only AA at the rate of 3% or permitted fraction (1/45) whichever is higher, will be given. 1 (b) (iii) Processing Machine YA 03 : Cost of machine RM262,000 Site preparation 22,000 Aggregate cost RM284,000 10% x 284,000 = RM28,400 Since the cost of site preparation is not more that 10% of the aggregate cost, thus qualifying plant expenditure is RM284,000 IA 20% (56,800) AA 14% (39,760) RE RM187,440 3
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Taxation 2 (a) Tax Computation for Mr. Albert YA 2003 Sec. 4b : Employment RM RM Government: Salary 15,000 Gratuity exempt 15,000 Clear Sdn. Bhd.: Sec. 13(1)(a): Salary (10,000 x 7) 70,000 Sec. 13(1)(b): Car (7,000 x 4/12) 2,333
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