Please help me! URGENT URGENT! Thank you in advance!

Covid-19 outbreak crisis is presenting unexpected challenges for organisations and individuals across the world. With the hope of curbing the spread of Covid-19 virus, the world including Malaysia went into lockdown, travel and movement restrictions. Due to these restrictions, it raised various concerns affecting many organisations and industries in Malaysia. Likewise, Mr Huang, the Chief Executive Officer of Chipsy Sdn Bhd (CSB), a tax resident in Malaysia has been assigned by the company to Italy on 27 February 2020 for a short term assignment pertaining to business expansion. Initially, this visit requires him to work at the client's office which it is expected to complete within three (3) weeks to discuss on future collaboration with CSB and to set up a branch office in Italy. Unfortunately, the short visit is dito be postponed and delayed as Mr Huang is unable to work at partner's office on 8 March 2020 onwards due to the lockdown restriction in Italy. Hence, Mr Huang is required to be temporarily present in Italy and work from hotel during the lockdown restriction until further notice. Because of Mr Huang's temporary presence and additional unplanned days spent in Italy, he is concerned about the impact on his tax residency status, cross border employment income, and permanent establishment risk of his Malaysian company in Italy. Also, Mr Huang is worried about the Movement Control Order (MCO) in Malaysia which has increased the risk of CSB going into insolvency since its implementation in March 2020. CSB is a small and medium enterprise (SME) engaged in manufacturing of fried chips. The company has two factories located in Pahang and Perak. During the virtual meeting conduct on 1 May 2020, the Financial Controller Officer, Ms Ally prepared the performance report as follows: Variance (Actual - Budget) RM 320,000 U Chipsy Sdn Bhd (CSB) Static Budget Performance Report For the Month Ended 30 April 2020 Actual Static Results Budget RM RM Net Sales Revenue 1,640,000 1,960,000 Variable Costs: Cost of Goods Sold 775,000 980,000 Sales Commissions 77,000 107,800 Shipping Cost 43,000 53,900 Total Variable Costs 895,000 1,141,700 Contribution Margin 745,000 818,300 Fixed Costs: Salaries 311,000 300,500 Depreciation 209,000 214,000 Rent 129,000 108,250 Advertising 81,000 68,500 Total Fixed Costs 730,000 691,250 Operating Income 15,000 127,050 Note: U=Unfavourable; F=Favourable 205,000 F 30,800 F 10,900 F 246,700 F 73,300 10,500U 5,000 F 20,750 U 12,500U 38,750 U 112,050 U Ms Ally also revealed that the actual sale price of RM20 per pack of chips was equal to the budgeted sale price and that there were no changes in inventories for the month. Due to this budget performance, the management is disappointed by the operating income results and Mr Huang enquired on "How can an actual operating income be roughly at 12% of the static budget amount when there are so many favorable variances? Nevertheless, CSB plans for an operational restructuring to modify the current financial and operational of business to weather the impact of Covid-19. Hence, the management suggested to disposal the company's properties or merging their business as to generate better cash flows. However, this triggered another concern by Ms Ally on the impact of the possible tax implication of the operational restructuring although the Malaysian government has committed to prioritise the SMEs' recovery in the Budget 2021. Besides, Mr Huang was being informed by the members of the management that Yazik & Co has been appointed as the new auditor of CSB subsequent to the Special Annual General Meeting held on 31 March 2020 due to the resignation of the previous auditor. From the draft annual audit report of the financial statements for the year ended 30 April 2020, the following issues in relation to inventories were identified: 1) 2) Goods received in the Pahang factory are occasionally checked prior to being accepted. In respect of the storage of materials prior to their use of manufacturing chips at the Perak factory: Raw materials used in manufacturing chips are not stored securely; and Several hazardous chemicals used in the factory are kept in open tanks in an area of the factory with unrestricted access. . Furthermore, Yazik & Co stated in their audit report that the auditors did not observe the counting of the inventories at 30 April 2019 and was unable to obtain sufficient appropriate audit evidence regarding the opening inventory balance of RM12.5 million. The draft financial statements for the year ended 30 April 2020 showed profit before tax of RM130.9 million. However, the auditors are of the opinion that the Statement of Financial Position at 30 April 2020 is fairly presented. Mr Huang is very positive that his company can improve its performance despite the many turbulences occurred while he was away and he is planning to seek further advice from the Ms Ally, tax consultant and auditors on any matters involving tax, going concern and subsequent events due to the pandemic if the performance of the business is declining and MCO restrictions still continues in future. c) Discuss and provide opinions in addressing the possible tax implication for the following tax matters: (ii) Operational restructuring to generate cash flows via: Merging the business Selling of company's properties (8 marks) (8 marks) Covid-19 outbreak crisis is presenting unexpected challenges for organisations and individuals across the world. With the hope of curbing the spread of Covid-19 virus, the world including Malaysia went into lockdown, travel and movement restrictions. Due to these restrictions, it raised various concerns affecting many organisations and industries in Malaysia. Likewise, Mr Huang, the Chief Executive Officer of Chipsy Sdn Bhd (CSB), a tax resident in Malaysia has been assigned by the company to Italy on 27 February 2020 for a short term assignment pertaining to business expansion. Initially, this visit requires him to work at the client's office which it is expected to complete within three (3) weeks to discuss on future collaboration with CSB and to set up a branch office in Italy. Unfortunately, the short visit is dito be postponed and delayed as Mr Huang is unable to work at partner's office on 8 March 2020 onwards due to the lockdown restriction in Italy. Hence, Mr Huang is required to be temporarily present in Italy and work from hotel during the lockdown restriction until further notice. Because of Mr Huang's temporary presence and additional unplanned days spent in Italy, he is concerned about the impact on his tax residency status, cross border employment income, and permanent establishment risk of his Malaysian company in Italy. Also, Mr Huang is worried about the Movement Control Order (MCO) in Malaysia which has increased the risk of CSB going into insolvency since its implementation in March 2020. CSB is a small and medium enterprise (SME) engaged in manufacturing of fried chips. The company has two factories located in Pahang and Perak. During the virtual meeting conduct on 1 May 2020, the Financial Controller Officer, Ms Ally prepared the performance report as follows: Variance (Actual - Budget) RM 320,000 U Chipsy Sdn Bhd (CSB) Static Budget Performance Report For the Month Ended 30 April 2020 Actual Static Results Budget RM RM Net Sales Revenue 1,640,000 1,960,000 Variable Costs: Cost of Goods Sold 775,000 980,000 Sales Commissions 77,000 107,800 Shipping Cost 43,000 53,900 Total Variable Costs 895,000 1,141,700 Contribution Margin 745,000 818,300 Fixed Costs: Salaries 311,000 300,500 Depreciation 209,000 214,000 Rent 129,000 108,250 Advertising 81,000 68,500 Total Fixed Costs 730,000 691,250 Operating Income 15,000 127,050 Note: U=Unfavourable; F=Favourable 205,000 F 30,800 F 10,900 F 246,700 F 73,300 10,500U 5,000 F 20,750 U 12,500U 38,750 U 112,050 U Ms Ally also revealed that the actual sale price of RM20 per pack of chips was equal to the budgeted sale price and that there were no changes in inventories for the month. Due to this budget performance, the management is disappointed by the operating income results and Mr Huang enquired on "How can an actual operating income be roughly at 12% of the static budget amount when there are so many favorable variances? Nevertheless, CSB plans for an operational restructuring to modify the current financial and operational of business to weather the impact of Covid-19. Hence, the management suggested to disposal the company's properties or merging their business as to generate better cash flows. However, this triggered another concern by Ms Ally on the impact of the possible tax implication of the operational restructuring although the Malaysian government has committed to prioritise the SMEs' recovery in the Budget 2021. Besides, Mr Huang was being informed by the members of the management that Yazik & Co has been appointed as the new auditor of CSB subsequent to the Special Annual General Meeting held on 31 March 2020 due to the resignation of the previous auditor. From the draft annual audit report of the financial statements for the year ended 30 April 2020, the following issues in relation to inventories were identified: 1) 2) Goods received in the Pahang factory are occasionally checked prior to being accepted. In respect of the storage of materials prior to their use of manufacturing chips at the Perak factory: Raw materials used in manufacturing chips are not stored securely; and Several hazardous chemicals used in the factory are kept in open tanks in an area of the factory with unrestricted access. . Furthermore, Yazik & Co stated in their audit report that the auditors did not observe the counting of the inventories at 30 April 2019 and was unable to obtain sufficient appropriate audit evidence regarding the opening inventory balance of RM12.5 million. The draft financial statements for the year ended 30 April 2020 showed profit before tax of RM130.9 million. However, the auditors are of the opinion that the Statement of Financial Position at 30 April 2020 is fairly presented. Mr Huang is very positive that his company can improve its performance despite the many turbulences occurred while he was away and he is planning to seek further advice from the Ms Ally, tax consultant and auditors on any matters involving tax, going concern and subsequent events due to the pandemic if the performance of the business is declining and MCO restrictions still continues in future. c) Discuss and provide opinions in addressing the possible tax implication for the following tax matters: (ii) Operational restructuring to generate cash flows via: Merging the business Selling of company's properties (8 marks) (8 marks)