Malaysian tax

B. Optimizer Sdn Bhd has been established for over 10 years. The company is resident in Malaysia since its incorporation. Its principle activity is manufacturing audio equipment in Malaysia. The accounts are made up to 31 December every year. For the year ended 31 December 2019, the company's statement of comprehensive income is as follows: 1 Optimizer Sdn Bhd Statement of Comprehensive Income for the year ended 31 December 2019 Note RM000 RM'000 Sales 601,712 Less: Cost of sales (12,066) Gross profit 589,646 Add: Other incomes Gain on disposal of shophouse 2 8,000 Rental of storage space 3 4.000 Interest from overdue trade debtors 300 12,300 Less: Expenses Marketing and distribution Administration and finance Miscellaneous Net profit before taxation 4 5 6 9,712 569,458 1,000 (580,170) 21,776 Notes: 1. RM000 1,366 i. ii. Cost of sales Amortization of property, plant and equipment used in the manufacturing activities. Acquisition of a proprietary rights owned by a Singaporean company in respect of a patented goods delivery system. This system enables the company to take and deliver orders in an efficient manner to customers. Royalty paid to Australian company on 12 October 2019. However, no penalty paid to IRB for late remittance of withholding tax on 7 December 2019. 600 11i. 100 2. Gain on disposal of shophouse 2 = The company acquired this property in 2014 for RM26,420,000. It was originally used as a showroom for the company's manufactured products. 3. Rental of storage space The company owns an old warehouse where both raw materials and finished goods are stored. Excess space in the warehouse is rented out to third parties. No support services are provided in respect of the space rented out. Annual fire insurance premium for the storage space paid is RM100,000. 4. Marketing and distribution include: RM'000 i. Sponsorship of foreign arts and cultural activities 800 ii. Sponsorship of local arts and heritage activities. 1.200 iii. Contribution to a non-governmental organization, which was established exclusively for the conservation and protection of the environment, for its tree planting project in a public park adjoining a coastline. The approved project is headed by the wife of the Executive Chairman of the company. 120 iv. Registration of a patent overseas to facilitate the export of its audio equipment to China and Japan which are two of its major markets in Asia. 160 v. Entertainment for potential customers during launching new 600 model of speaker vi. Wedding gift to a regular customer on his marriage to a Korean actress during the year. 20 vii. Free gifts and lucky draw prizes for customers during Hari Raya sales promotion 800 viii. Realized loss on foreign exchange arising from foreign trade debtor settlement 100 ix. Realized loss on account of an import of a machine used for quality testing of its audio equipment. 40 Negotiation of an agreement to export company's audio equipment by three marketing managers. This include hotel accommodation and sustenance for four nights. The visit in June 2019 was a follow up to a trade and investment mission to China and Japan organized in January 2019 by a local industrial association of which the company is a member. X. RM'000 100 120 24 14 5. Administration and finance include: i. Statutory audit fees ii. Legal fees for GST refund appeal against the Customs was taken up by its lawyers. Income tax filing fees iv. Secretarial fees Interest on loan taken to expand its production facility for goods exported to China and Japan. vi. Guarantee fees paid to AceBeeSee Bank on the outstanding loan liability vii. Commitment fee on the loan taken by one of the directors' wife viii. Directors' fees, employee salary and wages ix. Employee provident fund contribution Approved pension scheme contribution for senior staff 1,400 800 1.000 300,000 66,000 6 X. 6. Miscellaneous 3 Donation of speakers and audio equipment to selected colleges (approved institutions) in Penang worth RM400,000 in conjunction with its anniversary celebrations. The balance of the expenditure is sundry expenses fully qualifying for deduction. Additional information: Capital allowance claimed for the current year of assessment is 10,000,000. REQUIRED: Compute the chargeable income for Optimizer Sdn Bhd for the year of assessment 2019 by showing all relevant tax adjustments. (Note: Your answer must list every item stated in the income statement and notes. Indicate 'NIL' where no adjustment is necessary). B. Optimizer Sdn Bhd has been established for over 10 years. The company is resident in Malaysia since its incorporation. Its principle activity is manufacturing audio equipment in Malaysia. The accounts are made up to 31 December every year. For the year ended 31 December 2019, the company's statement of comprehensive income is as follows: 1 Optimizer Sdn Bhd Statement of Comprehensive Income for the year ended 31 December 2019 Note RM000 RM'000 Sales 601,712 Less: Cost of sales (12,066) Gross profit 589,646 Add: Other incomes Gain on disposal of shophouse 2 8,000 Rental of storage space 3 4.000 Interest from overdue trade debtors 300 12,300 Less: Expenses Marketing and distribution Administration and finance Miscellaneous Net profit before taxation 4 5 6 9,712 569,458 1,000 (580,170) 21,776 Notes: 1. RM000 1,366 i. ii. Cost of sales Amortization of property, plant and equipment used in the manufacturing activities. Acquisition of a proprietary rights owned by a Singaporean company in respect of a patented goods delivery system. This system enables the company to take and deliver orders in an efficient manner to customers. Royalty paid to Australian company on 12 October 2019. However, no penalty paid to IRB for late remittance of withholding tax on 7 December 2019. 600 11i. 100 2. Gain on disposal of shophouse 2 = The company acquired this property in 2014 for RM26,420,000. It was originally used as a showroom for the company's manufactured products. 3. Rental of storage space The company owns an old warehouse where both raw materials and finished goods are stored. Excess space in the warehouse is rented out to third parties. No support services are provided in respect of the space rented out. Annual fire insurance premium for the storage space paid is RM100,000. 4. Marketing and distribution include: RM'000 i. Sponsorship of foreign arts and cultural activities 800 ii. Sponsorship of local arts and heritage activities. 1.200 iii. Contribution to a non-governmental organization, which was established exclusively for the conservation and protection of the environment, for its tree planting project in a public park adjoining a coastline. The approved project is headed by the wife of the Executive Chairman of the company. 120 iv. Registration of a patent overseas to facilitate the export of its audio equipment to China and Japan which are two of its major markets in Asia. 160 v. Entertainment for potential customers during launching new 600 model of speaker vi. Wedding gift to a regular customer on his marriage to a Korean actress during the year. 20 vii. Free gifts and lucky draw prizes for customers during Hari Raya sales promotion 800 viii. Realized loss on foreign exchange arising from foreign trade debtor settlement 100 ix. Realized loss on account of an import of a machine used for quality testing of its audio equipment. 40 Negotiation of an agreement to export company's audio equipment by three marketing managers. This include hotel accommodation and sustenance for four nights. The visit in June 2019 was a follow up to a trade and investment mission to China and Japan organized in January 2019 by a local industrial association of which the company is a member. X. RM'000 100 120 24 14 5. Administration and finance include: i. Statutory audit fees ii. Legal fees for GST refund appeal against the Customs was taken up by its lawyers. Income tax filing fees iv. Secretarial fees Interest on loan taken to expand its production facility for goods exported to China and Japan. vi. Guarantee fees paid to AceBeeSee Bank on the outstanding loan liability vii. Commitment fee on the loan taken by one of the directors' wife viii. Directors' fees, employee salary and wages ix. Employee provident fund contribution Approved pension scheme contribution for senior staff 1,400 800 1.000 300,000 66,000 6 X. 6. Miscellaneous 3 Donation of speakers and audio equipment to selected colleges (approved institutions) in Penang worth RM400,000 in conjunction with its anniversary celebrations. The balance of the expenditure is sundry expenses fully qualifying for deduction. Additional information: Capital allowance claimed for the current year of assessment is 10,000,000. REQUIRED: Compute the chargeable income for Optimizer Sdn Bhd for the year of assessment 2019 by showing all relevant tax adjustments. (Note: Your answer must list every item stated in the income statement and notes. Indicate 'NIL' where no adjustment is necessary)