Khairul has been working with Tun Hamid Energy Bhd since 1 February 2009 as a Human Resource Executive. Beginning 1 January 2014, he was promoted as Human Resource Manager. Details of his remuneration and benefits for the basis year 2020, are listed below:

1. Monthly salary of RM9,800 after EPF deduction of 11%, zakat deduction of RM235 and schedular tax deduction (STD) of RM200.

2. Yearly bonus of RM19,600.

3. Entertainment allowance received was RM1,600 per month of which 70% was used for entertaining clients.

4. Reimbursement of all parking fees amounting to RM250 per month.

5. A car costing RM148,000 was provided together with a driver since 1 January 2017. The company paid salary to the driver amounting to RM1,300 per month.

6. A travelling allowance of RM3,200 per month was provided for official duties. He incurred RM6,000 on petrol and toll charges for travelling between his house and office, while RM17,000 on travelling to meet company’s clients.

7. On 1 February 2020, the company offered Khairul the option to purchase 4,000 units of the shares at RM2.50 per share. The market value of the share at that date was RM4.10 per share. Khairul exercised all of the option on 1 June 2020 when the market value of the share increased to RM4.20 per share.

8. In June 2020, he was given a corporate membership at Londu Golf Club of which the entrance fee of RM4,500 and monthly subscription fee of RM250 were paid by the company.

9. The company rented a fully-furnished house for RM3,500 per month (inclusive of furniture’s rental of RM1,000 per month) for his accommodation up to 30 November 2020. He was also provided with a maid who was paid by the company at RM750 per month. The company also reimbursed his electricity bills amounted to RM4,000 (registered under Khairul’s name).

10. For the month of December 2020, he was provided with an accommodation at DMunawarah Hotel. The employer settled the hotel bill amounting to RM200 per day for the room occupied.

11. The company paid the school fees of his daughter which study at Centrio International School amounted to RM5,000.

12. He received a Sijil Simpanan Premium (BUMI Bank) amounted to RM2,000 for excellent service award in year 2020.

13. The company paid RM3,500 for his wife’s maternity expenses whom delivered a baby on 23 December 2020.

14. He withdrew RM55,000 from an unapproved fund of which 35% was contributed by him.

15. Khairul and his family went for a holiday in Langkawi, Indonesia and Japan where the company paid all the expenses.

Destinations	Air fare (RM)	Meals and Accommodation (RM)
Langkawi	1,000 (including RM350 spent for his brother)	2,100
Indonesia	2,100	1,800
Japan	4,500	5,100

16. Credit card with a credit limit of RM20,000 per annum has been provided by the company. He incurred RM10,000 for his credit card bills in which 10% was used for personal purpose.

Required:

Compute the statutory employment income of Khairul for the year of assessment 2020.

(Total: 20 marks)

QUESTION 2

Encik Ameen started his catering business since 2000. He married Puan Leeza since 1990 who is now working as a finance executive in a listed company. Both are tax residents in Malaysia for the year of assessment 2020.

The couple have four children:

Name	Age	Particulars
Humaira	23	She is pursuing a professional accountancy course and serving under an articleship with an accounting firm in Kuala Lumpur. She is earning RM3,000 per year.
Aisyah	22	She is getting married in January 2019. She is studying in a local university under a full scholarship.
Ammar	16	He is schooling at Sekolah Menengah Seremban 3.
Hamzah	3	He had been legally adopted by Encik Ameen and his wife.

Note: It has been agreed that Puan Leeza will claim any available child relief for Hamzah.

The followings are details related to the couple’s income and expenditure for the year of assessment 2020:

Encik Ameen:

1. Business income:

RM
Statutory business income from business in Bangi	245,000
Adjusted losses from business in Sepang	37,000

2. Dividend income:

RM
EN Couture Bhd (pioneer status)	8,000
Arez Ltd in Singapore (remitted in Malaysia)	6,700

3. Encik Ameen paid medical expenses for his parents and mother-in-law which amounted to RM6,700 and RM2,500 respectively. The expenses were shared equally between him and his elder brother.

4. He paid RM3,400 on education insurance for his children.

5. He made a cash donation of RM3,500 to World Wildlife Fund (an approved institution) and RM800 to an old folks’ home in Lombok, Indonesia.

6. Encik Ameen paid zakat fitrah of RM42 and zakat on his income amounting to RM7,500.

7. He spent RM1,950 on complete medical examination for himself and his three children in Pantai Hospital.

8. A personal computer was purchased for RM3,800.

9. He paid child care fees totaling RM3,600 to his neighbor who take care Hamzah during working hours.

Puan Leeza:

1. Puan Leeza received a monthly salary of RM3,560 (net of 11% EPF). She is also received two month’s bonus based on her performance in 2020.

2. She is also received income amounted to RM9,800 as a part time tutor for year of assessment 2020.

3. Puan Leeza owns a single storey house in Alor Gajah and it was rented out starting from 1 September 2020. Below are the information relating to the apartment:

RM
Monthly rental	650
Quit rent and assessment	130
Advertising cost to find first tenant	250
Rental agreement	120
General repair (in September)	900

4. She is currently doing PhD in business administration at University Kebangsaan and incurred RM10,000 for her education fees.

5. She paid RM3,000 and RM5,200 for her child’s life insurance policy and medical insurance premium respectively.

6. She donated some clothes to an approved institution amounted to RM1,400.

7. Puan Leeza bought books worth RM1,200, but she could only produce a receipt of RM840.

8. She paid zakat on her income amounting to RM1,000.

Required:

Compute the tax liability of both Encik Ameen and Puan Leeza for the year of assessment 2020.

Answer rating: 100% (QA)

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