07-09 - T AX MIA QE SEPT 2007 ANSWER 1(a Computation of Tax...

TAX MIA QE / SEPT 2007
1 CONFIDENTIAL
ANSWER 1
(a)
Computation of Tax Payable
Orio Sdn. Bhd – YA 2007
Sec. 4a:
RM RM
+ -
Profit before taxation
Adjustments: 638,510
Sale of furniture 48,000
Dividend - Malaysia 146,000
Hong Kong 26,000
Interest - Fixed 29,500
Singapore 10,500
Compensation NIL
EPF 253,720 – (19% x 932,000) 76,640
Salary – handicapped (1,900 x 7 x 2) double
deduction
26,600
Leave passage 20,000
Export credit (double deduction) 27,800
Insurance premium (double deduction) 21,200
Interest on loan 26,400
Research (double deduction) 35,000
Bad debts – specific prov. Nil
general prov. (5,200)
write off 23,200 18,000
Entertainment:
- overseas (50% x 44,950) 22,475
- staff annual dinner NIL
- local customers (50% x 28,600) 14,300
Donation - Old folks home 22,340
Computers 24,000
Entrance fees - association 2,700
Entrance fees 8,000
Public library (restricted to RM
100,000)
70,000
National Interest project 80,000
Professional fees
- new tenancy 13,900
- violation of Co. Act provision 14,000
- tax appeal 12,100
- accountancy and audit fees NIL
Miscellaneous fees NIL
Depreciation 85,000
Proposed dividend 124,600
Goodwill written off 26,500
1,299,465 370,600
(370,600)
Adjusted income 928,865

TAX MIA QE / SEPT 2007
2 CONFIDENTIAL
(+) Balancing Charge 12,040
(-) Capital allowance (110,000)
Statutory income 679,805
(-) Loss b/f sec 43(2) (80,000)
750,905
(+) Other income
Dividend (146,000 x 100) - 26400 173,600
73
Exempt dividend Nil
Interest from fixed deposit 29,500
Interest – Singapore (exempt) Nil
Aggregate income 954,005
(-) Approved donation
(Subject to 7% of Aggregate Income)
= 66,708
Cash donation = 22,340
National Interest RM80,000
restricted to:
[66,708 – 22,340] = 44,440 (66,708)
In kind (not allowable) NIL
Chargeable Income 887,298
Tax on the 1
st
500,000 @ 20% = RM100,000
Tax on the balance 387,277 @ 27% = 104,570
204,570
(-) Tax Credit – Sec 110
(27% x 200,000)
(54,000)
Tax Payable 150,570
(20 marks)
Working
YA 2005 (year ended 30/9/05) RM
10/4/05 QPE (furniture)
30,100
IA 20%
(6,020)
CA
AA 10%
(3,010)
9,030
RE 21,070
CA YA 2006 (year ended 30/9/06)
AA 20%
(3,010)
3,010
RE
18,060
YA 2007 (year ended 30/9/07)

TAX MIA QE / SEPT 2007
3 CONFIDENTIAL
15/4/07 Sale Proceeds
(48,000)
Balancing charge 29,940
(Note : Balancing charge is restricted to total capital allowances claimed that is RM12,040).
(b)
Wira Sdn Bhd
Processing Machine
YA 2004 (year ended 30/9/04) RM
QPE (20/3/2003)
400,000
IA 20% (80,000) CA
AA 14% (56,000) 136,00
0
RE
264,000
CA YA 2005 (year ended 30/9/05)
AA 14%
56,000)
56,000
RE
208,000
YA 2006 (year ended 30/9/06)
22/4/06 sold to ERA
(208,000)
(Ignore Sale Value because there is a controlled transfer)
Balancing Adjustment NIL
Serah Sdn Bhd
YA 2006 (year ended 30/9/06) RM
RE
208,000
IA NIL CA
AA (14% x 400,000) (56,000) 56,000
RE 152,000
YA 2007 (year ended 30/9/07)
July 2007 S. Proceed
(600,000)
Balancing charge
448,000
Taxable balancing charge is restricted to total capital allowance
claimed i.e. RM248,000

TAX MIA QE / SEPT 2007
4 CONFIDENTIAL
Ikmal Sdn Bhd
YA 2007 (year ended 30/9/07) RM
QPE
600,000
IA 20% (120,000)
AA 14%
(84,000)
RE
396,000
(5 marks)
(Total: 25 marks)
ANSWER 2
Completion of Income Tax Payable
Puan Maria and En. Adib YA 2006
Encik Adib RM RM
Sec 4b: Employment
Sec 13(1)(a): Salary (8,500 x 12)
102,000
Director’s Fees 4,000
Entertainment Allowance (1200 x 12)
14,400 120,400
Sec 13(1)(b): Benefit In Kind
Car (7000 ÷ 2) 3,500
Fuel 1,800
Driver (600 x 12) 7,200
Leave passage: