Erwan plans to buy a house. He has two options to choose. The first option is to purchase a subsale property for RM475,000 where he can move in immediately. The second option is to purchase an under construction property for RM387,000 and is expected to complete in 24 months. Once the construction is completed, Erwan will start to pay his monthly installment. However, if he chooses the second option, he will need to rent an apartment for 25 months at RM1,150 per month until the house is completed and add another RM15,000 for renovation cost on the new house. Erwan is single and working as an auditor earning a monthly salary of RM6,480. He plans to take the maximum year for his housing loan. The bank is offering an interest rate of 4.6% per annum.

If he opts for option 2, Erwan will require to service the interest for the progressive release based on the stages done by the developer.

Tax(RM) Malaysia Personal Income Tax Rate 2020 Chargeable income Calculation (RM) Tax rate (RM) (%) 0 - 5,000 On the first 5,000 0 5,001 - 20,000 On the first 5,000 0 Next 15,000 1 20,001 - 35,000 On the first 20,000 Next 15,000 3 35,001 - 50,000 On the first 35,000 Next 15,000 8 50,001 - 70,000 On the first 50,000 Next 20,000 14 70,001 - 100,000 On the first 70,000 Next 30,000 21 100,001 - 250,000 On the first 100,000 Next 150,000 24 250,001 - 400,000 On the first 250,000 Next 150,000 24.5 400,001 - 600,000 On the first 400,000 Next 200,000 25 600,001 - 1,000,000 On the first 600,000 Next 400,000 26 1,000,001 -2,000,000 On the first 1,000,000 28 Next 1,000,000 Above 2,000,001 On the first 2,000,000 30 Next ringgit 0 0 150 150 450 600 1,200 1,800 2,800 4,600 6,300 10,900 36,000 46,900 36,750 83,650 50,000 133,650 104,000 237,650 280,000 517,650 ........ Refer to the tax rate table above. i. In your opinion, should they choose combined or separate assessment for their income tax? Explain. (3 marks) ii. Prepare the family's taxable income (10 marks) iii. Determine the family's total tax payable (7 marks) Tax(RM) Malaysia Personal Income Tax Rate 2020 Chargeable income Calculation (RM) Tax rate (RM) (%) 0 - 5,000 On the first 5,000 0 5,001 - 20,000 On the first 5,000 0 Next 15,000 1 20,001 - 35,000 On the first 20,000 Next 15,000 3 35,001 - 50,000 On the first 35,000 Next 15,000 8 50,001 - 70,000 On the first 50,000 Next 20,000 14 70,001 - 100,000 On the first 70,000 Next 30,000 21 100,001 - 250,000 On the first 100,000 Next 150,000 24 250,001 - 400,000 On the first 250,000 Next 150,000 24.5 400,001 - 600,000 On the first 400,000 Next 200,000 25 600,001 - 1,000,000 On the first 600,000 Next 400,000 26 1,000,001 -2,000,000 On the first 1,000,000 28 Next 1,000,000 Above 2,000,001 On the first 2,000,000 30 Next ringgit 0 0 150 150 450 600 1,200 1,800 2,800 4,600 6,300 10,900 36,000 46,900 36,750 83,650 50,000 133,650 104,000 237,650 280,000 517,650 ........ Refer to the tax rate table above. i. In your opinion, should they choose combined or separate assessment for their income tax? Explain. (3 marks) ii. Prepare the family's taxable income (10 marks) iii. Determine the family's total tax payable (7 marks)