Question 1

Lee Yeon was employed as a Chief Executive Officer in Petaling Jaya with Pichi Capital Berhad (PCB) since 1 April 2013. For the six months period ended on 30 June 2020, Lee Yeon received the following income and benefits-in-kind from PCB.

1.

Monthly salary of RM80,000 with monthly entertainment allowance of RM5,000. He incurred RM61,000 on entertaining the companys clients.

2.

Bonus of RM150,000 was received on 4 April 2020 relating to performance in year 2019.

3.

A Penthouse in Petaling Jaya with annual rental value of RM120,000. He is however required to pay RM2,000 per month to PCB as rental.

4.

A new car costing RM850,000 was provided to him on 1 January 2019 in carrying out the employment duties. He was also provided with petrol allowance of RM2,000 per month.

5.

Meal allowance of RM3,000 per month was provided on 1 March 2020 to relief the increased cost of living in Petaling Jaya.

6.

On 3 February 2020, he was offered 150,000 PCBs shares at a price of RM1.00 per share, the market value then was RM8.80 per share. Lee Yeon accepted the offer immediately and exercised the option on 1 June 2020 when the market value was RM10.00 per share.

7.

PCB incurred medical expenses of RM10,000 upon his hospitalization on 8 March 2020.

8.

As part of his employment contract, PCB paid Lee Yeon holiday trips one trip to United States of America and another trip to Sarawak.

Expenses	Destination
	United States of America	Sarawak
Airfare	RM50,000	RM3,000
Accommodation	RM50,000	RM6,000

9.

On 30 June 2020, Lee Yeon retired from his employment. He was age 55 years old on 1 January 2020 PCB paid him the following:

(a) Gratuity : RM5,000,000 including service excellent award RM50,000

(b) He withdrew monies from his PCBs unapproved staff retirement fund that is made up to the following:

(i) Own contribution : RM5,000,000

(ii) Employers contribution : RM10,000,000

(iii) Interest on the total contribution : RM3,000,000

10.

After his retirement, Lee Yeon commenced his own business on 1 October 2020, YeonjiaTraining Centre, providing various types of training services. The adjusted business income for 3 months, October to December 2020 amounting to RM100,000. Capital allowances for the YA 2020 amounting to RM8,000 on assets used in business.

11.

Lee Yeon has a 6 years old daughter, Lee Won with his deceased wife. Lee Yeon goes to registered kindergarten for which he pays fees amounting to RM5,000 in total.

12.

Lee Yeon remarried Nam Ji Ah in 2018. Nam Ji Ah is undergoing fertility treatment by way of intrauterine insemination. The treatment costs RM5,500.

13.

Lee Yeon and Nam Ji Ah spent RM2,000 for annual medical check up.

14.

Lee Yeon bought a new smart phone closing RM6,000 for his wife in December 2020. He also spent RM1,500 on gym membership and RM1,000 on his daughters books.

15.

Lee Yeon contributed 11% of his salary and bonus to EPF while in employment; and paid life insurance premium of RM6,000 to a Malaysian Insurance Company for himself and RM500 monthly for Nam Ji Ahs medical insurance premium.

16.

Lee Yeon contributed RM300 for SOCSO and RM50 for Employment Insurance System(EIS) each month while in employment.

17.

He made a wakaf donation of RM10,000 to the state religious authority and zakat contribution of RM600,000 for the year.

18.

The monthly tax deduction deducted by PCB for the six months period ended 30 June 2020 was RM150,000.

Required:

Compute the chargeable income and income tax payable by Lee Yeon for the YA 2020. Nam Ji Ah is a housewife and has no income of her own.

Notes:

You should indicate by the use of the word exempted or nil, where appropriate, any item referred to in the question for which no adjusting entry needs to be made in the tax computation.

Use the prescribed value method for benefits in kind.

Show all the workings and notes of the working.