Question
Norman and Sarah who are married, are both Malaysian tax residents. They have an eight-year-old daughter, Misha. Details of Norman s employment income and amounts
- Norman and Sarah who are married, are both Malaysian tax residents. They have an eight-year-old daughter, Misha. Details of Norman s employment income and amounts expended for the year of assessment (YA) 2018 are as follows:
- Salary for the year of RM60,000.
- Performance incentive of RM2,000 for YA 2019, paid on 3 March 2020.
- The use of a new car costing RM40,000 provided to him for the entire year without fuel.
- Social security contributions (SOCSO) of RM8,000.
- The minimum employment provident fund (EPF) contributions of 11% were deducted from his salary.
- A cash donation of RM25,000 made to Perpustakaan Negara.
- Sarah operates sole proprietorship cake house business. She also rents out a property located in Malaysia which she holds for investment purposes.
The following details relate to Sarah in respect of Year of Assessment (YA) 2018 and YA 2019:
- Extracts from her tax computation for YA 2018 are as below:
| Business | Rental |
| RM | RM |
|
|
|
Gross income | 122,000 | 12,000 |
Less: Allowable expenses | (130,000) | (16,000) |
Net loss | (8,000) | (4,000) |
Adjusted income | Nil | Nil |
|
|
|
Capital allowances carried forward | 3,400 |
|
None of the losses were utilised during YA 2018.
- Details of her business income for YA 2019 are:
| RM |
Adjusted income | 68,000 |
Capital allowances for current year | 3,000 |
- Her rental income and expenses for YA 2019 comprises:
| RM |
Gross rentals | 12,000 |
|
|
Expenses |
|
Insurance | 1,000 |
Interest expense | 7,900 |
| 8,900 |
- She received interest income of RM900 (translated from Singapore Dollars) from a fixed deposit placed in Maybank Singapore.
- Payments made by Sarah in 2019 were:
| RM |
Purchase of a computer | 5,000 |
Purchase of books | 1,200 |
Payments to an approved private retirement scheme | 5,500 |
Maintenance of the Misha, including schooling | 3,100 |
Norman and Sarah have agreed that Sarah would claim the child relief for Milan.
The couple elect for separate tax assessment.
Required:
Compute the income tax payable for the year of assessment 2019 by:
- Norman
[13 marks]
- Sarah
[17 marks]
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