John Tan, a mechanical engineer and a Malaysian tax resident, has been working with the Robson Steel
Question:
John Tan, a mechanical engineer and a Malaysian tax resident, has been working with the Robson Steel group for 18 years. He has been working in the United Kingdom but was posted back to Malaysia from 1 January 2020.
He has submitted the following information of his income from the company in his tax return for the year 2020.
RM | |
Salary | 18,000 per month |
Bonus (received on 28 February 2020) | 44,000 |
Parking allowance | 200 per month |
Entertainment allowance | 1,200 per month |
Air passage for him to London (unofficial) | 10,000 |
Medical bill for John for his spine surgery (paid by company) | 42,000 |
John was also given the following benefits:
1. Services of a full time household servant and a gardener.
2. A fully furnished bungalow located at Bandar Sunway. The company paid a monthly rental of RM7,500 (inclusive of RM2,500 for furniture).
3. He was given the option on 1 February 2020 to buy 5,000 units of the company’s shares at a price of RM3.20 per unit. He exercised this option on 1 June 2020. The market value of the share at 1 February 2020 was RM4.00 per unit. The market value at 1 June 2020 was RM3.50 per unit.
4. A new Honda car costing RM180,000 which was bought in 2019 by the company. Fuel and a driver was also provided by the company.
5. He was provided with an unfurnished house by the company with a monthly rental RM3,000.
6. Leave passages to Penang Island, amounting to RM3,800.
7. The company reimbursed John’s expenses of RM18,000 on his moving back to Malaysia.
8. John retired on 31 December 2020 upon reaching the compulsory retirement age and received a gratuity of RM220,000.
John claimed the following expenses:
1. Actual entertainment expenses incurred was RM9,600 of which 2/3 of the expenses were expended for official purposes.
2. Annual subscription fee of RM300 paid to the Institute of Mechanical Engineers.
3. In June 2020, John’s mother was hospitalized in Sunway Medical Centre. John paid his mother’s bill of RM12,000. The original receipt was enclosed with his tax return.
Required:
Compute the chargeable employment income of John Tan for the year of assessment 2020. State ‘NIL’ for every item of income that is not taxable.
Note:
You are required to make proper classification (by reference to sections 4 and 13 of the ITA).
