MY TAX PLANNING WORKBOOK

TAX PLANNING MY WAN NORAZAH BINTI MAMAT @ WAN MAHMUD SAIMA BINTI SALENG WORKBOOK 1st Edition

Published by Politeknik Kota Kinabalu No. 4, Jalan Politeknik KKIP Barat, Kota Kinabalu Industrial Park 88460 Kota Kinabalu, Sabah, Malaysia. Copyright © Politeknik Kota Kinabalu, Sabah, Malaysia, 2023 First Edition, September 2023 Perpustakaan Negara Malaysia All rights reserved. The authors are responsible for ensuring that their work does not violate any copyright. Editors and publishers are not liable for any copyright infringement bt the authors. No part of this publication may be produced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of Politeknik Kota Kinabalu, Sabah, Malaysia.

i PREFACE MY TAX PLANNING WORKBOOK 1st Edition is comprehensive e-book, design for students of Diploma Accountancy in Polythenic Malaysia who taking up Malaysian Taxation 2 courses. This e-book deals with information in detail on how to compute personal taxation and company taxation and follow up making tax planning for individual and companies. The contents in this e-book are designed based on the Polytechnic syllabus. For reinforcement, the e-book also include tutorial questions for enhancing students understanding in tax treatment based on the requirement of the Income Tax Act 1967. It is our intention to provide our students and lecturer with simple notes, examples and exercise for individual and company tax planning. It is expected that this e-book will facilitate both students and lecturers to prepare a simple tax planning for individuals and companies. We hope our reader will find this e-book as a useful and friendly companion in their learning process. Feedback from readers are most welcomed and appreciated. Wan Norazah Binti Mamat @ Wan Mahmud Lecturer Politeknik Kota Kinabalu, Sabah Saima Binti Saleng Lecturer Politeknik Kota Kinabalu, Sabah

ii TABLE OF CONTENT Preface i Table of Content ii 1.0 INTRODUCTION 1 2.0 TAX PLANNING 1 3.0 TAX PLANNING FOR INDIVIDUAL (EMPLOYMENT) 2 4.0 TAX PLANNING FOR INDIVIDUAL (BUSINESS INCOME) 2 5.0 TYPES OF BUSINESS INCOME- TAXABLE ON INDIVIDUAL 3 6.0 EXAMPLE OF TAX PLANNING FOR COMPANY 3 6.1 Tax planning for individual with Employment Income 3 6.2 Tax planning for individual with Business Income 6 7.0 TUTORIAL -INDIVIDUAL TAX PLANNING 11 8.0 TAX PLANNING FOR COMPANY 18 9.0 TAX RATE FOR RESIDENT COMPANY 18 10.0 EXAMPLE OF TAX PLANNING FOR COMPANY 19 11.0 TUTORIAL- TAX PLANNING FOR COMPANY 25 Bibliography

_______________________________________________________________________TAX PLANNING 1 | P a g e At the end of this chapter, the students should be able to: 1. Explain the definition of tax planning and tax evasion. 2. Explain the tax planning for individual and company 3. Explain the remuneration packages for individual and the company. 1.0 INTRODUCTION Tax planning is the legitimate right of any taxpayer to manage and minimise the taxes within the legal framework. 2.0 TAX PLANNING Tax avoidance Tax Evasion Tax evasion is the intentional and illegal attempt to avoid the payment of tax imposition by individuals, businesses, or organizations. Tax avoidance is structuring one’s financial affairs to reduce tax liability without violating any laws. SITUATIONS PERCEIVED AS EVADE Fraud Willful Fraud Negligence Fraud Specific Omission Does not disclose spouse’s income Intentionally falsifies information. A willful attempt to get out of tax obligation. Careless mistakes Specifically omitted certain item. Could constitute negligence, fraud or willful fraud. Husband/Wife has full has full knowledge of the spouse’s income and the fraud, willful default or negligence done by his/her spouse. Tax Planning

_______________________________________________________________________TAX PLANNING 2 | P a g e 3.0 TAX PLANNING FOR INDIVIDUAL (EMPLOYMENT) 4.0 TAX PLANNING FOR INDIVIDUAL (BUSINESS INCOME) ASPECT OF TAX PLANNING (Individual with Employment Income) RESIDENT STATUS S.7(1)(a) – s.7(1)(d) REMUNERATION STRUCTURE OTHERS INCOME S.4(c) – S.4(f) APPROVED DONATION PERSONAL RELIEF PERSONAL REBATE PERSONAL TAX MANAGEMENT ASPECT OF TAX PLANNING (Individual with Business Income PERSONAL RELIEF APPROVED DONATION OTHERS INCOME S.4(c) – S.4(f) PERSONAL TAX MANAGEMENT RESIDENT STATUS S.7(1)(a) – s.7(1)(d) PERSONAL REBATE BUSINESS EXPENSES -Allowable Expenses -Double deduction -Capital allowance

_______________________________________________________________________TAX PLANNING 3 | P a g e 5.0 TYPES OF BUSINESS INCOME- INDIVIDUAL TAXABLE Sole proprietorship and Partnership are businesses that are recognized as two separate entities between the business and the owner. Therefore, business profits from the Sole proprietorship and Partnership are not taxable at the business level but are taxed on the owner or the partners individually. 6.0 EXAMPLE OF TAX PLANNING FOR INDIVIDUAL 6.1 Tax planning for individual with Employment Income Aqli is a manager at Kupi-kupi restaurant in Kota Kinabalu. He is married with Aina who is a kindergarten teacher. Due to the continuous loss of the Kupi-kupi restaurant, Aqli services were terminated on 30 September 2023. Belows are information on Aqli and Aina remunerations during 2023: Aqli Aina RM RM Salary (monthly) 4,500 1,800 Entertainment allowance (monthly) 200 - Dividend 2,000 - Rental received : house in Penampang (monthly) :Land in Kota Kinabalu (monthly) - 400 1,000 - Royalty: publishing the recipe book :Translate children story books (requested by MOHE) 38,000 - - 22,000 Life Insurance (monthly): Self Aina Azmee 180 120 100 150 - - Example 1 EXAMPLE OF TAX PLANNING SOLE TRADER PARTNERSHIP ▪Sole traders should be resident in that year basis, so they can claim personal relief and rebate if any. ▪They can increase double deduction. Example; hiring the disabled workers ▪Maximise the personal reliefs. Example: SSPN max for RM8,000. ▪ Reduce non-allowable expenses. Example: Compound, speed trapped etc. ▪ Gave Zakat and Donation ▪ Upgrade donation to approve institution. ▪ Take fire insurance. ▪ Appoint disabled or senior citizen (6o years ≥) as empyees. ▪ Send staff for training programme. ▪ Reduce non-allowable expenses.

_______________________________________________________________________TAX PLANNING 4 | P a g e Education insurance: Asyfar Azmee - 160 100 - Parent’s medical expenses - 5,200 Donation: MAKNA (National Cancer Council) Orphanage Institution in Kinarut (Approved) Hamper for school sports tournament 3,000 2,000 - 2,000 - 200 Additional information: 1. The house in Penampang was rented out for the first time since 1 April 2022. Belows are expenses incurred related to the house: RM i. Kitchen maintenance expenses (50% is for the cost of 8,000 extending the kitchen) on 30 June 2022 ii. Advertising expenses to get the tenant 600 iii. Rent collection expenses 80 (monthly) iv. Legal fee for the rental agreement 500 2. The land was rented out since 1 June 2021. In 2023 the expenses incurred related to the land are: RM i. Property tax 2,400 per annum ii. Legal fee for renewal the agreement 600 3. Aqli and Aina have 3 children as follows: i. Ali – aged 23, studying Accounting at the Master level at Universiti Utara Malaysia. ii. Asyfar – aged 21, studying medicine at Lahore University (not approved by the Government). iii. Azmee- aged 8, studying at a special education school for deaf and mute. 4. In 2023, Aina bought a wheelchair for her sick mother which cost RM3,500. 5. During 2023, Aqli spent RM5,200 for chemoteraphy treatment for Aina who has cancer. 6. During 2023, Aqli expend RM800 for sport attire and RM1,500 for treadmill. Besides, he also expends RM400 for books and magazines. 7. On 1 March 2023, Aina spent RM400 for Influenza vaccination for her and her husband, Aqli. 8. During 2023, Aqli expends RM3,800 for her studies fee at UMS for pursuing a Master in children psychology. He also paid RM3,000 for Ali’s education fee at UUM. Required: a. Calculate the income tax payable in respect of Aqli according to the Combined assessment. for the year assessment 2023. b. Explain FIVE (5) suggestion on how Aqli can minimize his income tax payable.

_______________________________________________________________________TAX PLANNING 5 | P a g e a. Year assessment 2023: Aqli (Combined assessment) Aqli Aina RM RM RM RM S.4(b) Salary (4,500 x 9)/ (RM1,800 x 12) 40,500 21,600 Entertainment allowance (RM200 x 9) 1800 42,300 - 21,600 S.4(c ) Dividend Exempted - S.4(d): Rental House in Penampang (RM1,0000 x 9) Less: Allowable expenses Kitchen maintenance (40% x RM8,000) Rent collection expenses (RM70 x 9) - 9,000 (4,000) (630) 4,370 Land (RM400 x 12) Less: Allowable exp Property tax Legal fee for renewal Rental agreement 4,800 (2,400) (600) 1,800 Royalty Recipe book (RM38,000- RM20,000) Children story book (RM22,000-RM12,000) 18,000 - - 10,000 AGGREGATE INCOME (AI) 62,100 35,970 Less: Donation (limit 10% of AI) (5,000) (2,000) TOTAL INCOME 57,100 33,970 COMBINED TOTAL INCOME 91,070 Less: Personal Reliefs Self (9,000) Wife (4,000) Children- Ali (8,000) Asyfar (2,000) Azmee (6,000) Medical expenses for serious disease (5,200) Vaccination expenses (400) EPF (RM4,455 + RM 2,376) (4,000) Life Insurance (RM450 x 12) (3,000) Lifestyle (1,900) Education fee (3,800) (47,300) CHARGEABLE INCOME 43,770/ Tax Calculation: First RM35,000 RM600.00 Next RM8,770 x 8% RM701.60 Tax payable RM1,301.60 Answer

_______________________________________________________________________TAX PLANNING 6 | P a g e b. FIVE suggestion Aqli can minimize his tax payable 1. Aqli should apply for whole life insurance for himself or her wife. Whole life insurance is entitled for personal reliefs up to RM3,000 per annum. 2. Aqli should apply for education and medical insurance for himself, Aina or his childrens. Education and medical insurance are entitled for personal reliefs up to RM3,000 per annum. 3. Aqli should spend more on lifestyle such as subscribe internet under his name, buy lap top or buy more sport equipment up to RM 5,000. 4. Aqli and Aina should give more donations to an approved institution up to 10% of aggregate income which amounted RM6,210 for Aqli and RM3,597 for Aina. 5. Aqli should pay zakat. Zakat can reduce his tax payable according to the amount paid by him to the pusat zakat. The deductible amount for zakat is unlimited. 6.2 Tax planning for individual with Business Income Khai, aged 50 is a resident in year assessment 2023. He works as an engineer with Teguh Construction Bhd since 1 January 2019. Due to the company restructuring, Khai service was the terminated on 31 August 2023. Khai had been married with Maria, a housewife but divorced in 2017. They have a daughter, Shila, aged 22 who is studying in UMS. Shila had been engaged to her boyfriend, Ameer. Khai claimed for the relief of his daughter relief. Belows are information of Mr. Khai’s remuneration for the year 2023: RM Salary (monthly) 8,000 Entertainment allowance (monthly) 500 Gratuity 16,000 Servant (provided by his employer) (monthly) 500 Leave passagez: Pulau Pinang 1,000 : Seoul, South Korea 3,600 Dividend Received 3,000 Rental Received (monthly) 2,000 In 2019, Khai marry Lisa, who is a businesswoman. Lisa owns a Jelita boutique. Lisa is a widow and has two son with her late husband, Johan. Belows are informations on Lisa’s son: Example 2

_______________________________________________________________________TAX PLANNING 7 | P a g e i. Danny- aged 23, studying in UUM. He also a part time model who make an income RM10,000 per annum. ii. Daniel – aged 18, studying at Labuan Matriculation Centre. Belows are information of Jelita boutique: Jelita Boutique Income of Profit and Loss for the year ended 31 December 2023 Note RM RM Sales 180,000 Less: Cost of goods sold (35,000) Gross Profit 145,000 Add: Others income Dividend 2,500 Rental 6,000 8,500 153,500 Less: Others expenses Salaries 1 (42,000) Utility Bills 2 (12,000) Repair and maintenance 3 (4,200) Advertisement 4 (3,800) Donation (5,000) Depreciation (10,800) Entertainment expenses 5 (30,500) (108,300) Net Profit 45,200 Additional information: 1. Salaries included salaries for Andy, a senior staff, aged 60 years old who was appointed a store keeper with a salary amounted RM1,000 monthly. 2. Utility bills is for a period 1 October 2022 until 30 September 2023 for the whole building. 3. Included in repairs and maintenance is Danny’s car amounted RM1,250. 4. Included in the advertisement is advertisement (1 st tenant) for a rented accomodation, located at the level two the business premises. Level one was used as a boutique and level two was rented out to the outsider. 5. Entertainment expense includes: RM Entertainment allowance to marketing staff 4,000 Entertainment for potential client 5,000 Family’s day 6,000 6. During 2023, Khai paid RM800 per annum for property tax and RM50 monthly for the fire insurance ( for the house he was rented out) 7. Khai and Lisa has a daughter, Anita aged 2, Anita is mute and deaf.

_______________________________________________________________________TAX PLANNING 8 | P a g e 8. Lisa expends RM200 monthly for Anita’s kindergarten fee (registered with the Government). 9. Mr Khai has a mother who has cancer. He expends RM10,000 on his mother’ treatment in year 2023. 10. In year 2023, Khai also bought his mother a wheelchair for RM5,200 since his mother cannot walk anymore. 11. In year 2023, Khai allocate following amount for insurance: Types of Insurance Khai Lisa Anita RM RM RM Whole life (monthly) 200 100 100 Medical (monthly) 80 80 150 Education (monthly) - - 120 12. In the year 2023, Lisa bought Daniel a computer which cost RM2,000 and also subscribe an internet for RM100 monthly. 13. In the year 2023, Khai paid RM3,200 for zakat and RM10,000 for donation to the approved institution. 14. Capital allowance for year assessment 2023 is RM20,000 Note: All children were claimed by Khai Required: a. Calculate the net income tax payable in respect of Khai according to the combined assessment for the year assessment 2023. b. Explain FIVE (5) suggestions on how Khai can minimize his income tax payable. a. Year assessment 2023: Khai (Combined assessment) Khai Lisa RM RM RM RM S.4(a) Net Profit 45,200 Less: Others income Dividend (2,500) Rental (6,000) (8,500) Add: Non allowable expenses Utility bills: Prepayment (9/12 x RM12,000) 9,000 : Rented Building (3/12 x RM12,000) x 1/2 1,500 Repair and maintenance – Danny’s car 1,250 Answer

_______________________________________________________________________TAX PLANNING 9 | P a g e Entertainment allowance for marketing staff (50% x RM4,000) 2,000 Donation 5,000 Depreciation 10,800 Entertainment for potential client 5,000 34,550 Less: Double deduction expenses Senior citizen staff-Andy (RM1,000 x 12) (12,000) Statutory Business Income 59,250 Less: Capital allowance (20,000) Adjusted Business Income 39,250 S.4(b): S.13(1)(a) Salary (RM 8,000 x 8) 64,000 Entertainment allowance (RM500 x 8) 4,000 Gratuity [RM16,000- (RM1,000 x 4 years)] 12,000 80,000 S.13(1)(b) Servant (RM400 x 8) 3,200 Leave passage: Pulau Pinang Exempte d Seoul, South Korea (RM3,600-RM3,000) 600 3,800 Adjusted Employment Income 83,800 S.4(c) Dividend Exempted - S.4(d): Rental (RM2,000 x 12)/ Less: Allowable expenses Property tax Fire insurance (RM 50 X 12) Utility 24,000 (800) (600) - 22,600 6,000 - - (1,500) 4,500 AGGREGATE INCOME (AI) 106,400 43,750 Less: Donation (limit 10% of AI) (10,000) (4,375) TOTAL INCOME 96,400 39,375 COMBINED TOTAL INCOME 135,775 Less: Personal Reliefs Self (9,000) Wife/ Ex-Wife (4,000) Children- Shila (8,000) Danny - Daniel (1,000) Anita (6,000) Kindergarten fee (2,400) Medical expenses for parents-limit (8,000)

_______________________________________________________________________TAX PLANNING 10 | P a g e Basic supporting equipment (5,200) Life insurance: Khai & Lisa (RM300 x 12)- limit (3,000) Medical insurance: Khai, Lisa, Anita (RM310 x 12)- limit (3,000) Lifestyle (RM2,000 + RM1,200) (3,200) (52,800) CHARGEABLE INCOME 82,975/ Tax Calculation: RM First RM70,000 4,400.00 Next RM12,975 x 21% 2,724.75 Tax Payable 7,124.75 Less: Zakat (3,200.00) Net Tax Payable 3,924.75 b. FIVE suggestion Khai can minimize his tax payable: 1. Khai should upgrade his payment for zakat. Zakat can reduce his tax payable according to the amount paid by him to the pusat zakat. The deductible amount for zakat is unlimited. 2. Khai should expends more on lifestyle such as buy sport equipment and reading material and smartphone up to RM 5,000. 3. Khai should do complete medical checkup for himself, spouse or children which will reduce his tax payable up to RM1,000. 4. Khai can further his studies to upgrade his skills or knowledge. The education fee paid can be claimed for reducing his tax payable up to RM7,000 per annum. 5. Khai should keep his tax documents for 7 years as evidence on his expenses and remuneration.

_______________________________________________________________________TAX PLANNING 11 | P a g e 7.0 TUTORIAL TAX PLANNING FOR INDIVIDUAL Tutorial 7-1 Sofea aged 40 is a director at Suku Sakat Sdn Bhd in Kota Kinabalu, Sabah. She has been working with the company since January 2017. She provided the following information with respect to her income for the year assessment 2023. RM Director salary (monthly) 5,000 Dividend: Australian company (remitted) 12,000 Interest from Maybank 3,000 Rental- Tuaran, Sabah 10,000 Royalty from writing a book 90,000 Additional informations: 1. Sofea’s husband, Safie is disabled due to an accident two years ago. He is not working and has no source of income. 2. They have three unmarried children, aged 19 (Form 6), 21 and 23, who are both studying in the local universities. 3. She spent RM5,200 for her husband’s medical insurance premium and RM4,900 to buy a wheelchair. 4. RM1,500 was spent to purchase books for her children. 5. She purchased a laptop for RM2,500. 6. She contributed 11% to the Employee Provident Fund (EPF). 7. In November 2023, she contributed RM2,760 cash donation to an approved charitable institution. 8. She paid zakat of RM2,000 in year 2023. 9. She made a standing order of RM550 per month to the bank for payment of Skim Simpanan Pendidikan Nasional. You are required to: a. Calculate the income tax payable of Sofea for the year assessment 2023. b. Explain FIVE (5) suggestions on how Sofea can minimize her income tax payable.

_______________________________________________________________________TAX PLANNING 12 | P a g e Tutorial 7-2 Aziz and Atikah are resident in Malaysia for the basis year. They declared the relevant information about their income tax for the year of assessment 2023 Aziz Atikah RM RM Employment –Salary (monthly) 6,000 4,000 Rental (monthly) 650 1,500 Rent deposit 3,000 Electricity and water deposits 1,000 Advertising cost (for the first tenant) 200 Payment of rental agreement (for the first tenant) 250 Dividend (Thailand) 5,000 (1/2 remitted) Interest: CIMB 5,000 Bank Islam 4,700 Royalties: Translation of books 14,000 Transalation fees on transalation of literary work 10.600 (Both at the special request if the Ministry of Education) Additional information: 1. Insurance premium and EPF contribution were as follows: Aziz Atikah RM RM Premium paid of life insurance 1,500 2,000 EPF Contribution 5,400 4,600 2. They have three children: i. Suriani- 23 years, a student in a degree program at Universiti Kebangsaan Malaysia. ii. Shafiq- 19 years, a student in Diploma of Accountancy at Politeknik Kota Kinabalu. iii. Syukur- 15 years, a student at Sekolah Menengah Kebangsaan Tebobon, Kota Kinabalu. 3. Atikah donated to an approved institution of RM2,500 and bought educational books of RM600. She also paid zakat of RM700. 4. Aziz paid RM2,400 for his mother’s medical and also paid zakat of RM1,200. You are required to: a. Calculate the income tax payable of Aziz for the year assessment 2022 according to the combined assessment. b. Explain FIVE (5) suggestions on how Aziz can minimize his income tax payable.

_______________________________________________________________________TAX PLANNING 13 | P a g e Tutorial 7-3 Sheena has been working as the head of operations at Mantul Bhd located in Sandakan, Sabah since November 2017. She is divorced from Allan in 2019. Below are incomes received by Sheena for year 2023: 1. Salary of RM3,000 per month. 2. Dividend income: a. Received from Malaysian resident company in June 2023 amounting RM12,000. b. Remitted in RM16,000 from a foreign company in Sweeden in August 2023. 3. Interest of RM2,300 was received from a Malaysian resident bank in August 2023. 4. Sheena received income from rental. However, in 2023 she declared net loss RM23,000 after deducting the following expenses: a. renovation of RM30,000 b. repair and maintenance premises RM2,000 c. Renewed agreement RM1,500. 5. Received royalties from writing book amounting RM22,000. 6. The amount of interest amounting RM800 is from a fixed deposit in Bank Simpanan Nasional. 7. Allan paid alimony RM4,000 to Sheena. Additional Information: In 2023, Sheena incurs the following expenses: i. Life insurance premium is RM2,100. ii. Medical examination for herself amounting to RM500. iii. Child reliefs for • Shukri - 17 years old son who is pursuing a SPM. • Alya- 10 years old. iv. Cost of education insurance premiums for Alya amounting RM 500. v. Purchasing textbook for Shukri amounting RM1,300. vi. Medical expenses for Sheena’s father amounting RM7,000. vii. Purchasing a new personal computer for home use for RM3,289. viii. Anwar (Sheena’s husband) is paralyzed due to an accident.

_______________________________________________________________________TAX PLANNING 14 | P a g e You are required to: a. Calculate the income tax payable of Sheena for the year assessment 2023 according to the combined assessment. b. Explain FIVE (5) suggestions on how Sheena can minimize her income tax payable. Tutorial 7-4 Sulaiman is a professional engineer has been working with unify Construction Sdn Bhd since 1 July 2021. He also made some savings and investments in the year 2023. The following are the incomes received in the year 2023: RM Salary (after deducted EPF of 11%) 106,800 per annum Bonus 16,000 Dividend received from Tabung Haji 7,700 Dividend from ASB 23,000 En Sulaiman incurred the following expenses for the year ended 31 December 2023: Expenses RM Personal life insurance 6,000 Life insurance for children 7,200 Educational insurance for children 5,400 Medical expenses for En Sulaiman’s father 3,200 Book and magazines 700 Full medical examination 150 Zakat 5,700 Donation to an approved institution 10,000 Sulaiman’s wife has passed away four years ago. They have four children as follows: Shira 21 years old and studying in University of England Shika 19 years old and studying in UiTM, Shah Alam Balkis 18 years old and studying in Perlis Matriculation, Perlis Baiti 16 years old and studying in secondary school in Melaka You are required to: a. Calculate Sulaiman’s income tax payable for the year of assessment 2023. b. Explain FIVE (5) suggestions on how Sulaiman can minimize his income tax payable.

_______________________________________________________________________TAX PLANNING 15 | P a g e Tutorial 7-5 Ali and his second wife Ani need some help to complete their tax return (Form B) for the year assessment 2023 . They have provided the following information for this purpose: RM Ali’s Income Sole Proprietor Business Adjusted Loss 30,000 Capital allowance 10,000 Director’s fee 94,500 Malaysian Dividend 40,000 Ani’s Income Income from Royalties (Publication of books) 80,000 Other Details: 1. Ali made a cash gift of RM23,000 to a healthcare facility approved by the Ministry of Health. 2. Ali paid alimony of RM400 per month to his first wife from whom he divorced on 2 January 2023. 3. Ali and Ani paid RM4,000 each towards the cost of necessary basic supporting equipment for Alya. 4. Ali paid RM5,000 (part of the total cost) for the maintenance of Ani’s son, Johan who was over 18 years old, unmarried and studying full time at the local University in 2023. Johan is Ani;s son by her former husband from whom she is now divorced. 5. Ali bought his first personal computer for personal use. 6. Ali paid RM840 for a subscription of a broadband at home. You are required to: a. Calculate Ali’s and Ani’s income tax payable for the year of assessment 2023 based on separate assessment. b. Explain FIVE (5) suggestions on how Ali or Ani can minimize their income tax payable. Tutorial 7-6 Samuel is a Canadian citizen exercise his employment in Malaysia since 1 October 2021 and back to Canada on 21 March 2023 for a long leave due to the family matter. He intended to come back to Malaysia in January 2024. Belows are his income and expenses for year assessment 2023:

_______________________________________________________________________TAX PLANNING 16 | P a g e RM Salary (monthly) 8,000 Entertainment allowance (monthly) 500 Travelling allowance (monthly) 600 Driver 700 Accomodation (monthly) 2,500 Leave passage: Kota Kinabalu, Sabah 5,000 Bangkok, Thailand 6,800 Royalty (Translating the books) 30,000 Additional informations: 1. Samuel is married with Clara, a Malaysian citizen. Clara who has a online business. They have two children as follows: Chris- Aged 20, studying at a degree level in Accountancy at Toronto University. Melissa- Aged 10, studying at Kuala Lumpur International school. 2. Accomodation provided by his employer since his appointment is a fully furnished bungalow. 3. On 1 October 2023, Samuel expended RM8,200 for her mother’s cancer treatment who lived with him in Malaysia. 4. Samuel also expended RM200 monthly for Melissa’s education insurance. 5. He also paid RM600 for magazines and books for his children. 6. RM500 was incurred for him and his family for taking influenza vaccination before going back to Canada. 7. In the year 2023, Samuel make a donation to orphanage institution in Kuala Lumpur (approved) amounting RM3,000. You are required to: a. Calculate Samuel income tax payable for the year of assessment 2023. b. Explain FIVE (5) suggestions on how Samuel can minimize his income tax payable. Tutorial 7-7 Hakime is an accountant is an accountant at Sedap Food Industries Bhd. Apart from working as an accountant for the company, he also has a small business at home, selling homemade packaging food online. Followings are his income for the basis year 2023: a. Employment Income i. Salary of RM6,700 per month (gross). He contributed 12% of his monthly salary to EPF.

_______________________________________________________________________TAX PLANNING 17 | P a g e ii. A brand new Honda Accord with an annual value of RM3,600 was provided by his employer. However, petrol was not provided by the company. iii. He was provided with a semi furnished apartment (with air conditioners) valued at RM900 per month including furniture of RM200 until November 2023. In December 2023, he was provided a room at Cemerlang Hotel at the rate of RM110 per night. b. Business Income i. Adjusted income RM60,000 ii. Capital allowance (2023) RM12,000 iii. Balancing charge RM 3,000 iv. Unabsorbed capital allowance (2022) RM 1,700 v. Unabsorbed business loss carried forward from the year assessment 2022 was RM9,000. c. Hakime contributed RM400 cash and a secondhand computer worth RM1,000 to his daughter’s school library. d. His wife, Julia resigned from his job to futher her study at UMS. They have three children as follows: i. Adline- Aged 23, married and studying at UKM in Master of Accountancy. ii. Adyan- Aged 18, studying in upper 6 at Maktab Sabah. iii. Azreen- Aged 16, a form 4 student who is disabled due to the car accident two years ago. e. He spent RM2,300 on books and magazines for the year basis 2023. f. He bought supporting equipment for his daughter Azreen, cost RM5,000. g. He made payment of RM900 for his parent’s medical bills and RM1,300 for his parent in law’s medical bills. h. In 2023, a laptop worth RM2,200 was acquired by Hakime for Adyan. Another laptop was bought for himself, costing RM3,000. i. Hakime depositer RM1,000 for Adam and RM1,000 for Azrin in National Saving Scheme Fund (SSPN). j. In 2023, Hakime also paid RM2,200 for zakat. You are required to: a. Calculate Hakime income tax payable for the year of assessment 2023. b. Explain FIVE (5) suggestions on how Hakime can minimize his income tax payable.

_______________________________________________________________________TAX PLANNING 18 | P a g e 8.0 TAX PLANNING FOR COMPANY 9.0 TAX RATE FOR RESIDENT COMPANY TAX RATE FOR RESIDENT COMPANY FOR YEAR OF ASSESSMENT 2022 – 2023 2022 2023 Company or Non -SMEs Needs to fulfil the following conditions: • Paid-up capital > RM2.5 million • Paid-up capital < RM2.5 million, but Gross Income >RM50m 24 % 24 % ASPECT OF TAX PLANNING NEW COMPANY ▪Prepare the account accurately. ▪Know the non-taxable and taxable incomes. ▪Planning the right time to purchase and dispose assets. Claim capital allowance on fixed assets. ▪Fill the tax form or efilling on time, declare accurately. SME COMPANY ▪ Apply for specific industry tax incentive such as MSC Status. ▪ Estimate tax oayable amount accurately to avoid the penalty on under estimation of tax. ▪ Start early to optimize tax deduction, ie: donation to an approved institution. COMPANY ▪ Increase in allowable expenses and avoid non allowable expenses. ▪ Donate to approved institutions ▪ Make sure company are resident company. They can pay tax less than 28% if not resident. ▪ Start up the business with only RM2.5M as a SME's Company. So they can reduce tax rate for only 15%, 17% and 24% (starting year asssement 2023) ▪ Increase double deduction expenses. ▪ Apply for tax incentives. ▪ Planning the right time to purchase and dispose the assets. Claim capital allowance on fixed assets.

_______________________________________________________________________TAX PLANNING 19 | P a g e Small and Medium Scale Company (SMEs) Needs to fulfil the following conditions: • Paid-up capital < RM2.5 • Gross income of all business < RM50m • 1 st RM600,000 of chargeable income 17 % • Next (chargeable income > RM600,000) 24 % Small and Medium Scale Company (SMEs) Needs to fulfil the following conditions: • Paid-up capital < RM2.5 • Gross income of all business < RM50m • 1 st RM150,000 of chargeable income • 2 nd RM600,00 of chargeable income • Next (chargeable income > RM600,000) 15 % 17 % 24 % • Next (chargeable income > RM600,000) 24 % 24% 10.0 EXAMPLE OF TAX PLANNING FOR COMPANY GOODs Company is established profitable manufacturing company. They need your advice either to choose the Pioner Status (PS) or investment Tax Allowance (ITA) becouse they handling promoted project name in-house research. The paid-up captial is RM1 million. The particular of account Statement Profit And Loss For Year Ended 31 December 2023 RM RM Sales 2,450,000 (-) Cost of goods sold (1,570,000) Gross profit 970,000 (-) Operating expenses Administration cost 250,000 Marketing cost 100,000 Financial cost 50,000 (300,000) Net profit 670,000 EXAMPLE 3

_______________________________________________________________________TAX PLANNING 20 | P a g e Other Information: 1. Non allowable expenses RM5,000 2. Capital allowance RM25,000 3. IBA allowance RM38,000 4. Qualifying expenditure for promoted project RM70,000 You are required to: Compute the tax liability for both incentive and compare either PS ot ITA is better for GOODs Company for year assessment 2023. State the amount of tax saving. Tax Saving for GOODs Company for year assessment 2023. PIONEER STATUS RM Net Profit 670,000 (+) N/A 5,000 Adjusted Income 675,000 (-) Capital Allowance -25,000 (-) IBA Allowance -38,000 Statutory Income 612,000 (-) 70% Exemption for PS 428,400 Pioneer Status / Chargeable Income 183,600 Tax Rate 15% Tax Payable 27,540 ITA RM Total QCE 70,000 ITA (60% * QCE) 42,000 ITA b/f 0 ITA current year 42,000 Total ITA 42,000 Exempted: @ 70% * SI or 60% * QCE 42,000 60% * QCE = RM42,000 or 70% * SI = RM428,400 (lower) ANSWER

_______________________________________________________________________TAX PLANNING 21 | P a g e Statutory Income 612,000 (-) ITA Utilised -42,000 Chargeable income 570,000 Tax Rate 15% Tax Payable 85,500 Tax Saving = RM 27,540 – RM 85,500 = RM 57,960 GOODs Company should choose Pioner Status incentive because it will reduce the tax payable by RM57,960 Al Fateh Sdn Bhd is trading company incorporated in November 2022 with a paid-uo capital of RM3 million. Its first account made up to 31 December 2023 and thereafter to 31 December. At the close of its first account, the company computed its adjusted income for tax purpose at RM33,000 including the following expenditure which was incurred prior to 31.12.2023. The preparation and printing of the Memorandum and Articles of Association RM3,800 The drawing up of the preliminary contract and stamps duties thereon RM4,100 The seal of the company RM900 The training of 3 contract employees to impart basic skill to enable the company to commence its business RM7,200 The company did not receive any training grants from the Government, and it did not qualify for double deduction of any training expenses. The capital allowance for the first years of assessment is RM2,100. Advise Al Fateh Sdn Bhd on how to minimize the company’s tax payable. RM ADJUSTED INCOME 33,000 Preparation and printing M&A - Drawing prelimanary contracts and stamp duties - Seal the company - (-) Double Deduction : Training - 33,000 (-) Capital Allowance -2,100 EXAMPLE 4 ANSWER

_______________________________________________________________________TAX PLANNING 22 | P a g e STATUTORY INCOME/CHARGEABLE INCOME 30,900 TAX PAYABLE : 30,900 X 24% 7,416 IF PAID UP CAPITAL ONLY RM2.49M (become SME’s company) TAX PAYABLE : 30,900 X 15% 4,635 Total of tax savings is RM2,781 [7,416 - 4,635]. Syarikat Jelajah Borneo Sdn Bhd is a manufacturing company in Bau, Sarawak. The company prepares accounts on 31 December each year. The paid-up capital of the company is RM3,200,000. Detailed Statement of Comprehensive Income for Jelajah Borneo Sdn Bhd for year the ended 2023 was as follows: Note RM RM Sales 3,000,000 (-)(-) Cost of Sales ( 1,836,500) GROSS PROFIT 1,163,500 (+) Interest from fixed deposit 13,500 1,177,000 (-) Operational expenses Operating expenses 120,000 Payroll costs 1 281,000 Depreciation 23,000 Entertainment 2 62,000 Professional fees 3 26,000 Research & Development expenses 4 59,000 Utility 43,000 Donation 5 37,500 651,500 Net Profit Before Tax 525,500 (-) Tax Provision 33,000 Net Profit After Tax 492,500 Notes to the account: 1. Payroll costs comprise of: • Salaries and bonuses – RM235,000 (include salary for a disabled employee amounting to RM18,000) • EPF contribution – RM46,000 EXAMPLE 5

_______________________________________________________________________TAX PLANNING 23 | P a g e 2. Entertainment expenses includes: • Wedding gift to the customer – RM6,000 • Entertainment for Annual General Meeting of the company – RM26,000 • Gift with business logo for customer’s annual dinner – RM30,000 3. Professional fee comprises of: • Audit and accounting fee – RM11,000 • Tax filing fees – RM12,000 • Legal fees for the purchase of land – RM3,000 4. Research and Development expenses includes: • Cash contributions to approved research institution – RM45,000 • Expenses incurred in obtaining halal certification – RM14,000 5. The donation was made by cash to: • a public library – RM23,000 • Sarawak State Government – RM2,500 • Business Zakat – RM12,000 Additional informations: Capital allowance for the year ended 2022 was RM35,000. You are required to: a. Determine the tax payable for Syarikat Jelajah Borneo Sdn Bhd for the year of assessment 2023. b. Discuss FIVE (5) ways on how Jelajah Borneo Sdn Bhd can minimize its tax payable in year assessment 2024 a. Tax payable for Syarikat Jelajah Borneo Sdn Bhd for the year of assessment 2023. RM Sec 4 (a) : Business Income Net Profit before tax 525,500 (-) Other Income (13,500) (+) Non Allowable Expenses/Any Items : EPF Contribution 1,350 Wedding gift 6,000 Entertainment for Annual General Meeting 26,000 Legal fees for the purchase of land 3,000 Donation 375,000 ANSWER

_______________________________________________________________________TAX PLANNING 24 | P a g e (-) Double Deduction Approved research institution (45,000) Halal certification (14,000) ADJUSTED INCOME 526,850 (-) Capital Allowance (35,000) STATUTORY /AGGREGATE INCOME OF BUSINESS 491,850 (-) Donation - Public Library (20,000) - State Government (2,500) - Zakat (2.5%) (12,000) TOTAL INCOME 457,350 Tax Rate 24% TAX PAYABLE 190,784 b. FIVE (5) ways on how Jelajah Borneo Sdn Bhd can minimize its tax payable in year 2024: 1. Increase in allowable expenses and avoid non allowable expenses. 2. Donate to approved institutions 3. Apply for tax incentive such Pioneer Status or Invesment Tax Allowance 4. Start up the business with only RM2.5M as a SME's Company, so they can reduce tax rate for only 15%, 17% and 24%. 5. They can increase double deduction. Tips For Income TAX SAVING ▪ Claim all possible tax deduction ▪ Maximize personal tax reliefs. ▪ Submit and pay income tax on time ▪ Follow Income Tax Act ▪ Be charitable ▪ Earn Tax-free income ▪ Be resident in the year assessment

_______________________________________________________________________TAX PLANNING 25 | P a g e 11.0 TUTORIAL TAX PLANNING FOR COMPANY Tutorial 11-1 Cili Padi Bhd has been in the production of tempe crispy, a local snack food food business since 2022. Their paid up capital is RM3 million. The Statement of Profit and Loss for the year ended 31 December 2023 was as follows: Cili Padi Bhd Statement of Profit and Loss for the year ended 31 December 2023 Note RM RM Sales 9,500,000 Add: Other income 1 200,000 Less: Cost of sales 2 6,000,000 9,700,000 Operating expenses 3 2,700,000 (8,700,000) Profit before tax 1,000,000 Notes to accounts 1. Others income includes: RM Dividend received from investment 60,000 Foreign exchange gain on payment of other creditors 20,000 Rental (period for July 2022 until December 2023) 120,000 2. Cost of sales includes: RM Obsolete stock written off 15,000 Approved Research and Development expenses 150,000 Foreign exchange loss on payment of trade creditors 60,000 3. Operating expenses includes: RM Entertainment of non-business client 60,000 Entertainment for business client 150,000 Insurance paid for staff medical benefits 50,000 Insurance paid for managing director 30,000

_______________________________________________________________________TAX PLANNING 26 | P a g e Salary for handicapped employees 40,000 Repair and maintenance of office 200,000 Replacement of machine with better quality 80,000 Approved donation 70,000 Water & Electricity 24,000 Building annual maintenance 12,000 Legal fee on loan agreement 10,000 Sponsoring cultural performer from Turkey & South Korea 320,000 Hamper for loyal customer during Christmas Day 6,000 Other information: 1. Cost of fixed assets and annual allowance rate as at 1 st January 2023. Assets (Annual Allowance Rate) Cost (RM) Plant and Machinery (20%) RM300,000 Commercial Vehicles (20%) RM250,000 Furniture and Fittings (10%) RM100,000 Note: Show all the relevant workings 2. Rental is for a space rented as a food stall in the manufacturing building. The space covered 1/10 of the total building. 3. Water & Electricity and Building annual maintenance are for a whole manufacturing building. 4. The loan is for investment. 5. In 2024, Cili Padi Bhd plans to market their product to overseas since their product are Malaysian authentic and can be promote to the world. You are required: a. Perform the calculation of the tax payable in respect of Cili Padi Bhd forthe year of assessment 2023. b. Discuss FIVE (5) ways on how Cili Padi Bhd can minimize its tax payable in year assessment 2024. (Note: Show the calculation on how your suggestion effect the tax payable)

_______________________________________________________________________TAX PLANNING 27 | P a g e Tutorial 11-2 Senja Merah Sdn Bhd, a company with a paid up share capital of RM1.2 million on 1 July2021 closed its accounts annually to 30 June. Senja Merah Sdn Bhd produces a plant based cosmetic extracted from pineapple. Senja Merah Statement of Profit and Loss for the financial year ended 30 June 2023 is as follows: Senja Merah Sdn Bhd Statement of Profit and Loss for the year ended 30 June 2023 Notes RM’000 RM’000 Sales 39,000 Less: Cost of Sales 1 (30,000) Gross Profit 9,000 Add: Other Income Dividend: Investment from Canada 9 Compensation: Breach of Business Contract 72 81 9,081 Less: Expenses Marketing Expenses 2 217 Finance Charges 3 7 Salaries 4 6,013 Company Secretarial Fees 10 Tax Filing Fees 19 6,266 Profit Before Taxation 2,815 1. Cost of Sales includes: RM’000 • Depreciation of plant, propertyand equipment 9,000 • Payment to approved research and development (R&D) company comprise of: i. Cost of plant and machinery for R&D 40 ii. Research staff salaries 1,000 iii. Materials for research project 150 2. Marketing expenses comprises: • Cash donation to unapproved institution amounted to RM95,000. • Sponsorship of the local football league entitling Senja Merah to have free advertisement showcasing the company logo and products amounted RM30,000. • Souvenirs without company’s logo for a customer’s annual dinner amounted RM84,000. • Entertainment allowance for marketing staff amounted to RM8,000.

_______________________________________________________________________TAX PLANNING 28 | P a g e 3. Finance Charges include interest expenses arising from the bank loan forinvestment to earn the dividend income. 4. Salaries include remuneration RM2,000 monthly for Samari, aged 62 who was appointed as a storekeeper since 1 August 2023. 5. Capital allowance for the year of assessment 2023 has been computed at RM120,000. 6. Business loss from year 2022 is RM15,000. Additional informations: Senja Merah Sdn Bhd plan to introduce a new product to South Korea next year. Unfortunately, they do not have enough information on the data of the purchasing trend in South Korea. You are required to: a. Perform the calculation of the tax payable in respect of Senja Merah Sdn Bhd for the year of assessment 2023. b. Discuss FIVE (5) ways on how Senja Merah Sdn Bhd can minimize its tax payable in year assessment 2024 (Note: Show the calculation on how your suggestion effect the tax payable) Tutorial 11-3 Duka Lara Sdn Bhd was incorporated on 1 January 2014 and commenced its operation with an authorized capital and paid up share capital of RM2,800,000. The company involves in a manufacturing and prepares its account on 31 December annually. Below is the Statement of Profit and Loss for the year ended 31 December 2023. Duka Lara Sdn Bhd Statement of Profit and Loss for the year ended 31 December 2023 Notes RM RM Sales 1 46,000,000 Less: Cost of sales (25,000,000) Gross Profit 21,000,000 Add: Other Income Bad debt recovered 50,000 Less: Expenses Secretarial fee 30,000 Staff cost 2 5,782,300 Repair and maintenance 3 167,000

_______________________________________________________________________TAX PLANNING 29 | P a g e Donation 4 156,700 Entertainment expenses 5 190,000 Advertisement 6 470,000 Depreciation 2,600,000 Travelling expenses 7 390,000 Cash losses due to theft and embezzlement 8 55,000 (9,841,000) Profit before tax 11,209,000 Notes to the account: 1. RM85,000 of sales and RM15,000 of cost of goods sold not yet recorded the account. 2. Staff cost including remuneration for Castello, who is ex-convicts. His monthly salary isRM3,000 monthly commencing in February2023. 3. Included in repair and maintenance expenses are: RM i. Replace a broken office glass door 8,000 ii. Insta1l a new built in office furniture 18,000 iii. Compensation paid to the customer due to the fault in a product sold 20,000 iv. Legal fee for a new loan agreement 7,000 4. Donation comprises: RM i. Gift of money to the Minister of Health for COVID 19 60,000 ii. Gift to orphanage institution 30,000 iii. Sponsoring iftar during Ramadhan to an approved orphanage institution 10,000 iv. Business zakat 56,700 5. Entertainment expenses comprises of: RM i. Annual dinner for staff 100,000 ii. Reimbursement to marketing staff (spent on the customer) 80,000 iii. Dinner with the potential client 2,000 iv. Gift of flowers to the client during their new opening store 5,000 v. Free sample of a new product 3,000

_______________________________________________________________________TAX PLANNING 30 | P a g e 6. Advertisement expenses includes: RM i. Promotion product in Seoul, South Korea 275,000 ii. Approved training programmed for disabled person. (Not employee) 20,000 iii. Acquisition of paintings for the showroom 12,000 iv. Loan to customer written off 30,000 7. Travelling expenses including holidays expenses for Kassim, a senior management staff and his family to Makkasar, Indonesia amounted RM5,000 and remuneration for the excellent staffs to Langkawi amounted RM30,000. 8. A former accountant was caught for the theft and embezzlement and a police report was made. Additional information: i. Brought forward loss of RM92,000 from the year assessment 2022. ii. Current capital allowance is RM1,300,000 You are required to: a. Perform the calculation of the tax payable in respect of Duka Lara Sdn Bhd for the year assessment 2023. b. Discuss FIVE (5) ways on how Duka Lara Sdn Bhd can minimize its tax payable in year assessment 2024. (Note: Show the calculation on how your suggestion effect the tax payable) Tutorial 11-4 Diamond Bhd is engaged in the high technology production of custom-made vehicle with paidup capital RM3,000,000. The company’s Statement of Profit and Loss for the year ended 31 December 2023 as following: Notes RM RM Sales 1,450,550 Less: Cost of sales 1 (614,400) Gross Profit 836,150 Add: Other Income Rental 36,000

_______________________________________________________________________TAX PLANNING 31 | P a g e Less: Expenses Salaries and EPF 2 78,000 Repair and maintenance 3 32,000 Depreciation 80,000 General expenses 4 19,000 Donation 5 60,000 Provision for doubtful debt 6 5,000 Administration fee 7 15,000 Utilities 15,000 (304,000) Profit before tax 568,150 Notes to the account: 1. Included in cost of sales are: i. The provision of warranty claims for faulty furniture types in respect of claims not yet settled RM27,000 ii. Gift a bedroom set to her daughter as a wedding gift, cost RM3,000. The selling price for the bedroom set is RM6,000. iii. Bought a new machine (bought on 1 April 2023) RM10,000 2. Salaries and EPF includes: Salaries (RM) EPF (RM) Total Manager (disabled) 12,500 2,500 15,000 Tuan Rudy (Owner) 18,000 2,000 20,000 Staff 35,800 7,200 43,000 Total 66,300 11,700 78,000 3. Repair and maintenance expenses include: RM i. Decoration a showroom 6,000 ii. Repair the lorry (to freight out the goods) 2,000 iii. Repainting the office 4,000

_______________________________________________________________________TAX PLANNING 32 | P a g e 4. General expenses comprise from: RM i. Cost of printing the annual reports for the annual general meeting 5,000 ii. Wedding gift to the customer 1,000 iii. Training program fee for staff (approved by MIDA) 10,000 5. Donations are to: RM i. An approved public library 35,000 ii. Sport equipment for an activity approved by Minister 10,500 iii. Business zakat 14,500 6. Provision for doubtful debts are from: RM i. Loan to staff 1,800 ii. Receivable accounts 2,200 7. Administration fees include: RM i. Audit fee 2,000 ii. Tax fee (for company’s tax planning) 3,000 iii. Registration of product trademarks in overseas for promotion purposes 10,000 8. Capital allowance for year 2023 is RM45,000 not included a new machine. You are required to: a. Perform the compute of the tax payable in respect of Diamond Bhd for the year assessment 2023. b. Discuss FIVE (5) ways on how Diamond Bhd can minimize its tax payable in year assessment 2024 (Note: Show the calculation on how your suggestion effective tax payable)

_______________________________________________________________________TAX PLANNING 33 | P a g e Tutorial 11-5 Persona Cinta Sdn Bhd manufacture muslimah attire. The share paid-up capital is RM2,000,000. The Statement of Profit and Loss for the year ended 31 December 2023 was as follow: Persona Cinta Sdn Bhd Statement of Profit and Loss for the year ended 31 December 2023 Note RM RM Sales (1) 360,800 Cost of goods sold Opening stock 21,434 Purchases 140,000 161,434 (-) Closing stock (23,000) (138,434) 222,366 (+) Other income Interest (2) 5,200 Rental (3) 9,000 14,200 (-) Other expenses Depreciation 5,300 Salary (5) 76,220 EPF (5) 14,512 Utilities bills (6) 7,200 Repair and maintenance (7) 8,500 Rental (8) 12,000 Donation (9) 9,000 Entertainment expenses (10) 5,880 Sundry expenses (11) 12,800 (200,912) Net profit 35,654 Notes to the accounts: 1. Included in the sales is the sale of a business car for RM10,000. 2. Interest income isincome from an investment on fixed deposits at Public Bank Berhad. 3. Rentalreceived is forthe period of August 2021 until March 2023. The company owned the manufacturing two store building which is the second floor it was rented out.

_______________________________________________________________________TAX PLANNING 34 | P a g e 4. Salary and EPF Employee Gross Salary (RM) EPF Contribution Employer (RM) Employee (RM) Siti (owner) 30,500 5,545 3,355 Ahmad 15,000 3,160 1,650 Nabil 17,040 3,188 1,874 Seth* 13,680 2,619 1,505 Total 76,220 14,512 8,384 * Seth is an ex convicts, aged 35 years old. Note: Show all the relevant workings 5. ¼ ofthe utilities bills is for personal use. The balance ofthe utilities bill is for the whole building. 6. Repair and maintenance include: Instal steel doors for the company’s store RM 3,500 Repair her the air conditioners in the office RM 2,000 Repair shop floor RM 3,000 7. Rental fees include: Rental fee for Siti’s son who is studying at University Malaysia Sabah RM5,000 Rental of delivery van RM4,000 Rental of manufacturing special machine RM3,000 8. Donation includes: To an employee who had an accident RM 2,000 R&D Unit, UKM RM 5,000 Business zakat RM2,000 9. Entertainment expenses includes: Company secretarial fee RM2,000 Tax planning fee RM3,000 Hamper for loyal customer during Merdeka Day RM880 10. Sundry expensesinclude: Petrol expenses for deliveryvehicle RM 400

_______________________________________________________________________TAX PLANNING 35 | P a g e Provision for foreign exchange loss on stock RM 10,000 Annual general meeting RM 2,800 Required: a. Perform the calculation of the tax payable in respect of Persona Cinta Sdn Bhd for the year assessment 2023. b. Discuss FIVE (5) ways on how Persona Cinta Sdn Bhd can minimize its tax payable in year assessment 2024. (Note: Show the calculation on how your suggestion effect the tax payable) Tutorial 11-6 Mantul Sdn Bhd was incorporated in Malaysia on 27 October 2017 with authorized share capital of RM3,000,000. It commenced its business of food manufacturing on 1 January 2023 with paid up capital of RM1,500,000. The company’s financial statement was as follow: Mantul Sdn Bhd Statement of Profit and Loss for the year ended 31 December 2023 Notes RM RM Sales 1,080,020 Less: Cost of sales (526,690) Gross Profit 553,330 Add: Other Incomes Dividend 1 13,000 Interest 2 2,000 15,000 568,330 Less: Expenses Professional fees 3 19,000 Depreciation 20,500 Marketing and promotions 4 9,500 Rental of premises 24,000 Staff annual dinner 3,800 Staff costs 5 389,800 Sundry expenses 6 22,710 Travelling expenses 7 15,280 (504,590) Profit before tax 63,740

_______________________________________________________________________TAX PLANNING 36 | P a g e Notes to the accounts: 1. Dividend income is from Malaysia resident company (net). 2. Interest income includes is from loan to customer amounted RM2,000 3. Professional fees include: • Purchase new accounting system, Autocount amounted to RM3,000. Secretarial and tax filing fee amounted to RM16,000. • Secretarial and tax filing fee amounted to RM16,000. 4. Marketing and promotions include: • The cost of promotional samples of products amounted to RM3,500. • Professional fee paid for promoting company’s brand in Middle East amounted to RM6,000. 5. Staff costs include: Remuneration of a disabled employee amounted to RM12,000. Contribution to EPF at the rate of 20% for the general manager whose remuneration for the year 2023 was RM120,000. 6. Sundry expensesinclude: • Entrance fee paid to Saujana Golf Club of RM2,710. Cash donation to approve organization of RM3,000. Purchase new machine for manufacturing, cost RM8,000 • Rental amounted RM 9,000 (for June 2023 until March 2024) 7. Travelling expenses includes: • Entertainment allowance for marketing staff amounted to RM3,800 • Leave passage to Bali for staffs Asy and Azy as their wedding gift amounted to RM5,000. Penalty for a lorry (used for delivery) due overweight carriage amounted RM400 Expenses for internship programme (approved by Government) amounted RM4,000 Additional information: Capital Allowance is totaled at RM26,000 for the year of assessment 2023 not included new machine. Required: a. Perform the calculation of the tax payable in respect of Mantul Sdn Bhd for the year assessment 2023. b. Discuss FIVE (5) ways on how Mantul Sdn Bhd can minimize its tax payable in year assessment 2024. (Note: Show the calculation on how your suggestion effect the tax payable)

_______________________________________________________________________TAX PLANNING 37 | P a g e Tutorial 11-7 Bossku Kaya Sdn Bhd, a company with paid up capital share of RM2.2 million on 1st January 2022 makes up its accounts annually to 31 December. Bossku Kaya Sdn Bhd manufactures component parts for a Vacuum cleaner in Kota Kinabalu Sabah. Bossku Kaya Sdn Bhd of Statement of Profit and Loss for the year ended 31 December 2023 was as follows: Bossku Kaya Sdn Bhd Statement of Profit and Loss for the year ended 31 December 2023 Note RM R M Sales 51,000,000 Less: Cost of sales 1 (33,000,00 0) Gross Profit 18,000,000 Add: Others Income Dividend 12,000 Interest income on overdue debtor 75,000 Foreign exchange gains 2 75,000 162,000 18,162,000 Less: Expenses Company secretarial fees 10,000 Marketing expenses 3 230,000 Salaries 4 5,916,000 Tax filing fees (to approved tax agent) 19,000 Advertisement 5 100,000 (6,275,000) Profit before tax 11,887,000 Notes to the accounts: 1. Cost of sales includes: RM Depreciation of plant, property and equipment 12,000,000 Research and Development expenditure 1,180,000 Participating in ISO 2022 Award 10,000 2. Foreign exchange gain on trade receivables (realized) is RM75,000

_______________________________________________________________________TAX PLANNING 38 | P a g e 3. Marketing expenses comprise: RM Sponsoring gift of company’s product without logo for customer’s annual dinner 50,000 Expenditure incurred in international trade fair held in Singapore for promotion of export by MITI 33,000 Cash donation to an approved institution 92,000 Renovation office for Covid’19 Test Lab 37,000 Entertainment for company’s annual general meeting 10,000 Acquisition of paintings for showroom 8,000 4. Salaries includes remuneration of RM 12,000 for a member of staff who was certified disabled by the relevant authority and 21% rate for EPF payment. 5. Advertisement includes: RM Provision of Scholarship to student 20,000 Training employees on work practices for flexible work hours 12,000 Expense for designing new company logo 8,000 6. The capital allowance for the year assessment 2023 have been computed at RM 148,000. 7. The company paid business zakat amounted to RM 540,000 for year 2023. Required: a. Perform the calculation of the tax payable in respect of Bossku Kaya Sdn Bhd for the year assessment 2023. (70 marks) b. Discuss FIVE (5) ways on how Bossku Kaya Sdn Bhd can minimize its tax payable in year assessment 2024. (Note: Show the calculation on how your suggestion effect the tax payable) Tutorial 11-8 Impiana Sdn Bhd commenced its operation with an authorized and paid up capital of RM3 million on 1 January 2019 . The company located in Kota Kinabalu Sabah and selling traditional Malaysian furniture from teak wood. For the year ended 31 December 2023, its Statement of Profit and Loss was as follows:

_______________________________________________________________________TAX PLANNING 39 | P a g e Notes RM’000 Sales 23,200 Less: Cost of sales 1 (18,000) 5,200 Add: Other income 2 80 5,280 Less: Expenses Salary 3 (2,550) Professional fee 4 (90) Donation 5 (100) Provision for doubtful debt 6 (30) Administrative expenses 7 (46) Profit Before Taxation 2,464 Notes: 1. Cost of salesincluding: i. Training programme fee (approved by Malaysian Industrial Authority (MIDA) for two company staff amounted RM5,000 for each person. ii. Gift to loyal customer as appreciation, cost RM3,000 2. Other income comprises: i. Interest charged on trade debtors for late payment of account worth RM30,000 ii. Dividend from Bank Rakyat worth RM50,000 3. Salary including: i. Salary for two disabled staff amounting RM2,200 monthly for each staff. ii. EPF for staff amounted RM220,000 which is 25% of the staff salaries: 4. Professional fees including: i. Secretarial fee RM15,000 ii. Tax planning fee RM12,000 iii. Stamp duty on increase in authorized share capital worth RM50,000 iv. Legal fee for acquiring loan for company’s investment amounted RM5,000 v. Renew of license for accounting software for the business amounted RM8,000

_______________________________________________________________________TAX PLANNING 40 | P a g e 5. Donation comprises: i. Cash donation of RM60,000 for upgrading school’s library facilities around Sepanggar. ii. Cash donation of RM40,000 for state government 6. The provision for specific doubtful debt during the year is 20% from trade receivable account. The trade receivable account on 31 December 2023 is RM120,000. 7. Administrative expenses consist of: i. Cost of printing and distribution of annual reportRM6,000 ii.Gift without business logo for customer’s annual dinner amounting RM40,000 Additional information: Below is information of assets owned by Impiana Sdn Bhd for the year assessment 2023 Assets Purchase Date Cost (RM) Annual Allowances Van 01.01.2022 150,000 20% Machine 01.03.2023 160,000 15% Note: Show all the relevant workings Required: a. Perform the calculation of the tax payable in respect of Impiana Sdn Bhd for the year assessment 2023. (70 arks) b. Discuss FIVE (5) ways on how Impiana Sdn Bhd can minimize its tax payable in year assessment 2024. (Note: Show the calculation on how your suggestion effect the tax payable) Tips For Income TAX SAVING ▪ Claim all possible tax deduction ▪ Submit and pay income tax on ▪ Follow Income Tax Act ▪ Apply for tax incentive ▪ Seek the advice of tax consultant ▪ Be charitable ▪ Earn Tax-free income ▪ Reduce Your Tax Rate (SME’s company)

BIBLIOGRAPHY Adiebah, A., Azizah, A.R., & Noorul Áshikin, M.S. (2023). Handbook For Malaysian Taxation II Polythenic’s Syllabus (2nd Session 2022/2023). Pulau Pinang, Malaysia: Azimat Advance Venture. Segaran, K.S., & Singh, V. (2021). Malaysia Master Tax Guide 2021 (38th ed.). CCH (Malaysia) Sdn. Bhd. Kasipillai, J. (2019). A Guide to Malaysian Taxation (5th ed.). Malaysia: Oxford Fajar Sdn. Bhd. Income Tax Act, 1967.

TAX PLANNING MY WAN NORAZAH BINTI MAMAT @ WAN MAHMUD SAIMA BINTI SALENG WORKBOOK 1st Edition