Cosmos Sdn Bhd, financial year ends on 31 December annually is a supplier of fresh flowers in Malaysia. For the year of assessment 2020, the estimated income tax payable made by the company amounted to RM675,000. On the submission of tax return form, the actual tax payable was computed at RM975,000. Among the reason on the differences are due to incorrect tax treatment of the followings:

1. Provision for general doubtful debts for the year amounting to RM200,000

2. Lease rental for the lorry used to deliver the flowers. A monthly payment of RM2,200 was made since 1 January 2019. The lorry cost was RM125,000 and

   licensed as commercial transport.

3. Compensation received amounting to RM50,000 from various clients due to

   cancellation of orders.

4. The payment of withholding tax of amounted to RM120,000 was made to the AA

   Ltd, a resident of Singapore but not remitted to Inland Revenue Board.

5. An appeal was made to a court on the tax dispute case and RM55,000 was

   incurred in relation to the appeal.

The newly appointed account executive of Cosmos Sdn Bhd is unsure on the correct treatment of the items. Apart of that, he also has limited knowledge on mechanism of the self-assessment for the company and then seek for your advice.

Required:

Provide your details explanation on the followings:

1. Tax treatment on the above items in according to Income Tax Act 1967

2. The penalty of underestimation of income tax payable for the year of assessment 2020.

3. The amount of estimated income tax payable to be furnished to Inland Revenue

   Board (IRB) for the year of assessment 2021.

4. The due date for the first monthly installment of tax estimates for the year of the assessment 2021.

Answer rating: 100% (QA)

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