Financial Planning Association of Malaysia

Web Sample 2008

Module 3 – Sample Questions

Q1. The following considerations may be relevant when deciding whether a
company is trading in or with Malaysia:

I. The place where the contracts of sales are made.

II. The place where the operations from which the profits arose are
carried out.
III. The place where payments are made.
IV. The place where the title to the goods passes from the seller to the
buyer.

A. I, II
B. II, III
C. I, II, IV
D. All of the above.

Q2. Leonard Lane first arrived in Malaysia in 2007 and was employed as a
project manager in a Malaysian company. He left Malaysia on 29 June
2007. The following represent his pattern of stay in the country.

Days
01.01.2007 to 04.01.2007 4 Holiday
05.01.2007 to 31.01.2007 27 Employment
01.02.2007 to 29.05.2007 118 Holiday
30.05.2007 to 29.06.2007 31 Employment

Choose the correct statement regarding the taxability of his income in

Malaysia.

A. He is subject to tax on his employment income in Malaysia except for the

days he was on holiday.
B. He is subject to tax on his total employment income.
C. He is not subject to tax as he is a non-resident and exercised
employment for less than 60 days.
D. He is not subject to tax as he is a tax resident and his employment was for
less than 60 days.
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Web Sample 2008

Q3. The chargeable income of the following taxpayers is represented by their

total income except:

A. Companies.
B. Trade associations.
C. Resident individuals.
D. Clubs.

Q4. Which date is the most important in determining the beginning of the basis
period for a year of assessment to ascertain the chargeable income of a
company?

A. Financial date.
B. Commencement date.
C. Invoice date.
D. Accounting date.

Q5. The following statements in respect of corporate and central bank bonds
are correct except for:

A. Interest earned by individuals on bonds issued by public companies listed

on Bursa Malaysia is tax exempt.
B. Interest derived by individuals from bonds other than convertible
loan stock paid or credited by any company listed in Malaysia
Exchange of Securities Dealing and Automated Quotation Berhad is
not tax exempt.
C. Interest in respect of securities or bonds guaranteed by the government
and debentures, other than convertible loan stock, approved by the
Securities Commision is tax exempt.
D. Interest income derived from Merdeka bonds issued by Bank Negara
Malaysia and received by pensioners of 55 years and above who do not
have permanent jobs and uniformed personnel on mandatory retirement is
tax exempt.

Q6. Non-business income refers to the following except:

A. Employment income.
B. Partnership income.
C. Dividend income.
D. Rental income.
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Q7. Best Sdn. Bhd. is a company involved in the trading of shoes. The
following information is provided for YA 2006 and 2007:

YA 2006 YA 2007
RM RM
Adjusted Income/(Loss) (10,000) 50,000
Capital allowance 5,000 12,000
Balancing charge - 2,000
Approved donations - 1,000

Calculate the chargeable income for YA 2007.

A. RM37,000
B. RM39,000
C. RM29,000
D. RM24,000

Answer:

YA 2007 Adjusted income 50,000

Add: Balancing charge 2,000
52,000
Less: Capital allowance
(RM5,000 + 12,000) 17,000
Statutory income 35,000
Less: Unabsorbed loss b/f 10,000
Aggregate Income 25,000
Less: Approved donations
(restricted to 7% of
Agg. Income) 1,000
Chargeable Income 24,000

Q8. Janine Sdn. Bhd. manufactures furniture and trades in watches. The
following information is related to YA 2006:

Adjusted Income Capital Allowances

Manufacturing business RM20,000 RM22,000
Trading business RM17,000 RM15,000

Compute the statutory income for both the businesses separately.

Manufacturing business Trading business

A. RM20,000 RM17,000
B. RM0 RM2,000
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C. RM2,000 RM2,000
D. RM0 RM0

Answer:

Manufacturing
Adjusted income 20,000
Less:CA 22,000
Statutory income NIL

Businesslossc/f 2,000

Trading
Adjusted income 17,000
Less:CA 15,000
Statutory income 2,000

Q9. The following statements regarding donations are correct except:

A. Approved donations in cash to approved institutions, Government, State

Governments and local authorities are allowed against aggregate income.
B. Donations are revenue expenses and are allowable for tax deduction
against the gross income of a business.
C. An amount equal to the value as determined by the Department of
Museums and Antiquities or the National Archives is allowed against
aggregate income.
D. An amount of cash (restricted to RM20,000) for the provision of library
facilities to public or school libraries, university or colleges is allowed
against aggregate income.

Q10. Which of the following statements is CORRECT in respect of the general

guidelines provided by the IRB on the keeping of sufficient records.

A. Books and other records in manual or electronic form should be

sufficient to explain the transactions and to enable a true and fair
profit and loss account or income and expenditure account and a
balance sheet to be prepared.
B. If computers are used to record transactions, the original source
documents need not be retained.
C. Records and books of accounts should be kept at the registered office for
6 years from the end of the calendar year in which the accounts are
closed.
D. Records and books of accounts should be written in any known language.
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Q11. An offence is committed under the Income Tax Act 1967 under the
following circumstances except:

A. Failure to declare a correct Return.

B. Late submission of a Return Form.
C. Failure by companies to submit estimate of tax payable.
D. Failure to notify change of address within 2 months.

Q12. Choose the correct statements regarding a newly incorporated company

in 2005.

I. It is required to register an income tax file at the nearest branch of

the IRB.
II. It is required to ensure that an employer’s file is registered.
III. It is required to submit an estimate of tax payable within 3 months
from the date of commencement of operations.
IV. It is required to file its tax return within 30 days of receipt of a Tax
Return.

A. I, II
B. II, III
C. I, II, III
D. All of the above.

Q13. A company may apply to revise its estimate of tax payable twice, in the
_________ and __________ month of the basis period for a year of
assessment by using Form CP 204A.

A. Third and fourth.

B. Sixth and ninth.
C. Second and fourth.
D. Fifth and seventh.

Q14. Choose the most accurate duty and responsibility of an employer

regarding income tax.

A. Submit Tax Return to the IRB.

B. Submit Return of Remuneration by An Employer (Form E) to the IRB.
C. Inform the Inland Revenue Board of any employee about to or intending to
leave Malaysia within 3 months before the expected date of departure.
D. Make tax deductions bimonthly from employees’ remuneration.
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Q15. The IRB has issued a guideline on entertainment expenses to explain the
treatment of the expense as a deduction. For this purpose,
“Entertainment” includes the following:

I. Provision of food and drink.

II. Provision of recreation.
III. Provision of accommodation or travel in connection with the
purpose of facilitating entertainment.
IV. Provision of hospitality.

A. I, II
B. I, III
C. I, II, III
D. All of the above.

Q16. Salient Sdn. Bhd. is in the business of trading in plastic wares. The
company has bank borrowings of RM50 million as at 31.12.2006. The
interest incurred on the borrowings was RM5 million. The company has
investment in a subsidiary of RM10 million.

Calculate the amount of interest restricted based on the above facts.

A. RM1 million
B. RM2 million
C. RM4 million
D. RM5 million

Answer:

RM10/50 million X 5 million = RM 1 million

Q17. The definition of a permanent establishment in all double taxation

agreements entered into between Malaysia and various countries would
require the existence of a ____________.

A. Country.
B. Contract.
C. Fixed place of business.
D. Licence.
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Q18. The following interest expenses are tax deductible except:

A. Interest on debentures issued by a company.

B. Interest on loans to purchase shares which generate income.
C. Interest paid on the breach of a commercial agreement.
D. Interest on loans raised specifically to pay dividends.

Q19. A company which has a financial year end of 31 December 2006 is

required to submit its estimate of tax payable to the IRB by:

A. 1 December 2005
B. 1 December 2006
C. 31 March 2006
D. 10 February 2006

Q20. The following income is exempted from income tax with the exception of:

A. Income of an individual derived from exercising employment on board a

sea-going ship registered under the Merchant Shipping Ordinance 1952.
B. Income of a director who performs his duties in Malaysia for less
than 60 days.
C. Gratuity or pension paid to a person resident in Malaysia if he has attained
the age of 55.
D. Sums received by way of death gratuities or as consolidated
compensation for death or injuries.

Q21. The following capital expenditure charged to the profit and loss account
would not qualify for tax deduction except:

A. Incorporation expenses of companies with authorized capital less

than RM2.5 million.
B. Expenditure relating to changes in authorized and paid-up capital.
C. Professional fees in connection with acquisition or disposal of fixed assets.
D. Renovations and improvements.
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Q22. Mr. Lee is entitled to a yearly leave passage benefit amounting to

RM5,000 under the terms of his employment contract with Latent Sdn.
Bhd. In March 2007, he accompanied his mother to USA for medical
treatment and incurred total overseas leave passage cost of RM5,000 ie
at RM2,500 per person. His employer reimbursed him for the full cost of
RM5,000. How much of the leave passage incurred is exempted from tax?

A. RM5,000
B. RM3,000
C. RM2,500
D. None of the above.

Q23. Anklemark Sdn. Bhd. received rental income from 1 unit of shophouse, 2
units of residential houses and 1 unit in a shopping complex. The rental
income of Anklemark Sdn. Bhd. is assessed under:

A. Section 4(a) of the Income Tax Act 1967.

B. Section 4(b) of the Income Tax Act 1967.
C. Section 4(c) of the Income Tax Act 1967.
D. Section 4(d) of the Income Tax Act 1967.

Q24. The tax consequences of a taxpayer who does not comply with the
provisions of withholding tax in respect of payments to non-resident
contractors is/are ________________.

I. A penalty of 10% would be imposed on the amount of the

withholding tax.
II. The withholding tax and penalty would be a debt due to the
Government.
III. The payment to the non-resident would not be allowed for tax
deduction.
IV. A deduction will be given for the payment to the non-resident if the
withholding tax and penalty is paid subsequently.

A. I
B. I, II
C. I, II, III
D. I, II, IV
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Q25. Encik Rahim bought a double storey shophouse in December 2005 and
rented it out for RM6,000 per month for the whole year beginning January
2006. The following expenses were incurred by Encik Rahim during the
year ended 31 December 2006.
RM
Interest on term loan for purchase of property 18,000
Quit rent and assessment 14,000
Commission paid to broker to secure his first tenant 1,000
Renovations on the shophouse 8,000
Legal fees incurred on tenancy agreement 3,000

Compute the net rental income for the year 2006 which is subject to tax.

A. RM28,000
B. RM40,000
C. RM36,000
D. RM39,000

Answer:

(RM6,000 X 12) – (RM18,000 + RM14,000) = RM40,000

Q26. Which of the following unfurnished accommodation does not apply to the
taxable BIK for living accommodation which is to be limited to 3% of the
section 13(1)(1) gross income of an employee?

A. A hotel, hostel or similar premises.

B. Premises on a plantation or in a forest.
C. Premises not subject to rates.
D. An apartment.

Q27. Total Income is Aggregate Income less the following items except:

A. Approved donations.
B. Prospecting expenditure.
C. Adjusted business loss for the basis period.
D. Qualifying operational business expenditure.
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Q28. To arrive at adjusted income from a business source, one of the following
is deducted from gross income:

A. Donations.
B. Capital allowances.
C. Balancing charges.
D. Losses brought forward from an earlier YA.

Q29. Which of the following withholding tax payments is not considered to be a

final tax?

A. Interest.
B. Section 4A income.
C. Contract payment.
D. Royalty.

Q30. Lam and his wife Eva have income as follows in the year 2006:

Lam Eva
1. Salary 36,000 1. Salary 4,000
(EPF: 4,000) (EPF: 500)
Rent 6,000

They decide on a joint assessment, in Lam’s name.

What is the tax chargeable on Lam?

A. RM1,210
B. RM860
C. RM510
D. RM1,175

Answer:

Salary – Lam 36,000

- Eva 4,000 40,000
Rent 6,000
Total Income 46,000
Less: Reliefs
Self 8,000
Wife 3,000
EPF 4,500 15,500
Chargeable Income 30,500
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Tax Liability
Income tax on first 20,000 475.00
Next 10,500 @ 7% 735.00
1,210.00
Less: Rebate 700.00
Tax chargeable RM 510.00

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