7 EPISODES IN MALAYSIAN TAXATION : PARTNERSHIP TAXATION EPISODE 1

7 EPISODES IN MAL AYSIAN TAXATION :
PARTNERSHIP TAXATION EPISODE 1
Authors:
SITI ZAKIAH BINTI ABU BAKAR
ROSMARIA BINTI ISMAIL
1st Edition 2021

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Published by :
POLITEKNIK MELAKA (PMK)
NO 2, JALAN PPM 10,
PLAZA PANDAN MALIM,
BALAI PANJANG,
75250 MELAKA.
Tel : 06.337.600
Fax : 06.337.6007
Website : http://www.polimelaka.edu.my

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It is a pleasure for us to introduce this ebook entitled 7 Episodes in Malaysian Taxation :
Partnership Taxation Episode 1.
This ebook is a valuable contribution to the department. It is suitable for final semester
accounting students in the Commerce Department, Politeknik Melaka. The ebook is
written with simple and clear explanations to achieve the course learning objectives and
its review and edited by Mrs. Ati Arini Binti Salim, Madam Choo Mei Cheng and Mr.
Saifulnizam Bin Zakariah.
We believe students should be provided with a good understanding of taxation in
preparing them for future courses. This ebook fulfils this role by guiding and assisting
students towards this goal. The writers of this book should be recommended for their
dedication and effort in coming up with this text.
We would like to record our warm appreciation and thanks to the many parties who
have provided encouragement and helpful comments towards the arrangement of this
e-book. It is our hope that this e-book would help students to gain better understanding
of the course.

SITI ZAKIAH BINTI ABU BAKAR
ROSMARIA BINTI ISMAIL
Department of Commerce
Politeknik Melaka

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7 EPISODES MALAYSIAN TAXATION covers tax computation for partnership and
company which includes the deductions of capital allowances and investment incentives as
provided under the tax laws and continues with computation of real property gains tax and
indirect taxes for taxpayer’s tax planning decision. This course is part of the Core Subject for
Diploma of Accountancy students in Polytechnics.

PARTERSHIP TAXATION EPISODE 1 state the nature of partnership, ascertain the provisional
adjusted income and divisble income/(loss), ascertain the assesment for each partner based
CP30 and form P and analyse the changes in membership and profit-sharing ratio.

The aim in writing this ebook is to help students become skilled preparers and informed
consumers of taxation information and also to help the Majority of Polytechnic Students
who are from Low Income to Middle Income family background. As lecturers, its have mixed
feelings when asked them to purchase reference books in the market but for some of them
could be quite expensive.

This ebook is a part of an innovation idea for experienced the Learning and Teaching Process
because:

• The notes are cheap if compared with reference books in the market.
• The Notes were prepared based on the needs of the Polytechnic Syllabus,

and fully follow the guidelines from the Ministry Of Higher Education
unlike the current reference books in the market. This, our
students are not required to buy further reference
books.
• The notes are complete with varied examples and solutions.
• The content of the note is written in simple English language.

We hope that this book will benefit all students and help
them to achieve excellent results

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DECLARATION OF COPYRIGHT

ACKNOWLEDGEMENTS

ABSTRACT

EPISODE 1 PART 1 –7 ELEMENT IN THE PARTNERSHIP

PAGE

1.1 State the nature of a partnership 2
1.2 Ascertain the provisional adjusted income and divisible
5
income/(loss)
1.3 Ascertain the assessment for each partner based on CP30 9
11
and Form P
1.4 Analyze the changes in membership and profit-sharing ratio

EXERCISES
REFERENCE

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IP

PARTNERSHIP TAXATION

At the end of this chapter, you should be able to:

1.1 State the nature of a partnership
Define a partnership according to Section 2, Income Tax
Act (ITA) 1967
Recognize the different types of partners
Describe the creation and existence of a partnership

1.2 Ascertain the provisional adjusted income and
divisible income/(loss)
Calculate the partnership’s provisional adjusted income
Calculate the partnership’s divisible income/(loss)

1.3 Ascertain the assessment for each partner based on CP30
and Form P
Calculate the adjusted income/(loss) and statutory income
Calculate the aggregate income and total income

1.4 Analyse the changes in membership and profit-sharing ratio
Determine the allocation of partnership’s capital allowances
among partners
Determine the apportionment of partnership’s investment
income and donations among partners

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1.1 INTRODUCTION

A partnership is not a person in law, it is not a separate and assessable
entity for tax purposes (Rose v FC of T). A partnership is, however,
required to lodge a return. The partnership return determines what is the
net partnership income or partnership loss. Each partner must then
include in his personal return his individual share of these amounts and
pays tax accordingly.

1.1.1 DEFINE PARTNERSHIP ACCORDING TO SECTION 2, INCOME TAX
1967
A partnership is defined in Section 2 of the Income Tax Act (ITA) as “an
association of any kind (including joint ventures, syndicates and cases
where a party to the association is itself a partnership) between parties
who have agreed to combine any of their rights, powers, property, labour
or skill for the purpose of carrying on a business and sharing the profits
there from but it excludes a Hindu joint family although such a family may
be a partner in a partnership.”

According to the Malaysian Partnership Act 1961, a partnership is defined
as a relationship that subsists between persons carrying on business in
common with a view of profit. A partnership is not a person within the
meaning of sec 2 of the ITA. Consequently, no assessment can raise for
income tax purposes on the partnership. Instead each individual partner
is assessed on his or her share of the partnership income.

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1.1.2 List down types of partners
a. Full partners
These are the “real” partners who share in the conduct of the
business and in the profit or losses it generates. Their income is
assessed to tax under sec 4(a) as income from a business or
professional source.

b. Salaried partners
Such partners, although held out to the world as partners, are in fact
merely employees of the partnership drawing a fixed salary with or
without commissions or bonuses. They do not share in the losses of
the partnership. The income of salaried partners is assessed to tax
under sec 4(b) as income from an employment source.

In some cases, however the income of salaried partners is assessed
under sec 4(a) as income from carrying on a business. An example
of this is in the case of share brokers who are salaried partners in
broking firm. These persons do not draw salaries but derive
commissions on the business they put through the organization.

c. Sleeping partners
Such partners only contribute capital to the business. They leave the
conduct of the business to others. Their income is assessed under
sec 4(a).

d. Limited partners
Such partners only subscribe to a certain fixed amount of capital and
their liability is limited to this amount. They do not take part in the

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management of the partnership business and normally have no
powers to bind the organization. A body corporate can be a limited
partner. In ascertaining the share of profits of a limited partners the
same rules as those relating to full partners are applied.

e. Corporate partners
Corporate partner is the in full partnership with individuals. It may
also refer to two or more companies which form a partnership.

1.1.3 Discuss the creation and existence of a partnership.

A partnership can be formed by at least two persons but not
exceeding 20 persons agreeing to carry on a business with a view to
make profit. The definition of a partnership suggests the following.
i) It is an association of some kind between persons.
ii) It is an agreement between persons to combine their rights,

powers, property, labour or skill in a partnership for the
purpose of carrying on a business and
iii) Sharing of profits within the partner.

Normally, a partnership agreement is drawn out between partners.
In certain circumstances, however a partnership may exist even
though there is no partnership agreement. In determining whether
a partnership exists, the following guidelines can be used:

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i) Preparation of profit and loss accounts showing the partners’
share of profits or losses.

ii) Manner in which partners operate their bank accounts and
whether there are limitations to the signing of cheques.

iii) Name used in carrying on the business as shown in trade
directories and business correspondence.

iv) Records showing partners’ remuneration, drawing, capital
contribution and interest paid for capital loaned to the
business.

1.2 ASCERTAIN THE PROVISIONAL ADJUSTED INCOME AND
DIVISIBLE INCOME/(LOSS)

1.2.1 Calculate the provisional adjusted income
(Refer to example 1.1)
The income of a partnership for any period is computed in the same
manner and on the same basis as that of a person carrying on a trade
or business. This income is usually different from the figure of profit
in the partnership accounts.

The profit figure is normally net after certain adjustments are made
for partners’ salaries, interest on a partner’s capital and other
personal expenses charged in the partnership accounts. Such
appropriations are not allowed for tax purposes.

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EXAMPLE 1.1

The following is an extract from a partnership business styled as

Wani & Wana Enterprise.

Wani & Wana Enterprise

Profit and Loss Account

Year Ended 31 December 20XX

RM RM

Sales 260,000

(-) Cost of sales (200,000)

Gross profit 60,000

Less: Expenses

Revenue items 20,000

Depreciation 5,000

Partners’ salaries 10,000

Partners’ private expenses 5,000 (40,000)

Net Profit 20,000

It is assumed that Wani & Wana are entitled to half of the
profit/loss of the partnership profits.

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Required:
Compute the adjusted income of the partners for basis year 20XX.

Answer
Wani & Wana Enterprise

The Provisional Adjusted Income for the basis year 20XX
RM RM

Net profit as per account 20,000

Add: 5,000 (20,000)
Depreciation 10,000 40,000
Partners’ salaries 5,000
Partners’ private expenses
Provisional Adjusted Income

1.2.2 Calculate the partnership’s divisible income/(loss)

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The divisible income for the basis period of the partnership is the
provisional adjusted income less:
a) Partners’ wages or salaries
b) Interest payable to a partner, and
c) Private expenses of the partners charged to the partnership

account.

RM RM

Provisional Adjusted Income 40,000

Less: Partners’ salaries- Wani 5000 (15,000)
Wana 5000 25,000
5000
Partners’ private expenses-Wani
Divisible Income

1.3 ASCERTAIN THE ASSESSMENT FOR EACH PARTNER BASED ON

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CP30 AND FORM P

1.3.1 Calculate the adjusted income/ (loss) and statutory income of
partners.

The adjusted income of an individual partner for a basis period is the
a) Share of divisible income and
b) Remuneration, interest, private expenses from the partnership.

The adjusted income of Wani and Wana from the partnership for
year of assessment 20XX is computed as follows:

Partners’ salaries Wani Wana
Partner’ private expenses (RM) (RM)
Divisible income 5,000 5,000
Adjusted income 5,000
12,500 0
22,500 12,500
17,500

1.3.2 Compute aggregate income and total income

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(Refer to format of computation)

Form P requires the following additional information:
- Nature of business of the partnership
- Business registration number
- Address of each branch
- Changes in constitution of the partnership during the basis year
- Full particulars of partners and the allocation of Malaysian and

non-Malaysian income from businesses
- Statement of foreign income received in Malaysia and the foreign

tax suffered, if any and
- Declaration of disposal of chargeable assets (lands, buildings and

shares in real property companies) under the Real Property Gains
Tax Act 19765.

The tax filing deadline for partnership is 30 June of the following
year.

1.4 ANALYZE THE CHANGES IN MEMEBERSHIP AND PROFIT SHARING
RATIO

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Where a change occurs in a partnership, as a result of retirement,
death or dissolution of the partnership or the admission of a new
partner, a new partnership in effect comes into being.

In the case where at least one partner from the old partnership is also
a partner in the new partnership and the nature of trade of both the
partnership is virtually the same, then the partner who is in the old and
new partnerships is deemed to have one continuing source of income
in respect of the old and new partnership.

Thus, the business will be divided into two different partnership
business which are:

a) Before new admit or retirement – old partnership
b) After new admit or retirement –new partnership

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(C –retirement) (D- Admission)
______________________________________________________
______________________________

1/1/20XX (A,B.C) 1/4/20XX (A,B) 1/7/20XX (A,B,D)
31/12/20XX

The Changes will affect as follows:

1. Changing in Period of Accounting-
E.g : From year ended 31th March to end of 31th December

2. Sharing Profit & Loss
E.g: From sharing equally to capital ratio

3. Capital Contribution
E.g: Capital injection or withdrew the capital by partner.

4. Salary & Interest on capital
E.g: Month salary from RM 2,000 to RM 2,500 and interest on
capital from 2% to 3% per year.

1.4.1 ANALYZE THE CHANGES IN MEMEBERSHIP AND PROFIT-SHARING
RATIO

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a) Although the partnership is assessed as business source, capital
allowance claim is attributable to individual partners instead of the
partnership.

b) The capital allowance is allocated with reference to the profit-
sharing ratio of the partner at the end of each basis period.

c) Admission or retirement of partners will not affect the claim of
capital allowance as the partnership is treated as continuing
business if at least one partner of the old the partnership
continues to be partner in the new partnership.

EXAMPLE 1.2

An old partnership of Tan and Tin, profit being divided equally,
makes up its accounts annually to 31 December. Tin retires on 30
September 20xx and Tun joins the partnership on the same date
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Allocation of Partners’ Income

Period ended 30.9.20xx Tan Tin Tun
Year ended 31.12.20xx RM RM RM
Period ended 31.09.20xx
10,000 10,000 -
3,500 - 3,500
9,000
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1.4.1 Determine the allocation of capital allowance and approved
donation among the partners

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Since a partnership is not a legal person it cannot own fixed assets.
These therefore belong jointly to the individual partners. Capital
allowances are allocated only amongst those who are partners at
the end of the relevant basis period in their profit-sharing ratios. Any
capital allowances allowed for income tax purposes in respect of
assets are calculated for the year of assessment and these are
divided among the partners in accordance with the profit-sharing
ratios. Any allowance that cannot be set off due to the insufficiency
of profits is carried forward and forms part of the allowances for the
next assessment year. If the approved donation is made by the
partnership, it shall be apportioned based on the profit-sharing ratio
of the partners at the time the donation given.

Tax treatment of capital allowance in partnership
a) Capital allowance allocation for the partnership based on the

partners in the partnership at the end of each basis period.
b) The allocation will be based on profit sharing ratio of each partner

at the end of basis period.
c) If any allowance that cannot be set off owing to be insufficiency

of profit is carried forward and forms part of the allowances for
the next assessment year.

1.4.2 Determine the apportionment of partnership’s investment
income and donations among partners among the partners
Tax treatment of donation made by partnership business

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a) Donation made by a partnership will be apportioned to partners
at the time the donation is made.

b) When there are changes in a partnership, the date of a donation
made and partners’ profit sharing ratio must be taken into
consideration when computing donation of each partner.

There is no statutory requirement for partnership accounts to be
audited. If the Director General is satisfied that the books and
records are so maintained that they enable the determination of the
partnership income, these are accepted. Director General has,
however the power to prescribe the form of these records and the
way they should be kept, if he so wishes. He can also compel the
production of audited accounts within a specific time by exercising
his powers under sec 82(5).

FORMAT OF COMPUTATION
ZAS PARTNERSHIP

COMPUTATION OF DIVISIBLE INCOME

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YA 20XX x xx
x
Net profit (before taxation) x x
x x
(+) Partners’ remuneration x
(Salary, Allowance, Bonus) x (x)
Partners’ Interest on capital x (x)
Private and domestic expenses of partners x (x)
Non Allowable Expenses (x)
(Donation, fine, depreciation etc.)
XX
(-) Non Business Income
RPGT x
Dividend, Rental, Interest x
Gain on disposal of asset x (x)

(-) Double Deduction (x)

Provisional Adjusted Income- Sec 55(2) (x)
XX
(-) Section 55(3)
Partners’ Salary
Partner A
Partner B
Partner C

Interest on Capital
Partner A
Partner B
Partner C

Private Expenses
Partner A
Partner B
Partner C

Divisible Income

OMPUTATION OF TOTAL INCOME

Partners C
AB

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Divisible Income X XX
Partners’ Salary X XX
Interest on Capital X XX
Private Expenses X XX

(+) Balancing charge (devide X XX

equally or based on agreement) (x) (x) (x)

(-) Balancing Allowance (x) (x) (x)

Capital Allowance(devide XX XX XX

equally or based on agreement)

Statutory Income

X XX

(+) Other Statutory Income X X X

S.4(b) Salary X XX

S.4(c) Dividend & Interest X XX

S.4(d) Rental & Royalty X XX

S.4(e) Pension &Anuity

S.4(f) Other than Sec 4(a) – XX XX XX
(e)

Aggregate Income (x) (x) (x)
(-) Donation (devided equally or XX XX XX
based on agreement)

Total Income

Example 1.3

A partnership of Perdana and Gen-2 made up its annual accounts to 31
December each year. On 1 April 20XX, they admitted Exora as a partner.
Given below are the accounts of partnership.

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Pandalela Enterprise
Statement of Comprehensive income for the year ended 20XX

Administration expenses 23,000 Trading profit 125,000
Salaries of employee 36,000
Repairs 40,000
Depreciation 20,000
Gross profit
6,000

125,000 125,000 6,000
Partner’s salary: Gross profit 10,000
Perdana 11,000 Other income 18,400
Gen-2 15,200 Net Loss
Exora 4,800

Partner’s Interest on capital: 1,800
Perdana 1,100
Gen-2 500
Exora

34,400 34,400

Additional Information:

i. The profit sharing ratio is as follows:

Perdana Gen-2 Exora
-
1/1/20XX- 21

31/3/20XX

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1/4/20XX- 32 1
31/12/20XX

ii. Repairs include an extension to an existing store amounting to RM
32,000.

iii. The capital allowance for the year of assessment 20XX is RM 12,000

Required:
Calculate the statutory income for each partner for the year of
assessment 20XX.

EXERCISES

QUESTION 1

Partnership Adiani is owned by Adi and Ani. This partnership distribute
printing card. Closing date of account is on 30 June every year. Profit and
Loss Account for year ended 30 June 20XX is as follows:

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Gross profit RM RM
(-) Expenses 195,000
Salary (i)
Advertising (ii) 90,400 (135,370)
Office rental 25,000 59,630
Stationery and postage 5,500
Interest on capital 4,500
Depreciation 3,270
Repair of office equipment 1,200
Office renovation 2,000
Net profit 3,500

Additional information:
i. Salary is included partners salary and employee salaries.
ii. Included in advertising expenses is a personal expense of Ani
amounting to RM 1,200 and donation to approved institution
amounted RM 250 on 2/01/2xxx.

The terms of agreement between Ani and Adi are as follows:

Ani Adi

Yearly partners salary RM 36,000 RM 28,000

Interest on capital per 6% 5%

annum

Capital RM 30,000 RM 24,000

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Profit sharing ratio 0.5 0.5

On 1 April 20XX, Amani become a partner for Adiani Partnership and the

new terms of agreement are as follows:

Ani Adi Amani

Yearly partners salary RM RM RM 12,000

40,000 28,000

Interest on capital 6% 5% 3%

Capital RM RM RM 16,000

35,000 30,000

Profit sharing ratio 0.5 0.3 0.2

This partnership was closed on 30 June. Capital allowance for year ended
30 June 20XX is RM 3,200.
Required:
1. Calculate divisible income for each partner for year assessment 20XX.
2.Calculate partner’s total income for year assessment 20XX.

(PAI = RM137,050, DI =RM 64580)
(TOTAL INCOME ANI =RM70641, ADI = RM 57252, AMANI = RM 5709)

QUESTION 2

Aisha and Balqis are partner of Aiqish Enterprise which was established

on 1 January 2014 and accounting period is closed on 31 December every

year. The terms of agreement between Aisha and Balqis are as follows:

Aisha RM Balqis RM

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70,000
Monthly salary 10% per 2,500
Capital annum 105,000
Interest on capital 10% per
2/5 annum
Profit sharing ratio
3/5

On 30 September 20XX, Aisha quit from the partnership and she took out
all the capital that she had invested in the partnership.

On 1 October 20XX, Camelia joined the Aiqish Partnership. Closing

accounting period was same as before. Below are terms of agreement for

the new partnership:

Balqis Camelia

RM RM

Monthly salary 2,500 2,500

Capital 100,000 100,000

Interest on capital 10% per 10% per

annum annum

Profit sharing ratio 1/2 1/2

Below is Income Statement for Aiqish Partnership for year ended 31
December 20XX:

Income from construction RM
contract 8,418,60

0

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(-) Construction cost (7,961,4
00)
Construction profit
(+) Other income 457,200
190,700
(-) Overhead 647,900
Net profit 420,300
227,600

Additional information;

1. Overhead was included:

RM

Partners salary 55,500

Interest on capital 18,125

Depreciation for fixed asset 30,700

2. Capital allowance for year assessment 20XX is RM 30,500

Required:
1. Calculate divisible income for each partner for year assessment
20XX.
2. Calculate partner’s total income for year assessment 20XX.

(DI = RM67,6000) (PAI = RM 141225)
(CAPITAL ALLOWANCE = BALQIS = RM 15,520, CAMELIA = RM 15,250
(TOTAL INCOME AISHA =RM43530, BALQIS = RM 159345,
CAMELIA = RM 98550)
QUESTION 3

Mahathir and Zakaria agreed to form a partnership, Mahakarya Partners’
operating supplying painting since 2010. On 1 April 20XX, Yahya joined
partnership. Below is Profit and Loss Account for the partnership:

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MAHAKARYA PARTNERS

PROFIT AND LOSS ACCOUNT FOR YEAR ENDED 31

DECEMBER 20XX

Administrative

expenses 33,000 Sale profit 205,000

Employee salary and

partners 79,200 Interest 6,000

Repairs expenses 5,000

Depreciation 7,500

Interest on capital 3,325

Painting and

exhibition Expenses 20,000

Net profit 62,975

211,000 211,000

Additional information: Mahathir Zakaria Yahya
1. The profit sharing are: 2 1 1

1/1/20XX to 3 2
31/3/20XX
1/4/20XX to
31/12/20XX

2. Partners salaries:
a. Mahathir : RM 1,500 per month
b. Zakaria : RM 1,000 per month
c. Yahya : RM 800 per month

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3. Partners’ capital:

Partners Capital Interest on capital per
annum
Mahathir 30,000 7%
Zakaria 20,000 5%
Yahya 10,000 3%

4. Repair expenses include renovation for painting hall valued at
RM 2,000.Painting equipment costing RM 25,000 since 2014.
Annual allowance is 20% and initial allowance is 10%

Required:
Calculate aggregate income for each partner for year assessment 20XX.

(PAI = RM107, 000, DI = RM 66,475,)
(STATUTORY INCOME= MAHATHIR RM53607, ZAKARIA RM 33492,
YAHYA RM 14901)
(AGGREGATE INCOME = MAHATHIR =RM 56607, ZAKARIA = RM 35492,
YAHYA =RM15901)

QUESTION 4
The partnership of Amy and Barney made up its annual accounts to 31
December each year. On 1 April 20XX, they admitted Carry as a partner.
Given below are the accounts of partnership.

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AMY, BARNEY AND CARRY

PROFIT AND LOSS ACCOUNT FOR YEAR ENDED 31 DECEMBER

20XX

RM RM

Administrative expenses 23,000 Trading profit 113,000

Salaries of employees 36,000

Repairs expenses 40,000

Depreciation 20,000 Gross loss 6,000

119,00

0 119,000

Gross loss 20,000

Partners' salaries:

Amy 11,000

Barney 15,200

Carry 4,800

Partners' interest capital:

Amy 1,800

Barney 1,100

Carry 500 Net loss 40,400

40,400 40,400

Additional information:
1. The profit sharing ratio is as follows:

1/1/20XX to Amy Barney Carry
31/3/20XX 32

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1/4/20XX to 321
31/12/20XX

2. Repairs include an extension to an existing store amounting to

RM 32,000.

3. The capital allowance for year assessment 20XX was RM 12,000

Required:
Calculate the statutory income for each partner for year assessment
20XX.

(PAI = RM 46,000, DI =RM 11,600) (STATUTORY iNCOME = AMY = RM
12,890, BARNEY = RM 16,360, CARRY =RM 4,750)

QUESTION 5
Raman and Kumar, who are partners, have been selling souvenirs since
2007. Their partnership accounting period ends on 31 December
annually. Raman made a capital contribution of RM 40,000 and whereas

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Kumar’s made a capital contribution amounted to RM 65,000. The terms
of their agreement are as follows:

Salary (per Interest on capital (per Profit and loss sharing
month)
year) ratio

Raman RM 2,200 5% 1/3

Kumar RM 2,500 5% 2/3

On 31 March 20XX, Raman opted for retirement and withdrew all of his
capital. Johan was admitted to be a new partner on 1 April 20XX and his
capital contribution amounted to RM 65,000. On that day, Kumar
increased his capital contribution by RM 10,000. The new terms of their
agreement are as follows:

Salary (per Interest on capital (per Profit and loss sharing
month)
year) ratio

Kumar RM 3,250 7% 1/2

Johan RM 2,700 7% 1/2

Additional information:
1. The provisional adjusted income for the year of assessment 20XX is
RM 42,230

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2. The provisional adjusted income for the year of assessment 20XX is
RM 27,600

You are required to:
Compute the statutory income for each partner for the year of
assessment 20XX and for year of assessment 20XX.

QUESTION 6

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a) “Section 3(1) of Partnership Act 1961 defines a partnership as the
relation with subsists between persons carrying on business in
common with a view of profit”.

You are required to :
i) List FIVE (5) types of partners in partnership business.

(5 marks)
ii) State FIVE (5) elements that determine the existence of a

partnership business
(5 marks)

b) Ara and May are partners in a kopitiam business “Karipap & Kopi”
since 2014. Each of them contributed equal capital of RM 100,000.
On 1st July 20XX, Mimi was admitted as a new partner and she is
responsible to manage the Karipap & Kopi. Mimi injected RM 50,000
capital into the business. The partnership accounting year ends on
31 December each year.

The terms of the partnership agreement provided that:

i. Each partner is to be paid a salary of RM 2,000 per month
ii. Interest of 8% per annum is to be paid to each partner based

on the capital contribution.

Below were information related to the business:

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2021 MALAYSIAN TAXATION

1 January 20XX-30 June 1 July 20XX – 31
20XX December 20XX

Ara May Ara May Mimi

Profit & loss 1: 1 1:1:1
sharing ratio
RM 60,000 RM 150,000
Divisible income
RM 24,000
Capital allowance
RM 1,000 RM 1,500
Gift of money for
State Government

You are required to:

Calculate the total income for partner for year assessment 20XX.
(15 marks)

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2021 MALAYSIAN TAXATION

COURSE LEARNING OUTCOMES (CLO):
Upon completion of this course, students should be able to:

CLO1 : Determine precisely the tax computation for chargeable person
under relevant tax rules and regulations ( C4 , PLO 2 )

CLO2 : Prepare properly the computation of the company's industrial
building allowances and income tax payable under current tax legislations
( P2 , PLO 5 )

CLO3 : Perform accordingly the tax planning computation to reduce the
taxpayer's tax liability under tax law provisions and rulings

REFERENCES
Fatt, C. K. (2019). Malaysian Taxation Principles and Practice (25th ed.).
Infoworld.

Josef, V. (2018). Malaysia Master Tax Guide 2018 (35th ed.). Malaysia:
CCH (Malaysia) Sdn Bhd.

Kasipillai, J. (2019). A Guide to Malaysian Taxation (5th ed.). Malaysia:
Oxford Fajar Sdn Bhd.

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