QUESTION 4 (30 MARKS) Azfar, an owner of travelling agency since few years ago located in Kuala Lumpur. For the year ended 31 December 2021, the following information is available pertaining to his business: RM Adjusted income 5,150 Current year capital allowances 5,000 Balancing charge 1,800 Since the business was badly affected due to global pandemic, Azfar has decided to work and thus, he has been employed as business development manager on March 2021. He has been paid for RM10 ,000 as salary (gross) per month and entitled for travelling allowance of RM2,000 per month. Azfar also earned the following incomes in the year 2021: 1. Dividend income from Amanah Saham Nasional Berhad amounted to RM25,800. 2. Interest income from his investment in unit trust with Philips Mutual. The amount received amounting to RM33,000 respectively. 3. Royalty from his books amounted to RM82,000. He incurred editing cost for RM5,000 on the books and general expenses totalling to RM1,150. 4. Part-time income as a teacher at tuition centre amounted to RM14,000 and grab driver of RM15,000. 5. Rental income from his apartment totalling to RM18,000 for the year. He paid RM500 for the quit rent and assessment to local authority. Another RM2,000 was incurred for normal maintenance and service costs for the apartment. Ruby, Azfar's wife is a lawyer with a private legal firm with a monthly salary of RM12,000. Beginning from June 2021, her employer provided her with a company car valued at RM90,000 The following were Ruby's other income in basis year 2021: Dividend from Global AA Bhd RM 40,000 16,600 Interest from Maybank on her fixed deposit Ruby owns a piece of land at Cameron Highlands and it was rented to a plantation company. The company paid a rental of RM8,000 per month for the land. During the year 2021, Ruby also earned income of RM38,000 for being a guest lecturer at some private universities. Ruby also received royalty income amounted to RM22,000 for her translation works on legal documents as requested by relevant authorities. The other relevant information: 1. Azfar is taking care of his parents. His father, aged 75 years old is a diabetic and undergo medical treatment at Hospital Kuala Lumpur regularly. A total of RM15,000 was spent in year 2021 for the cost of his father medical treatments. Meanwhile, his mother is unable to walk properly due to knee-pain and thus, Azfar bought her a wheel chair for RM1,100. 2. Azfar and Ruby were blessed with children as follows: (a) Noah, 28 years old, legally adopted child and married. (b) Isa, 26 years old, single and post-graduate student in Heriot-Watt University. He is a research assistant and earned RM24,000 for the year 2021. (c) Musa, 22 years old, single, studying engineering course at IUKL. (d) Hawa, 20 years old, single, doing her diploma program at University Malaya (e) Hud, 17 years old, studying in secondary school at Kuala Lumpur. Hud is suffered with bone cancer. (f) Maryam, 10 years old, studying in private primary school. 3. Azfar paid RM9,000 for Hud's medical expenses. Included also RM1,000 for Hud's complete medical examination. 4. In year 2021, Azfar deposited RM6,000 and RM4,000 each for Hud and Maryam in Skim Simpanan Pendidikan Nasional (SSPN). He also donated RM15,000 to Cancer Association (approved) 5. Azfar spent RM1,520 for internet usage subscription under his name and RM1,200 for reading materials for his family. Additional RM200 incurred for his new sport equipment. 6. In the year 2021, Azfar paid zakat and premium on his life insurance amounting to RM18,000 and RM3,000 respectively. He also contributed to Employee Provident Fund (EPF) an amount of RM12,000 and SOCSO for RM500 in the year 2021. 7. Ruby made the following payments in the basis year 2021: RM 2,500 Donation to approved institutions Zakat 18,500 Life insurance 8,500 Contribution to EPF 36,000 2,200 9,000 Purchase of smartphone for Hawa Medical expense for her parents Travelling expenses to Pulau Tioman Education insurance for her children 2,210 5,600 100 Entrance fee to virtual run competition New shoulder crutches for Hud 800 Medical examination for herself 2,000 8. Ruby is pursuing her post-graduate study on part-time basis at Universiti Kebangsaan Malaysia. She paid a tuition fee of RM4,200 in year 2021. 9. Azfar and Ruby are under monthly tax deduction and in the year 2021, RM15,000 and RM19,200 has been paid by them resepectively. Required: i. Compute the tax liability of Azfar and Ruby for the year of assessment 2021 under separate assessment. Ruby claim all the child reliefs. (28 marks) (CLO3:PLO6:C6) ii. Provide your suggestion to both Azfar and Ruby on how the tax liability can be reduced within the ambit of law. (2 marks) (CLO3:PLO6:C6) QUESTION 4 (30 MARKS) Azfar, an owner of travelling agency since few years ago located in Kuala Lumpur. For the year ended 31 December 2021, the following information is available pertaining to his business: RM Adjusted income 5,150 Current year capital allowances 5,000 Balancing charge 1,800 Since the business was badly affected due to global pandemic, Azfar has decided to work and thus, he has been employed as business development manager on March 2021. He has been paid for RM10 ,000 as salary (gross) per month and entitled for travelling allowance of RM2,000 per month. Azfar also earned the following incomes in the year 2021: 1. Dividend income from Amanah Saham Nasional Berhad amounted to RM25,800. 2. Interest income from his investment in unit trust with Philips Mutual. The amount received amounting to RM33,000 respectively. 3. Royalty from his books amounted to RM82,000. He incurred editing cost for RM5,000 on the books and general expenses totalling to RM1,150. 4. Part-time income as a teacher at tuition centre amounted to RM14,000 and grab driver of RM15,000. 5. Rental income from his apartment totalling to RM18,000 for the year. He paid RM500 for the quit rent and assessment to local authority. Another RM2,000 was incurred for normal maintenance and service costs for the apartment. Ruby, Azfar's wife is a lawyer with a private legal firm with a monthly salary of RM12,000. Beginning from June 2021, her employer provided her with a company car valued at RM90,000 The following were Ruby's other income in basis year 2021: Dividend from Global AA Bhd RM 40,000 16,600 Interest from Maybank on her fixed deposit Ruby owns a piece of land at Cameron Highlands and it was rented to a plantation company. The company paid a rental of RM8,000 per month for the land. During the year 2021, Ruby also earned income of RM38,000 for being a guest lecturer at some private universities. Ruby also received royalty income amounted to RM22,000 for her translation works on legal documents as requested by relevant authorities. The other relevant information: 1. Azfar is taking care of his parents. His father, aged 75 years old is a diabetic and undergo medical treatment at Hospital Kuala Lumpur regularly. A total of RM15,000 was spent in year 2021 for the cost of his father medical treatments. Meanwhile, his mother is unable to walk properly due to knee-pain and thus, Azfar bought her a wheel chair for RM1,100. 2. Azfar and Ruby were blessed with children as follows: (a) Noah, 28 years old, legally adopted child and married. (b) Isa, 26 years old, single and post-graduate student in Heriot-Watt University. He is a research assistant and earned RM24,000 for the year 2021. (c) Musa, 22 years old, single, studying engineering course at IUKL. (d) Hawa, 20 years old, single, doing her diploma program at University Malaya (e) Hud, 17 years old, studying in secondary school at Kuala Lumpur. Hud is suffered with bone cancer. (f) Maryam, 10 years old, studying in private primary school. 3. Azfar paid RM9,000 for Hud's medical expenses. Included also RM1,000 for Hud's complete medical examination. 4. In year 2021, Azfar deposited RM6,000 and RM4,000 each for Hud and Maryam in Skim Simpanan Pendidikan Nasional (SSPN). He also donated RM15,000 to Cancer Association (approved) 5. Azfar spent RM1,520 for internet usage subscription under his name and RM1,200 for reading materials for his family. Additional RM200 incurred for his new sport equipment. 6. In the year 2021, Azfar paid zakat and premium on his life insurance amounting to RM18,000 and RM3,000 respectively. He also contributed to Employee Provident Fund (EPF) an amount of RM12,000 and SOCSO for RM500 in the year 2021. 7. Ruby made the following payments in the basis year 2021: RM 2,500 Donation to approved institutions Zakat 18,500 Life insurance 8,500 Contribution to EPF 36,000 2,200 9,000 Purchase of smartphone for Hawa Medical expense for her parents Travelling expenses to Pulau Tioman Education insurance for her children 2,210 5,600 100 Entrance fee to virtual run competition New shoulder crutches for Hud 800 Medical examination for herself 2,000 8. Ruby is pursuing her post-graduate study on part-time basis at Universiti Kebangsaan Malaysia. She paid a tuition fee of RM4,200 in year 2021. 9. Azfar and Ruby are under monthly tax deduction and in the year 2021, RM15,000 and RM19,200 has been paid by them resepectively. Required: i. Compute the tax liability of Azfar and Ruby for the year of assessment 2021 under separate assessment. Ruby claim all the child reliefs. (28 marks) (CLO3:PLO6:C6) ii. Provide your suggestion to both Azfar and Ruby on how the tax liability can be reduced within the ambit of law. (2 marks) (CLO3:PLO6:C6)