QUESTION 1 (30 MARKS) Read the following case and compute the tax payable for Mohsins family for the year of assessment 2019 by way of both separate and joint assessment. Your answer must include every item appeared in the question, indicate NIL where no adjustment is necessary. Support each item with explanation and relevant section from Income Tax Act 1967. Mohsin is a freelance halal consultant since 1 March 2019. Previously, he worked as halal executive in a well-known food processing company in Selayang, Selangor for about 64 months. During his employment, he was paid a monthly gross salary of RM8,500 besides travelling allowance of RM2,500 for exercising his official duties. After quitting his job, he earned 80% more than monthly remuneration paid by his employer. On 19 April 1994, Mohsin married Tina who was a bank teller in Port Dickson, Negeri Sembilan. They have three (3) children named Adibah, Saiful and Shukri. Saiful and Shukri are twins. On 1 April 2019, Mohsin attended his primary school reunion dinner and met an old friend, Suri. They fell in love and got married two (2) months after the gathering. After married, Suri remained to stay with her mother (aged 70 years old) in her own house. Suri was a single mother with two (2) children named Shafiu and Rasol (disabled). She owned a bakery shop since July 2015. In the middle of year 2019, Suri ventured into a dropship business. Tina suffered from cervix cancer and was endorsed by the Medical Board to retire since the middle of year 2018. On 15 November 2019, she passed away before her forth chemo treatment cycle. Mohsin received compensation of RM100,000 from a local insurance company for Takaful policy taken for Tina. The following information has been provided for 2019 tax filing purposes together with original receipts: 1. Suris bakery reported adjusted income of RM86,000. The amount of balancing charge and capital allowance were RM14,000 and RM35,000 respectively. In addition, her dropship business showed adjusted income of RM78,000. 2. Tinas parents stay near to Mohsins house. Mohsins father had passed away a few years ago. Thus, his mother (aged 75 years old) moved in to stay with Mohsin and Tina. Mohsins mother is a housewife. Suris father had passed away when she was in secondary school. Mohsin spent RM2,000 each for medical treatment of his mother and mothers in-law. 3. Suri spent RM2,800 to purchase a wheel chair for her son, Rasol, who is disabled. 4. Mohsin paid RM9,000 for Tinas medical expenses including complete medical examination. 5. Suri purchased a smartphone worth RM1,100 for Shafiu. She also paid RM400 for his annual gym membership fees. Besides, she also paid monthly internet usage of RM80 and RM120 for herself and children which was subscribed under their own names.

6. Mohsin spent RM1,320 for internet usage subscription under his name and RM1,180 for books purchased by his children (including RM300 of books purchased by his step children). 7. Information related to children is as follows: Adibah Aged 25 years old, works as a teacher and married to Arman in 2018. Her monthly salary is M4,800. Saiful Aged 20 years old, taking Bachelors degree (part time) at Open University Malaysia. He works as an account assistant in a merchandising company and earned RM2,000 per month. Shukri Aged 20 years old, taking Bachelors degree (full time) at Universiti Utara Malaysia. Shafiu Aged 20 years old, taking Bachelors degree (full time) at a well-known private college in Subang Jaya, Selangor. Rasol Aged 19 years old, a full time diploma student at one of the polytechnics in Malaysia. 8. Suri and Mohsin deposited RM9,000 and RM8,500 in their childrens SSPN accounts. Mohsin withdrew RM3,000 to fund the childrens education needs. 9. Insurance policies: Mohsin paid RM500 for life insurance premium at the end of every month. The policy was subscribed under Tinas name. He also paid RM450 for monthly medical insurance premium for himself. As for the children, Tina subscribed medical and education insurance policy for each of them, she paid in total RM600 as monthly premium. Since she retired, the premium was waived. Suri spent RM650 for her life insurance premium and RM150 each for her childrens medical insurance policies. 10. Mohsin and Suri paid zakah for RM10,000 and RM8,000 respectively. The monthly tax deduction (MTD) for Mohsin was RM450.

Malaysia tax system

Malaysia tax system