Question 2

Encik Khairul works as the Senior Manager of Yummy Restaurant on 1 July 2002. On 31 December 2020, due to ill health, he resigned from Yummy Restaurant. He was paid a gratuity of RM500,000 and he received long service award of RM10,000.

Other payments and benefits received by Encik Khairul from employer in 2020 were as follows:

• Salaries (per month) RM20,000;
• Travelling allowance (per month) RM2,000 for official duities.
• Bonus, equivalent to nine months salary;
• Medical bills of RM10,000 paid by the employer;
• Costs of leave passage, paid by employer;

	Airfare	Accommodation	Total
to Seoul, South Korea (Oversea)	12,000	10,000	22,000
to Pulau Langkawi (Local)	2,000	4,000	6,000
to Sabah (Local)	3,000	3,000	6,000
to Penang (Local)	2,000	4,000	6,000
to Sarawak (Local)	1,200	1,000	2,200

• Entertainment allowance (per month) RM3,000;
• A car (Honda) and fuel were provided by the employer. The car was purchased in 2016 at a cost of RM250,000. Encik Khairul used the car until 30 September 2020.
• Accommodation:

1. A fully furnished house was provided since 2015 until 31 August 2020. The monthly rent of RM8,000 were paid by the employer.

2. From 1 September 2020 until 31 December 2020 Encik Khairul stayed in a hotel where all the following expenses were provided by the employer;

	RM
Hotel room rate	6,000
Food at the hotel	3,000
Taxi fares from the hotel to Yummy Restaurant	1,000

Additional notes:

1. On 24 June 2020 Yummy Restaurant offered En. Khairul the option to purchase 10,000 units of Yummy Restaurants shares at RM1.00 per share although the current market price was RM5.00 per share. En. Khairul accepted the option and purchased the 10,000 shares on 30 September 2020 when the market price was RM7.00 per share.
2. In 2020, En. Khairul is 49 years old.
3. For the house provided by Yummy Restaurant, En. Khairul was required to pay RM2,000 per month to his employer.
4. En. Khairul incurred RM40,000 expenses in 2020 to entertain clients.
5. En. Khairul incurred RM25,000 on travelling to meet company clients.
6. En. Khairul pay a subscription of RM2,000 per annum to Hospitality Professional Association for his membership.

Required:

Compute the statutory employment income of En. Khairul for the year of assessment 2020.

Notes:

• You should indicate by the use of the word exempted, 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.

[16 marks]