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Course: Taxation 2 Course Code: TAX517 Date: APRIL 2020 Time: 1 Hour

1. The document is a common test for a Taxation 2 course, containing an accounting case study about a company called COVIDA Sdn Bhd and questions about its income tax calculation and treatment of bad debts. 2. COVIDA Sdn Bhd manufactures electronic chips and made a net profit of RM1.9 million in 2019. The test-taker must calculate its income tax liability based on information provided about revenue, expenses, allowances and other notes. 3. The second question asks about the tax treatment of a bad debt owed by a Thai company, King Kap PLC, to another company called Corronna Sdn Bhd. The test-taker must explain the tax

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162 views

Course: Taxation 2 Course Code: TAX517 Date: APRIL 2020 Time: 1 Hour

1. The document is a common test for a Taxation 2 course, containing an accounting case study about a company called COVIDA Sdn Bhd and questions about its income tax calculation and treatment of bad debts. 2. COVIDA Sdn Bhd manufactures electronic chips and made a net profit of RM1.9 million in 2019. The test-taker must calculate its income tax liability based on information provided about revenue, expenses, allowances and other notes. 3. The second question asks about the tax treatment of a bad debt owed by a Thai company, King Kap PLC, to another company called Corronna Sdn Bhd. The test-taker must explain the tax

Uploaded by

anis izzati
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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CONFIDENTIAL AC220/MARCH-JULY 2020/TAX517

UNIVERSITI TEKNOLOGI MARA


KAMPUS MELAKA
COMMON TEST

COURSE : TAXATION 2
COURSE CODE : TAX517
DATE : APRIL 2020
TIME : 1 HOUR

INSTRUCTIONS TO CANDIDATES

1. This question paper consists of one (1) question.

2. Answer ALL questions.

NAME :
STUDENT ID :
GROUP :
LECTURER :

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO

1
CONFIDENTIAL AC220/MARCH-JULY 2020/TAX517

QUESTION 1

A.

COVIDA Sdn Bhd (CSB) is a company venturing into manufacturing of electronic chips for
telecommunication industry. The company is having paid up capital of RM2.55 Million and
resident in Malaysia for the year of assessment 2019. The company closed its account at 31
December yearly. The following are the information pertaining to the accounting period of
2019:

Note RM RM
Sales 7,500,000
Less: Cost of goods sold 1 (4,475,000)
Gross profit 3,025,000
Add: Other income 2 176,000
3,201,000
Less:

Salaries and bonus 3 245,250


EPF contributions 45,000
Marketing and entertainment 4 98,000
Training 5 24,600
Payment for technical know-how 6 22,000
Legal and Professional fees 7 60,600
Leasing 8 192,000
Foreign exchange loss/gain 9 29,300
Freight and insurance 10 61,000
Bad debts and doubtful debt 11 43,000
Social responsibility 12 355,000
Zakat contribution 25,000
Depreciation 100,000 (1,300,750)

Net profit before tax 1,900,250

Notes:

1. The cost of goods sold includes provision for damage electronic components
amounting to RM140,000.

2. Other income comprises:


RM
Dividend received from Gobang Maju Sdn Bhd (single tier) 147,000
Interest charged by the company on late payment debtor 16,000
Profit on from disposal of a machine (Last residual value and sales
proceed amounting to RM22,000 and RM30,000 respectively) 13,000

3. Salaries and bonus:


RM
Salaries and bonuses for employees 228,950
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CONFIDENTIAL AC220/MARCH-JULY 2020/TAX517

Salaries for disabled employee 10,000


Bonus for disabled employee 6,300

4. Marketing and entertainment include:


RM
Promotional samples given to participants at the World
Communication Exhibition held in Melbourne, Australia 25,000
Entertainment provided to customers during the launching of the new
product brand 35,000
Award giving ceremony to staff in the company annual dinner 38,000

5. Training and recruitment comprise of:


RM
Training allowance of RM800 per month for three and a half months for
two university students undergone an internship program approved 5,600
by Talent Corporation Malaysia Berhad (TCMB)
In-house technical training program for production staff 19,000

6. Payment for technical know-how on the production of the electronic chips paid to
Manchester Pt Ltd., a company resident in England on 15 November 2019. Until the
end of the year, the withholding tax on the service is yet to be remitted to the IRBM.

7. Legal and professional fees comprise of:


RM
Registration of patent in Japan 25,000
Fees for income tax appeal 10,000
Tax filing fees 12,000
Audit fees 10,600
Annual general meeting expenses 3,000

8. Leasing of vehicle

The company lease a lorry for transportation of product from the national port
costing RM300,000. Lease payment is RM10,000 per month since January 2019.
The company leased a motorcar costing RM280,000 for the Managing Director. The
lease commenced on 1 October 2018 at RM6,000 per month.

9. Foreign exchange losses/(gain) comprise of:


RM
Realised loss (on settlement of amount due for the import of 30,000
production material from Japan)
Realised loss (on settlement of amount due for the purchased of 2
buggies for visitor tour in the manufacturing building) 11,500
Unrealised gain on material for electronic chips (12,200)

10. Freight and insurance include:


RM
Insurance premium paid to the export or import of cargo insured with
local insurance companies 35,000
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CONFIDENTIAL AC220/MARCH-JULY 2020/TAX517

Premium paid on export credit insurance taken with Malaysian Export


Credit Insurance Bhd (MECIB) 26,000

11. Bad and doubtful debts comprise of:


RM
Bad debts recovered (trade) (17,000)
Bad debt written off for a loan given to an ex-manager 24,000
12.
Increase in general provision for doubtful debts 36,000
Social responsibility comprises:
RM
Cash donation to Public library (Elected for Sec 34(6)(g) 98,000
Donation of food and clothing to Persatuan Bulan Sabit Merah 11,000
Malaysia
Donation to Majlis Perbandaran Hang Tuah Jaya (a Local Council) 50,000
The amount incurred for the construction of public parking in Seri 196,000
Kembangan town. The company choose to claim the expenses
incurred under sec 34(6)(h).

Capital allowances for the year of assessment 2019 is RM246,000.

Required:

(i) Compute the income tax payable, if any, for COVIDA Sdn Bhd for the year of
assessment 2019. Every item mentioned in the notes to the account must be shown
in your computation, indicating “NIL” where no adjustment is necessary.
(22 marks)

(ii) Corronna Sdn Bhd (CSB) is a company producing pharmaceutical product and
adopts 30 April as its financial year end. Starting December 2019 the company facing
large demand of face mask to support the use of Asean region countries.

On December 2019, King Kap PLC a company in Thailand has purchased Corronna
Sdn Bhd’s product, valued at RM150,000 . However due to the currency problem, the
value of the debt has reduced to RM132,000. As Corronna Sdn Bhd is closing their
account on the following 30 April 2020, the accountant has confirmed the balance of
King Kap’s PLC debt at RM132,000 in preparing the financial statement on the
company.

Explain to Corronna Sdn Bhd on the tax treatment of the transaction if:

i) King Kap PLC still has not paid the amount of debt until the closing date of
Corrona Sdn Bhd’s accounting period.

ii) King Kap PLC paid the amount of RM132,000 on 30 April 2020.

(3 marks)

B. For the following scenarios, identify the basis period (BP) for the company for a year
of assessment 2019 (YA2019):

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CONFIDENTIAL AC220/MARCH-JULY 2020/TAX517

i) A new company JJ Supplies Berhad, commenced a business on 1 June 2018


as a member of a group companies Ankara Holdings in which all the
companies in the group make up their accounts to 30 April annually.
(1 mark)

ii) For the year of assessment 2018, RumahDuduk Sdn Bhd closed its recent
accounts as usual on 31 July 2018. However, due to some reasons, the
company has decided to change its following accounting date to be closed on
31 December annually thereafter.
(1 mark)
C. Bayu Samudera Sdn Bhd, a company resident in Malaysia with a paid-up ordinary
share capital of RM3.5 million closes their account on 31 October every year. For the
year of assessment 2019, the company submitted their Form CP204 amounted to
RM115,000 and revision had been done on the sixth month amounted to RM135,000.
The chargeable income of the company for the year of assessment 2019 was
RM830,000.

Required:

Determine the followings:

i. The additional tax payable including penalty (if any) that need to be submitted
to the IRBM.
ii. The due date of submitting Form CP204 to the tax authority by Bayu
Samudera Sdn Bhd for the year of assessment 2020.
(3 marks)
(Total: 30 marks)

END OF QUESTIONS
(30 MARKS)

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