Personal Taxation and Residence Status
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201605 Taxation 1Tutorial 5-7: Personal Taxation and Residence StatusQuestion 1Mary 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:RMQuit rent and assessment1,300Repairs water pipe and roof 2,000Renewal of rental agreement600Housing loan instalment (interest RM 7,900)18,000Fire insurance200Extension of kitchen5,800Required:Compute the adjusted income from rental source for Mary for the Year of Assessment 2015.Question 2Alex 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: RMFixed 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:Renewal of rental agreement 520Renovation to the living room13,850Repairs water pipe and roof 200Quit rent and assessment480Housing loan instalment (interest RM 10,625)60,000Fire insurance175(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 3Mr. 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: ChildAge in 20151st21 yearsMarried and studying at Universiti Malaya2nd19 yearsHandicapped and not schooling3rd16 yearsStudying in a local private institution 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: RMMedical expenses for Amys parents1,600Purchase of books and magazines for his children1,300Premium paid for – life insurance policy (self)1,900 – personal accident insurance policy (self)380 – medical insurance policy (children)3,600 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 4Ahmad, 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 monthHand phone (employer provided the hand phone and paid all the bills) RM3,200In 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 2015Ali (adopted son), aged 22 is studying at London School of Economics, (University of London) under a Government scholarshipYahya, 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 RM3,000Contribution 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.