Muhammad, a Malaysian tax resident, has been working with Saga Sdn. Bhd. (Saga) since 2012 as an

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Question:

Muhammad, a Malaysian tax resident, has been working with Saga Sdn. Bhd. (Saga) since 2012 as an engineer. He has a son, Ali, aged 16. The following details for 2020 are provided:

1. Monthly gross salary of RM 5,000. For Employee’s Contribution Fund (EPF), the rate for employer is 15%, and employee, 11%. All employees’ salary will be deducted by RM 120 per month for parking and RM 30 per month for contribution to the employees’ sports club.

2. Muhammad is an avid e-sports player. In May 2020, he won the first prize in an international e-sports event. The news of the winning was well published in the press. Saga was proud of Muhammad’s achievement and decided to award him a bonus equivalent to one month’s salary for his excellent performance in the event.

3. Muhammad was provided with a car and a driver. The driver is from a pool of drivers who also serve other senior employees of the company. After office hours, the car is parked at Saga’s premise. The cost of car was RM 240,000.

4. Muhammad is pursuing his masters degree in a local university. The fee incurred and paid in 2020 was RM 5,500. His wife also commenced her PhD studies and paid RM 4,500 during the year.

5. Muhammad purchased Saga’s products at a discount of RM 300. Saga’s inventory were supplied by a related company. Muhammad also purchased products directly from another related company of Saga, at a discount of RM 500.

6. Muhammad received foreign dividends of RM 4,200 from his investment in Singapore company Lion Plc, a company involved in the shipping industry.

7. Ali is currently studying in a university. Despite his age, he was admitted into the university based on his extraordinary talent in maths. He was born with a hereditary illness, which impairs his ability to walk. Muhammad did not see the need to register Ali as a disabled person with the Welfare Department. Saga contributes RM 6,000 towards Ali’s tuition fees, as part of the company’s benefits for its employees.

8. During the annual dinner of Saga, Muhammad received a long service award, consisting cash of RM 3,500 and a certificate of appreciation.

9. During the year, Muhammad's wife went for fertility treatment that cost her RM 1,900. The treatment was a simple procedure as her condition was not serious. A medical check- up costing RM 400 was conducted before the fertility treatment.

10. Muhammad paid RM 1,800 in life insurance premium for his wife. He also paid RM 1,200 in premium for Ali’s life insurance. Muhammad himself does not subscribe to any life insurance.

11. Muhammad paid medical insurance premium for his parents and Ali. The premium for his parents was RM 2,300, while the premium for Ali was RM 2,800.

12. During the year, Muhammad bought a computer for his son, costing RM 2,400, and another laptop for his wife, costing RM 2,100.

Muhammad’s wife is not working and has no total income for the YA 2020.

The formula method is used where applicable.

Required:

Compute the income tax payable by Muhammad for the YA 2020.