Prema was employed by Shintek Sdn Bhd (a company based in Penang) as a sales manager since I June 2010. At the age of 46, Prema's employment with the company was terminated on 30 Sept. 2022. The termination of Prema's employment was not due to ill health. Upon termination of her employment, she received a gratuity of RM35,000 and compensation for loss of employment of RM120,000.( employee retirement is working more than 10 year)

Not resignation, not retirement. Can assume Forced retirement so see whether gratuity can be lessed

Q: what is Premas gratuity income that will be taxable under Section 13 (1) (a)?

No gratuity income is taxable, whole amount of RM35,000 is exempted. Worked more than 10 years (2010-2022)

Q: how much compensation is taxable? None. RM120,000 is exempted because RM10,000 for each completed year = RM10,000 x 12.

Upon her termination, she also withdrew RM15,000 from the company's retirement fund (an unapproved scheme) of which RM7,500 was her total contributions and RM2,500 was the accumulated interest income earned on the overall total contribution. The balance was contributed by the employer. S13(1)d 15,000-7,500

For the period 2022 (1 January to 30 September 2022), Prema received the following income from Shintek: Sdn. Bhd:

Monthly gross salary of RM8,000 and monthly entertainment allowances of RM600. S13(1)a (8,000*9)=72,000+(600*12)

A car costing RMI20,000 for her use until the termination of her employment. The car was acquired by the company in 2012. No fuel was supplied to her. S13(1)b

3. In February 2022, Prema was hospitalised for an appendicitis surgery. The medical bills amounting to RM18,000 was paid by the company. S13(1)b

4.Prema was provided with a fully furnished house until the termination of her employment. The annual rental value of the house was RM22,000 inclusive of RM4,000 furishings value. She was required to contribute RM400 per month for occupying the house.

5. A refrigerator costing RM4,000 was also provided to her in the house. The prescribed average lifespan for the refrigerator is 10 years. Already computed RM280 for 9 months & its FULLY FURNISHED, so no need to compute again for the refrigerator. But if semi-furnished then add (RM4,000/10 x 9/12)

6. The company paid for her utilities bills. Total amount of utilities paid from January to Sept 2022 was RM1,500. All bills were under Prema's name. s13(1)(a) because all falls under Premas name. if under companys name then under Section13 (1) (b)

Other information:

1. Prema received RM1,500 interest income from Merdeka Bonds issued by the government.(other income exempt) individual Other income, exempted, why? Interest & Individual.

2.Prema incurred RM4,500 to entertain the company's clients from January to Sept 2022.(expense for individual rental only) Less from total employment income. NOT expenses, expenses for individuals are only for rental.

3.Prema's total EPF deduction for 2022 was RM5,290. relief 4,000(private)

4.Pema paid annual premium on her life insurance policy amounting RM4,500. Relief personal relief RM3,000 because working for a private employer

5.In December 2021, Prema's mother in law was hospitalised and she paid RM4,500 for the treatment.Relief Medical expenses for parents RM5,000. Can claim for spouses parents as well but if spouse is working then cannot but if joint can but only for 1 parent. In this case, CANNOT claim because it was for December 2021 and not the current year.

6.Prema bought a new wheelchair for her disabled daughter worth RM6.400. relief RM6,00 supporting equipment for disabled taxpayer

7.Prema donated RM2,200 cash to the National Kidney Foundation (an approved institution) aggregate income compute 7% of aggregate income and check lower amount

8.Prema is married to Nantha, (with no income) and has two daughters: i) Anu, aged 19 years old studying at Multimedia University. (ii) Pretty, aged 11, disabled, studying in a special school. Disable taxpayer 6,000 + child relief below 18 years 2,000

REQUIRED:

(a) Compute Premas income tax liability for the year of assessment 2022. Show all your workings.

(b) Ability to explain the treatment of compensation, gratuity and withdrawal of private annuity.