Personal Taxation and Residence Status

201605 Taxation 1

Tutorial 5-7: Personal Taxation and Residence Status

Question 1

Mary owns a residential property in Damansara which she lets out at an annual rental of RM24,000. During the year 2015, she incurred the following expenses for the house:

Required:

Compute the adjusted income from rental source for Mary for the Year of Assessment 2015.

Question 2

Alex opted for cessation of employment under a Voluntary Separation Scheme (“VSS’) from LG Sdn Bhd on 31 December 2015 at the age of 49 after having been with the company since I July 1990. Details of his employment income for the year 2015 are as follows:

Salary         RM150,000.

Compensation under the VSS          RM300,000.  

Alex contributed to EPF at the rate of 11% of his salary. In addition, Alex received the following items of income for the basis year 2015:

        RM

1. Fixed deposit interest from RHB Bank of 12 months          3,500                                                                                          

(2)        Dividends from SIGI Sdn Bhd paid on 2 May 2015         37,000

(3)        Rental income         30,000

        Expenses:

(4)        Alex and Liza have two unmarried children. Liza is a full-time housewife.

• The first child (17 years old in 2015) studied Form 6 in Kolej Tunku Abdul Rahman. On 4 March 2015, he met with an accident and a leg was amputated. Alex bought a sophisticated artificial limb costing RM 9,000 for the child.  
• The second child (16 years old in 2015) studies in SMJK Kajang, Kuala Lumpur.

(5)        Alex purchased books amounting to RM 750 during 2015.

Required:

Compute the income tax payable of Alex for the year of assessment 2015.

Question 3

Mr. Tony Lim worked as an engineer in CY Sdn Bhd. His monthly salary is RM7,000. The employer provided medical benefit for him and his immediate family, which cost RM3,600 in the year 2015.    

During the year, he inherited an apartment in Singapore from his father. The apartment was rented out. Net rental of RM18,000 was remitted to him from Singapore in 2015.

In April 2015, Tony received dividend income from Malaysian resident companies amounting to RM2,960 under the single tier system.    

In June 2015, he received interest of RM4,500 on a 12-month fixed deposit of RM120,000 @ 3% interest per annum with AmBank (M) Berhad.

Tony’s wife, Amy is a full-time housewife. Details of their children are as follows:

In July 2015, Tony donated a painting worth RM1,500 and cash of RM1,000 to an old folk’s home, an approved institution.

Tony incurred the following expenses during the year:

Required:

Compute the income tax payable by Mr. Tony Lim for the year of assessment 2015. State ‘Nil’ for every item that is not taxable or deductible.      

Question 4

Ahmad, a widower, has been in employment with Wonderful Sdn. Bhd since January 1997. The following information has been provided to prepare his tax computation for YA2015.

• Salary from employment RM10,000 per month
• Hand phone (employer provided the hand phone and paid all the bills) RM3,200
• In February 2015, he made a cash donation of RM2,000 and a computer worth RM4,000 to the Blind Association of Malaysia (an approved institution).
• Ahmad has four unmarried children:

• Rabia, aged 23, studying at Universiti Sains Malaysia. She gave tuition to students and received RM 12,000 in the year 2015
• Ali (adopted son), aged 22 is studying at London School of Economics, (University of London) under a Government scholarship
• Yahya, aged 20 is studying at International Islamic University Malaysia. He earned RM5,000 as a part time worker at the National Science Centre in June 2015.

• Minah, aged 15, is studying in St Mary School at Johor Bharu, Johor.

• Premium paid for life insurance for himself amounting to RM3,000
• Contribution to Employees Provident Fund (EPF) amounting to 11% of the gross employment income.
• RM5,500 for his mother who was hospitalized in Subang Jaya Medical Centre to treat her diabetic condition.
• RM1,000 for a complete medical check up.
• RM750 for subscribing to the ‘National Geographic’ and ‘Far Eastern Review” magazines.

Required:        

Compute the income tax payable by Ali for the year of assessment 2015.

Note: All items stated in the question should be included in the computation. Where the item is not taxable or deductible, indicate ‘Nil’ in the computation.