Question 10

Mr. Ronnie, aged 56, retired on 30 April 2020 from Pallazzo Bhd. He had worked in the company since 1 November 2005. Upon retirement, he received gratuity of RM70,000 and compensation for loss of employment of RM100,000. He also withdrew RM60,000 from the company's unapproved 8 retirement fund of which RM 18,000 represents his contributions and RM6,000 represents interest income earned on total contributions (employer's and employee's contribution). Payments and benefits received by Mr. Ronnie from Pallazzo Bhd in 2020 were as follows:

- a. Net monthly salary of RM4,300 after deducting EPF contribution of 11% and tax of RM150.

b. A watch costing RM3,000 for serving the company for 15 years at the company annual dinner held on 28 February 2020.

c. On 15 January 2020, he had a heart surgery. The surgical and medical expenses incurred amounted to RM20,000 was paid by the company.

d. A semi-furnished house was provided by the company until 31 March 2020. The monthly rent of RM600 (excluding furniture of RM150) was paid by the company. On 1 July 2020, he and his close friend set up a company, Terrazzo Sdn Bhd, each owning half of the shares of the company. As the owner of the company, Mr. Ronnie was given the following remuneration and benefits: -

On 1 July 2020, he and his close friend set up a company, Terrazzo Sdn Bhd, each owning half of the shares of the company. As the owner of the company, Mr. Ronnie was given the following remuneration and benefits: -

a. Monthly director fees of RM5,000.

b. Entertainment allowance of RM800 per month.

c. Mr. Ronnie was provided with a mobile phone. All business calls and phone rental amounted to RM1,800 for the month of July until December 2020 was paid by the company.

d. A new company car costing RM120,000 was purchased and provided to Mr. Ronnie together with a driver from 1 September 2016.

e. For the month of July 2020, Mr. Ronnie was provided with accommodation in a hotel with daily room rate of RM200. On 1 August 2020, he moved into a house provided by the company with a monthly rental of RM3,000. Mr. Ronnie used his own furniture for the house.

f. The company also provided him with a servant and a gardener with a monthly salary of RM600 and RM300 respectively, effective from 1 August 2020.

g. During Christmas, Mr. Ronnie and his wife went for a holiday to Perth, Australia where the following expenses were paid by Terrazzo Sdn Bhd: -

	RM
Airfares including insurance	12,500
Hotel accommodation	7,100

Required: Compute the statutory employment income of Mr. Ronnie for the year of assessment 2020.