Explain in detail the income tax treatment in respect of the following items and justify your answer by quoting the relevant section of the Income Tax Act 1967:

i) Interest income on overdue trade debts (note 2);

ii) Bad debts written off in respect of study loan advanced to ex-marketing

executive (note 3);

iii) Acquisition of trademark (note 4);

iv) Sponsorship of bus stops as part of a public amenities for community

programme approved by the relevant authorities (note 5); v) Salary expenses paid to a disabled staff member (note 10)

You as the tax agent of Volition Sdn Bhd is required to answer the following questions raise by Mr. Joe Edwards, the managing director of the company. Required: a) Advise Mr. Joe Edwards of the tax resident status of Volition Sdn Bhd for year of assessment 2020. Your answer should be critically evaluated the requirement of tax resident status by Malaysia tax legislation. (15 marks) b) Explain the concept of withholding tax to Mr. Joe Edwards and the tax treatment in respect of interest expense paid by the company to Fastspeed (Tokyo) Ltd (in note 8). (20 marks) c) Compute the income tax payable for Volition Sdn Bhd for the year of assessment 2020. (40 marks) Note: You should start your computation with the profit before taxation figure and follow the descriptions used in the notes to the profit and loss account, indicating by the use of the word 'NIL' in the appropriate column for any item that does not require adjustment. d) Explain in detail the income tax treatment in respect of the following items and justify your answer by quoting the relevant section of the Income Tax Act 1967: i) Interest income on overdue trade debts (note 2); ii) Bad debts written off in respect of study loan advanced to ex-marketing executive (note 3); iii) Acquisition of trademark (note 4); iv) Sponsorship of bus stops as part of a 'public amenities for community programme approved by the relevant authorities (note 5); v) Salary expenses paid to a disabled staff member (note 10) (15 marks) (Total: 90 marks) Notes: 1) The cost of sales includes: Provision for stock obsolesces b/f Provision for stock obsolesces c/f Depreciation expenses RM'000 150 270 60 2) Interest income comprises: RM'000 7 Interest income on overdue trade debts Interest income from fixed deposit placed with Public Bank Bhd 11 3) Volition received the grant from government in respect of a skills training programme which the company undertook as part of its human capital development programme. (see also note 9 below) 4) The company had advanced a sum of RM4,000 study loan to an ex-account executive. The ex-account executive was subsequently declared bankrupt during the year. 5) Consultancy fees paid comprise: Secretarial fees Preparation of income tax return filing fees Acquisition of trademarks RM'000 2 12 10 Total: 24 ==== 6) Donation comprise: RM'000 60 31 Donation to an approved old folk center Sponsorship of bus stops as part of a 'public amenities for community programme approved by the relevant authorities Cash contribution to public libraries 70 161 ==== 7) The foreign exchange loss includes an unrealized payment of RM6,000 due to a supplier. 8) The interest expense includes an amount of RM8,000 relates to a loan taken from Fastspeed (Tokyo) Ltd, the funds from which were used in the acquisition of machinery for the production of the audio speakers. No withholding tax was deducted from this interest or paid to the Inland Revenue Board. 9) It includes an amount of RM5,000 in respect of the training of employees for conducting the Skim Latihan 1 Malaysia for unemployed graduate for a period of up to 12 continuous months. It also includes the cost of the skills training programme undertaken as part of the government's human capital development programme (as in note 2 above) attributable to the grant of RM4,000 received from the government. It has been confirmed that this expense was not eligible for any further deduction. 10) The repairs and maintenance expenses include the cost of RM10,000 of purchasing photocopy machine for office used. 11) Staff salaries expense and EPF comprise: RM'000 200 Salary expenses (It included salary paid to a disabled staff member of RM24,000 p.a. (duly certified by the relevant authorities)) EPF (21%) Total: 42 242 12) The total capital allowance available to claim for the year is RM200,000. You as the tax agent of Volition Sdn Bhd is required to answer the following questions raise by Mr. Joe Edwards, the managing director of the company. Required: a) Advise Mr. Joe Edwards of the tax resident status of Volition Sdn Bhd for year of assessment 2020. Your answer should be critically evaluated the requirement of tax resident status by Malaysia tax legislation. (15 marks) b) Explain the concept of withholding tax to Mr. Joe Edwards and the tax treatment in respect of interest expense paid by the company to Fastspeed (Tokyo) Ltd (in note 8). (20 marks) c) Compute the income tax payable for Volition Sdn Bhd for the year of assessment 2020. (40 marks) Note: You should start your computation with the profit before taxation figure and follow the descriptions used in the notes to the profit and loss account, indicating by the use of the word 'NIL' in the appropriate column for any item that does not require adjustment. d) Explain in detail the income tax treatment in respect of the following items and justify your answer by quoting the relevant section of the Income Tax Act 1967: i) Interest income on overdue trade debts (note 2); ii) Bad debts written off in respect of study loan advanced to ex-marketing executive (note 3); iii) Acquisition of trademark (note 4); iv) Sponsorship of bus stops as part of a 'public amenities for community programme approved by the relevant authorities (note 5); v) Salary expenses paid to a disabled staff member (note 10) (15 marks) (Total: 90 marks) Notes: 1) The cost of sales includes: Provision for stock obsolesces b/f Provision for stock obsolesces c/f Depreciation expenses RM'000 150 270 60 2) Interest income comprises: RM'000 7 Interest income on overdue trade debts Interest income from fixed deposit placed with Public Bank Bhd 11 3) Volition received the grant from government in respect of a skills training programme which the company undertook as part of its human capital development programme. (see also note 9 below) 4) The company had advanced a sum of RM4,000 study loan to an ex-account executive. The ex-account executive was subsequently declared bankrupt during the year. 5) Consultancy fees paid comprise: Secretarial fees Preparation of income tax return filing fees Acquisition of trademarks RM'000 2 12 10 Total: 24 ==== 6) Donation comprise: RM'000 60 31 Donation to an approved old folk center Sponsorship of bus stops as part of a 'public amenities for community programme approved by the relevant authorities Cash contribution to public libraries 70 161 ==== 7) The foreign exchange loss includes an unrealized payment of RM6,000 due to a supplier. 8) The interest expense includes an amount of RM8,000 relates to a loan taken from Fastspeed (Tokyo) Ltd, the funds from which were used in the acquisition of machinery for the production of the audio speakers. No withholding tax was deducted from this interest or paid to the Inland Revenue Board. 9) It includes an amount of RM5,000 in respect of the training of employees for conducting the Skim Latihan 1 Malaysia for unemployed graduate for a period of up to 12 continuous months. It also includes the cost of the skills training programme undertaken as part of the government's human capital development programme (as in note 2 above) attributable to the grant of RM4,000 received from the government. It has been confirmed that this expense was not eligible for any further deduction. 10) The repairs and maintenance expenses include the cost of RM10,000 of purchasing photocopy machine for office used. 11) Staff salaries expense and EPF comprise: RM'000 200 Salary expenses (It included salary paid to a disabled staff member of RM24,000 p.a. (duly certified by the relevant authorities)) EPF (21%) Total: 42 242 12) The total capital allowance available to claim for the year is RM200,000