Fundamentals Level – Skills Module Time allowed Reading an d pl an ning: 15 minu tes Writing: 3 hours This question paper is divided into two sections: Section A – ALL 15 questions are compulsory and MUST be attempted Section B – ALL SIX questions are compulsory and MUST be attempted Rates of tax and tables are printed on pages 2–4. Do NOT open this question paper until instructed by the supervisor. During reading and planning time only the question paper may be annotated. You must NOT write in your answer booklet until instructed by the supervisor. Do NOT record any of your answers on the question paper. This question paper must not be removed from the examination hall. P a p e r F 6 ( M Y S ) Taxation (Malaysia) Specimen Exam applicable from December 2015 The Association of Chartered Certified Accountants
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13 ZAP Supermarket Sdn Bhd is a retailer who is registered for goods and services tax (GST). The company recorded the
following information in relation to invoices issued to customers in December 2015. All amounts are stated exclusive
of GST:
RM
Local sales – cash 10 million
Local sales – credit 11 million
Export sales – credit 2 million
ZAP Supermarket Sdn Bhd offers its customers 30 days of credit. Therefore, payment in respect of the December
2015 credit sales (both to local customers and exports) was received in January 2016.
What is the output tax payable by ZAP Supermarket Sdn Bhd for the month of December 2015?
A RM1,380,000
B RM660,000
C RM1,260,000
D RM600,000
14 Fajar Sdn Bhd, a manufacturing company with an issued share capital of RM20 million, owned an acre of land which
it acquired for RM1,000,000 in 2013.
The government compulsorily acquired the land and paid Fajar Sdn Bhd compensation of RM1,200,000 under a sale
and purchase agreement.
What are the real property gains tax (RPGT) implications of the above transaction for Fajar Sdn Bhd?
A Fajar Sdn Bhd will not be subject to RPGT nor be required to submit a RPGT return to the Inland Revenue Board
(IRB) as the compulsory acquisition by the government will be treated as a no-gain no-loss transaction
B Fajar Sdn Bhd will be subject to RPGT and must submit a RPGT return to the IRB within 30 days from the date
of signing the sale and purchase agreement
C Fajar Sdn Bhd will be subject to RPGT and must submit a RPGT return to the IRB within 60 days from the dateof signing the sale and purchase agreement
D Fajar Sdn Bhd will not be subject to RPGT as the compulsory acquisition by the government will be treated as a
no-gain no-loss transaction but it must still submit a RPGT return to the IRB
15 Pole Sdn Bhd makes up its accounts annually to 31 December. On 1 July 2014, the company acquired a passenger
vehicle for the production manager under a hire purchase agreement.
Details of the asset acquired under the hire purchase agreement are as follows:
RM
Cash price of the passenger vehicle 305,000
Deposit paid during the year of assessment 2014 40,000
Capital portion of instalments paid during 2014 70,000
Interest portion of instalments paid during 2014 5,000
Capital portion of instalments paid during 2015 100,000
Interest portion of instalments paid during 2015 10,000
What is the amount of capital allowances claimable by Pole Sdn Bhd in respect of the above asset for the year
Section B – ALL SIX questions are compulsory and MUST be attempted
Please write your answers to all parts of these questions on the lined pages within the Candidate Answer Booklet.
1 Oxygen Sdn Bhd (OSB) is a manufacturer of digital products based in Kuala Lumpur, which makes up its accounts
annually to 30 June.
Details of the non-current assets acquired by OSB in the basis period for the year of assessment 2014 are shownbelow:
Asset description Qualifying expenditure
RM
(i) Factory building 1,000,000
(ii) Various items of office equipment 60,000
The office equipment was all acquired on 6 January 2014. On 20 April 2015, one of the items of equipment, which
had cost RM10,000, was damaged in a fire and it was written off for commercial reasons. There was no insurance
coverage for the asset damaged.
During the board of directors’ meeting on 2 June 2015, it was determined that there was an increase in demand for
OSB’s products in Malaysia and the finance manager was instructed to look into constructing a storage warehouseexclusively for the Malaysian market. He is considering the following two options:
Option 1 – To construct a warehouse within the curtilage of the current factory premises.
Option 2 – To construct a warehouse 20 kilometres away in Port Klang, Malaysia.
Required:
(a) Compute the residual expenditure and balancing charge or balancing allowance on the office equipment
written off during the year of assessment 2015 and determine the balance of qualifying plant expenditure
and residual expenditure for the remaining office equipment carried forward to the year of assessment 2016.
Note: You should assume that the provisions of Paragraph 71 of the Income Tax Act 1967 are NOT applicable
and therefore no claw back of capital allowances claimed for the assets disposed of within two years ofacquisition will be made. (5 marks)
(b) Compute the industrial building allowance for the years of assessment 2014 and 2015 for the factory
building and the residual expenditure carried forward to the year of assessment 2016. (2 marks)
(c) Explain the income tax implications of each of the two options for the construction of the warehouse from
the perspective of claiming industrial building allowance and advise which would be more tax efficient.
2 (a) (i) Explain the responsibilities of Malaysian companies – both existing companies and new companies – for
the assessment, estimation and payment of tax liabilities, and the submission of tax returns under the
self-assessment system. (6 marks)
(ii) Explain if there are any exceptions to the self-assessment responsibilities outlined in (i) for new
companies with a paid-up share capital of less than RM2,500,000. (2 marks)
(b) SOS Bhd makes up its accounts to 31 December annually. The company estimated its tax payable for the yearof assessment 2015 as RM100,000 and paid monthly instalments to the Inland Revenue Board (IRB) in
accordance with this estimate.
SOS Bhd submitted its tax return for the year of assessment 2015 to the IRB by the due filing date. The tax return
showed a final tax liability of RM180,000.
Required:
Compute the penalty payable by SOS Bhd in respect of the underestimation of its tax for the year of
assessment 2015. (2 marks)
(10 marks)
3 On 12 January 2010, Esther acquired a piece of land for RM2,000,000, paying stamp duty of RM30,000 and
professional fees of RM20,000. On 1 March 2012, Esther transferred the land to her husband, Yee, without any
valuable consideration.
Yee immediately built a storage building for RM490,000 on the piece of land.
In September 2012, Yee received an offer from Acre Sdn Bhd to acquire the piece of land and received a deposit of
RM10,000. Acre Sdn Bhd subsequently decided not to pursue the acquisition and the deposit was forfeited to Yee.
On 6 February 2015, Yee disposed of the piece of land for RM3,500,000 to Zen Sdn Bhd. Yee incurred RM9,000
on valuation fees and RM1,000 on legal fees in relation to the disposal of the land.
Required:
(a) Explain the real property gains tax implication of the gift of land from Esther to Yee on 1 March 2012.
(3 marks)
(b) Compute the gain subject to real property gains tax (RPGT) arising from the disposal of the land by Yee to
Zen Sdn Bhd on 6 February 2015. Clearly identify the disposal price and the acquisition price.
Notes:
1. You are NOT required to compute the real property gains tax.
2. You should indicate by the use of the word ‘nil’ any item referred to in the question for which no adjusting
entry needs to be made in the tax computation. (7 marks)
Expenses for maintaining a overseas sales office for the promotion of exports
to the Vietnam market 500,000
(6) Motor vehicle expenses include the following lease rentals:
Year of assessmentCost 2014 2015
RM RM RM
Chief marketing officer’s car (non-commercial) 305,000 110,000 110,000
Van (commercial) 165,000 60,000 60,000
(7) Salaries and allowances include allowances of RM40,000 paid to the sales and marketing team to defray
expenses incurred to entertain customers and RM4,000 of overseas leave passage for a director.
(8) Sundry expenses comprise:
RM
Annual general meeting (AGM) expenses 1,000
(9) The capital allowances have been computed at RM1,300,000 for the year of assessment 2015.
Required:
(a) Compute Space Tech Bhd’s chargeable income for the year of assessment 2015.
Note: You should start your computation with the profit before tax figure of RM2,122,000 and indicate by the
use of the word ‘nil’ any item referred to in the question for which no adjusting entry needs to be made in the
tax computation. (13 marks)
(b) STB is considering the acquisition of proprietary rights to a patented industrial design to improve its
manufacturing technology processes.
STB has heard that a special tax deduction of 20% (over five years) should be available in respect of the purchaseof proprietary rights, provided certain conditions are met.
Required:
State the conditions which must be met before a company can claim a special deduction for the cost of the
RE carried forward to YA 2016 840,000 ½–––––––––– –––
2–––
(c) Option 1: the warehouse building would be eligible for industrial building allowance (IBA) as the warehouse
is within the curtilage of the factory building. 1
Option 2: the warehouse building will not be within the curtilage of a factory building and is not to be used
exclusively for the storage of goods for export or for the storage of goods to be imported, processed andre-exported. As such it will not be eligible for IBA. 1½
Therefore, option 1 would be more tax efficient as the warehouse building would be eligible for IBA. ½–––
Under the self-assessment system in Malaysia, a taxpayer company:
(i) has to compute and assess its own tax liability: the tax payable as per the tax return is a deemed
assessment and is deemed agreed;
(ii) has to furnish an estimate of income tax payable no later than 30 days before the beginning of the basis period;
(iii) is allowed to revise its tax estimate in the sixth month and/or ninth month of the basis period;
(iv) is required to pay the estimated amount of income tax payable to the Inland Revenue Board (IRB)
in equal monthly instalments by the 15th day of the month, beginning from the second month of
the relevant basis period;
(v) has to submit its tax returns within seven months from the close of its accounting year;
(vi) has to settle any balance of income tax payable or on before the last day of the seventh month
following the close of the accounting year;
(vii) is subject to the penalty regime for non-compliance of due dates or underestimation of tax.
New companies
Under the self-assessment system in Malaysia, a taxpayer company which commences business in a
year of assessment:
(viii) is required to furnish an estimate of income tax payable within three months from the date of
commencement of its operations.
(ix) has to commence its monthly instalment payments in the sixth month of the relevant basis period.
SIX items only required, 1 mark each, maximum 6–––
Marking note: Credit will also be given for any other acceptable factors not shown above.
(ii) Exception for new ‘SME’ companies
A new company with a paid-up share capital of RM2,500,000 and below is not required to furnish an
estimate of income tax payable and not required to pay income tax payable in monthly instalments for
the year of assessment in which it commences and the following year of assessment. To benefit fromthis exception, the company must not be part of a group of companies which includes a company with
a paid-up share capital of more than RM2,500,000. 2–––
(b) Penalty for the underestimate of tax
RM
Final tax payable 180,000
Estimated tax 100,000 ½––––––––
Difference 80,000 ½
Less: 30% of final tax (30% of 180,000) (54,000) ½––––––––
Excess subject to penalty 26,000––––––––
Penalty at 10% 2,600 ½–––2
–––10–––
3 Esther and Yee – Real property gains tax (RPGT)
(a) Esther – Gift of land to Yee
The transfer of real property as a gift between parent and child, grandparent and grandchild, or husband and
wife is treated as at no gain no loss. 1
Therefore, there will be no real property gains tax payable by Esther on the gift she made to her husband,
Yee. 1The acquisition price of the property for Yee will be the acquisition price incurred by the donor, Esther, and