Mr. Louis is an Australian citizen working with a multinational company based in Nilai. He has been working with this company since 2000. He is 60 years old and returned to Australia permanently on 20 December 2019 due to retire on 28 February 2020. 

The following information was provided in his return for the year 2019: 

	RM
Salary per month	35,000
Leave pay (January and February 2020)	70,000
Bonus for the year 2019	87,500
Entertainment allowance per month	6,000
Travelling allowance per month	3,500
Leave passage to the Australia for family	40,000
Gratuity for years of service with the company	700,000

 

Additional information: 

1. Louis was given the option to buy 20,000 units of the company’s shares at the price of RM10 per share on 1 October 2019. The market value at that time was RM13 per share. He exercised his option on 1 December 2019 when the price was RM15 per share. 
2. He incurred RM15,000 on entertainment expenditure on official duties. The travel allowance is for official duties. The entertainment and travelling allowance were paid up to the end of 31 December 2019.
3. The company provided a bungalow till 31 December 2019. The rental of RM6,000 (including RM1,000 for full furnishings) was paid for by the company. The house was larger than what the family actually acquired. Louis estimates that 30% of the house was used for official entertainment.
4. He was provided with a luxury car costing RM360,000 when new for the year 2019. The employer did not bear the cost of fuel for Louis. 
5. Louis took an interest-free loan of RM100,000 from his employer to finance his second car. The loan was given from the equity funds of the employers. The interest of the said loan would have been RM15,000 if it had been borrowed from a commercial basis.
6. Louis married to Lisa who is a housewife and they have three children. The first child aged 22 years is pursuing a degree in medicine in Ireland. Louis contributed RM50,000 towards her upkeep during the year. The second child is continuing degree course in accounting at Inti University in Malaysia and Louis incurred RM60,000 during the year. The third child

is 16 years old and he is attending Nilai International school. Louis fully supports the education of his younger two children.

7. Lisa suffers from renal failure and had to go for kidney transplant at a private medical centre in December 2019. Louis incurred medical expenses of RM45,000 during the year. His employer paid RM40,000 of the expenses.
8. Louis made a cash donation of RM10,000 to an approved organization in Malaysia.
9. Louis made the normal contribution to the EPF, which was equivalent to 11% of his salary. He also pays life assurance premiums of RM18,000 per annum. 
10. He received dividends amounting RM8,000 from his portfolio of shares in the Australia in 2019. He also receives rental income of RM100,000 from his family home in Gold Coast which is directly credited into his account in the Australia. He also receives interest income from his fixed deposits in Maybank of RM6,400.
11. Louis bought a laptop from himself amounting RM4,200. He has also bought books and magazines for the family for RM1,600 during the year. 

 

Required:

Compute the chargeable income and income tax payable for Louis after considering all the tax benefits available to him for the year of assessment 2019. 

Answer rating: 100% (QA)

Answer Chargeable income RM700000 RM87500 RM6000 RM3500 RM40000 RM15000 ... View the full answer