SUGGESTED SOLUTION:

COMMON TEST: March – July 2020

QUESTION 1

A. (i)
COVIDA Sdn Bhd
Computation of Income Tax Payable for the year of assessment 2019
Note ADD (RM) LESS
(RM)
Net Profit before taxation 1,900,250
Adjustment for:
1. Cost of good sold 140,000
2. Other Income:
Dividend from Gobang Maju Sdn Bhd 147,000
Interest charged on late payment 16,000
Profit on disposal of machine (BC : 30k – 22k = 8k) 13,000
3. Salaries and bonus:
Salaries and bonuses for employees nil
Salaries for disabled employee 10,000
Bonus for disabled employee 6,300
EPF (Max: 19% x (228,950 + 10,000 + 6,300 = 46,597,50) nil
Vs 45,500
4. Marketing and entertainment
Promotional samples given to participants at the World Nil
Communication Exhibition held in Melbourne, Australia
Entertainment provided to customers during the launching Nil
of the new product brand
Award giving ceremony in the company annual dinner nil
5. Training and recruitment
Training allowance (Talent Corp Malaysia Berhad) 5,600
In-house technical training program for production staff nil
6. Payment for technical know-how (withholding tax not 22,000
complied)
7. Legal and professional fees:
Registration of patent in Japan 25,000
Fees for income tax appeal 10,000
Tax filing fees (max RM10,000) 2,000
Audit fees nil
AGM expenses 3,000
8. Leasing of vehicle
Lorry for transportation of product (commercial) nil
Non-commercial for director (90,000 – 50,000) 40,000
9. Realised loss (on settlement of amount due for the import nil
of production material from Japan)
Realised loss (on purchased of 2 buggies for visitor tour in 11,500
the manufacturing building)_
 Unrealised gain on material for electronic chips 12,200
10. Freight and insurance
Insurance premium paid to the export or import of cargo
insured with local insurance companies nil
Premium paid on export credit insurance taken with MECIB 26,000

11. Bad and doubtful debts

Bad debts recovered (trade) nil
Bad debt written off for a loan given to an ex-manager 24,000
Increase in general provision for doubtful debts 36,000
12. Social responsibility
Cash donation to Public library (Elected for Sec 34(6)(g) nil
Donation of food and clothing to Persatuan Bulan Sabit 11,000
Merah Malaysia
Donation to Majlis Perbandaran Hang Tuah Jaya (a Local 50,000
Council)
The amount incurred for the construction of public parking nil
in Seri Kembangan town. The company choose to claim
the expenses incurred under sec 34(6)(h).
Zakat contribution 25,000
Depreciation 100,000
2,374,750 261,100
ADJUSTED BUSINESS INCOME 2,113,650
Addd: Balancing charge (30,000 -22,000) 8,000
Less : Capital allowance (246,000)
STATUTORY INCOME 1,875,650
Less: Unabsorbed business loss b/f Nil
Net Statutory Income 1,875,650
ADD: Non-Business Income / Other Income
Dividend from Gobang Maju Sdn Bhd (130,000) exempted
Interest charged on late payment 16,000
Profit on disposal of machine (capital) NT
AGGREGATE INCOME 1,891,650
Less:
Donation of food and clothing to Persatuan Bulan Sabit Non- NT
Merah Malaysia monetary
Donation to Majlis Perbandaran Hang Tuah Jaya 50,000
(a Local Council)
Zakat (max: 2.5% x RM1,891,650 = RM47,291) 25,000
CHARGEABLE INCOME 1,816,650
TAX PAYABLE (RM1,816,650 X 24%) 435,996

(44 x ½ = 22 marks)

(ii)
a) If King Kap PLC has yet paid the amount, the foreign loss is considered not realised and
therefore it should be added back in the computation of Adjustsed Business Income

b) If King Kap PLC has paid the amount, the foreign loss is considered realised and no adjustment
should be done.
(6 x ½ = 3 marks)

B.

Answer:

Basis period
i) 1.6.2018 - 30.4.2019 (11 months) (1 mark)
ii) 1.8.2018 – 31.12.2019 (17 months) (1 mark)
(2 marks)

C.
i.
RM
Chargeable Income 830,000
Actual Tax Payable @ 24% 199,200
Estimated tax payable (135,000)
Shortfall 64,200
Margin of error: 30% x RM199,200 (59,760)
4,440
Penalty @ 10% x RM4,440 444
Additional tax payable paid to IRBM 64,644

ii. The due date for the submission of Form CP204 for the YA 2020 is 30 days before the
beginning of the basis period for that year of assessment. i.e. latest by 1 October 2019 .
(6 x ½ = 3 marks)
(Total: 30 marks)