A. Businesses have been hit severely in the light of Covid-19 pandemic and the Movement Control Order imposed by the Malaysian Government to curb the spread of the disease. Karim, a business owner of a restaurant in Negeri Sembilan, had to shut down his business as the abrupt decline in his business income could not sustain the business operating expenses. Briefly explain the type of assessment that could be issued to Karim by the Director-General of Inland Revenue Board of Malaysia when he ceased his business, and why this assessment is issued.

B. Based on each of the situations below, explain the type of offence, the provision of the offence under Income Tax Act 1967, and penalty (fine/imprisonment) faced by the taxpayers: i. Aaron submitted a duly completed return for the year of assessment 2019 on his own. He had declared business income from selling imported gift items and souvenirs. It was discovered during a tax audit that he had not declared his income from the rental business that he has been carrying on for the past 5 (five) years. ii. Ben is a head of accounting department in LHS Sdn Bhd. For the year of assessment 2019, he was instructed by the director of the company (Tan), to reclassify certain entertainment expenses of the company (which are not allowable for income tax purposes) as purchases of goods and service. By doing so, he managed to understate the tax liability of the company by more than RM5,000 for 2019. This was discovered during a tax audit.

(Malaysia tax)