Aishah, the sole-proprietor of a food catering business. The following information was provided for the preparation of the tax filing for the year of assessment 2019. ..................................................................................................................... RM........................RM Sales 290,000 Less: Cost of sales............................................................................................. 60,840 Remuneration .......................................................................................... 75,300 Running expenses of van........................................................................ 16,400 Leave passage ............................................................................................ 960 Donation (approved).................................................................................. 500.................(154,000) Net profit............................................................................................................................ 136,000 Notes: (1) Included in the cost of sales is the cost of meals consumed by Aishah and her family amounting to RM10,800. The catering price of these meals would be RM14,000. (2) Included in the remuneration is a sum of RM52,400 in respect of the salary paid to Aishah. (3) The van, which was leased by Aishah, is used partly for private purposes. It was agreed by the Inland Revenue Board that one-quarter of the van running expenses are attributable to these private purposes. (4) The leave passage costs relate to a trip made by Aishah and her children to visit her relatives in Sarawak. Aishah is also a director (not a service director) of a controlled company, declared her income for the year ended 31 December 2019 as follows: .....................................................................................RM Salary ..............................................................150,000 Bonus for year 2019 (to be received on 5 January 2020)..................................24,000 Entertainment allowance....................................................................................15,000 In addition, during the year, the company paid for the following expenses: a. Medical expenses amounting to RM15,000 in respect of Aishah’s illness. b. School fees for one of Aishah’s children (Azizi) to attend an international school amounting to RM16,000. b. Annual subscription fees amounting to RM10,000 in respect of individual membership of a golf club for Aishah. c. A new company car costing RM160,000 with free petrol (which cost the company RM5,700 per year). The business use of the car amounted to 25%. d. A driver with a salary of RM1,000 per month was employed by her and the company reimbursed her this amount every month. e. A fully furnished accommodation for which the company paid rent of RM10,000 per month. The cost of the furniture included in the rental is RM1,500. Other information: The prescribed average lifespan of the car is eight years. On 14 February 2019, Aishah received an excellent service award of RM25,000 in recognition of her role in promoting the company’s growth over the past few years. During the company’s lucky draw event, Aishah won a branded watch worth RM12,000. Aishah claimed deductions for expenses and reliefs as follows: i. Entertainment expenses incurred for the provision of entertainment in connection with the company’s business amounting to RM19,000. ii. She contributed to the EPF amounting to RM19,200. She did not buy any life insurance for herself. She also paid Zakat of RM3,500 in the year 2019. ................................................................................................................................................ Other information -Aishah also runs a small grocery business, with the adjusted business loss for YA 2019, amounted to RM7,325. Capital allowance for YA 2019 was RM2,000. The loss brought forward was RM1,000. -Aishah also received a royalty of RM21,000 for translation of children’s book from English to Chinese, with the approval of the Ministry of Education, Malaysia. -She saved up for her children’s education and put RM100,000 in a fixed deposit with Malayan Banking Berhad, and received interest of RM3,500 per annum in YA 2019. -Aishah and her husband were divorced in 2017. Since then, her husband paid her alimony amounted to RM1,500 per month. -Aishah elected to claim the reliefs for her three children Nazri (aged 13), Azizi (aged 15) and Hisham (aged 20). Note that Nazri is a disabled child. Hisham is currently pursuing his Bachelor Accounting degree in Universiti Putra Malaysia. -She gave RM1,200 for her retired mother (aged 65) as living expenses, Aishah is the only child of her mother. -She donated toys and books worth RM2,500 to a primary school in Ipoh. Required: Compute the tax payable of Aishah for the year of assessment 2019, using the formula method for the car benefit and the prescribed value method for the other benefits provided by her employer.
Aishah, the sole-proprietor of a food catering business. The following information was provided for the preparation of the tax filing for the year of assessment 2019.
..................................................................................................................... RM........................RM
Sales 290,000
Less:
Cost of sales............................................................................................. 60,840
Remuneration .......................................................................................... 75,300
Running expenses of van........................................................................ 16,400
Leave passage ............................................................................................ 960
Donation (approved).................................................................................. 500.................(154,000)
Net profit............................................................................................................................ 136,000
Notes:
(1) Included in the cost of sales is the cost of meals consumed by Aishah and her family amounting to RM10,800. The catering price of these meals would be RM14,000.
(2) Included in the remuneration is a sum of RM52,400 in respect of the salary paid to Aishah.
(3) The van, which was leased by Aishah, is used partly for private purposes. It was agreed by the Inland Revenue Board that one-quarter of the van running expenses are attributable to these private purposes.
(4) The leave passage costs relate to a trip made by Aishah and her children to visit her relatives in Sarawak.
Aishah is also a director (not a service director) of a controlled company, declared her income for the year ended 31 December 2019 as follows:
.....................................................................................RM
Salary ..............................................................150,000
Bonus for year 2019 (to be received on 5 January 2020)..................................24,000
Entertainment allowance....................................................................................15,000
In addition, during the year, the company paid for the following expenses:
a. Medical expenses amounting to RM15,000 in respect of Aishah’s illness.
b. School fees for one of Aishah’s children (Azizi) to attend an international school amounting to RM16,000.
b. Annual subscription fees amounting to RM10,000 in respect of individual membership of a golf club for Aishah.
c. A new company car costing RM160,000 with free petrol (which cost the company RM5,700 per year). The business use of the car amounted to 25%.
d. A driver with a salary of RM1,000 per month was employed by her and the company reimbursed her this amount every month.
e. A fully furnished accommodation for which the company paid rent of RM10,000 per month. The cost of the furniture included in the rental is RM1,500.
Other information:
The prescribed average lifespan of the car is eight years.
On 14 February 2019, Aishah received an excellent service award of RM25,000 in recognition of her role in promoting the company’s growth over the past few years. During the company’s lucky draw event, Aishah won a branded watch worth RM12,000.
Aishah claimed deductions for expenses and reliefs as follows:
i. Entertainment expenses incurred for the provision of entertainment in connection with the company’s business amounting to RM19,000.
ii. She contributed to the EPF amounting to RM19,200. She did not buy any life insurance for herself. She also paid Zakat of RM3,500 in the year 2019.
................................................................................................................................................
Other information
-Aishah also runs a small grocery business, with the adjusted business loss for YA 2019, amounted to RM7,325. Capital allowance for YA 2019 was RM2,000. The loss brought forward was RM1,000.
-Aishah also received a royalty of RM21,000 for translation of children’s book from English to Chinese, with the approval of the Ministry of Education, Malaysia.
-She saved up for her children’s education and put RM100,000 in a fixed deposit with Malayan Banking Berhad, and received interest of RM3,500 per annum in YA 2019.
-Aishah and her husband were divorced in 2017. Since then, her husband paid her alimony amounted to RM1,500 per month.
-Aishah elected to claim the reliefs for her three children Nazri (aged 13), Azizi (aged 15) and Hisham (aged 20). Note that Nazri is a disabled child. Hisham is currently pursuing his Bachelor Accounting degree in Universiti Putra Malaysia.
-She gave RM1,200 for her retired mother (aged 65) as living expenses, Aishah is the only child of her mother.
-She donated toys and books worth RM2,500 to a primary school in Ipoh.
Required:
Compute the tax payable of Aishah for the year of assessment 2019, using the formula method for the car benefit and the prescribed value method for the other benefits provided by her employer.
Step by step
Solved in 8 steps
