QUESTION

Encik Hashim, a resident in Malaysia for the basis year 2020, is a lecturer in UiTM. He also operates a tuition center Pusat Pelajar Cemerlang (PPC) since 2018.

For the tuition center he rented a shop lot with a rental of RM1,200 per month. At PPC students have to take all the subjects offered at cost of RM300 per student. In 2020 the tuition center has 100 students. PPC employed 6 teachers with a salary of RM1,000 per month each. The EPF contributed for these teachers is RM15,120 for 2020. In September 2020, PPC disposed a photostat machine which is purchased in 2017 costing RM15,000. The disposal value is RM5,700. In disposing the photostat machine PPC has a capital gain (profit on disposal) of RM3,000. Starting September 2020, in replacement to the disposed photostat machine PPC rented a new photostat machine starting with a rental payment of RM600 per month. PPC furnished the tuition center with furniture & fittings. The net book value as at 31 December 2019 is RM7,000 and the tax written value (residual expenditure) as at that date Is RM6,000. The cost of this furniture & fitting amounted to RM12,000 when purchased three years ago. For 2020 PPC has a tax brought loss (from previous year) amounting to RM2,500.

Encik Hashim works in UiTM is under pension scheme, therefore he does not contribute to Employment Provident Fund (EPF). In 2020 Encik Hashim earns the following employment income per month: Basic salary of RM8,000; Housing allowance of RM1,500; and Entertainment allowance of RM1,000.

UiTM encourage their lecturers to involve in writing and research. As a lecturer, Encik Hashim is active in writing and for 2020 he received a royalty from writing books amounting to RM30,000.

In 2020, Encik Hashim also received other incomes. Dividend from Amanah Saham National amounting to RM5,000. He has a Fixed Deposit in Bank in America (USA) which earned interest of RM16,000 and all is remitted to Malaysia. He also has a rental income of RM30,000 from a condominium in Singapore of which RM15,000 was remitted to Malaysia. He also received a commission amounting to RM20,000 for doing a part time job, introducing buyers to seller in properties market.

In October 2020, Encik Hashim divorced his wife Puan Alima. Encik Hashim paid alimony of RM4,000 per month to his ex-wife (Puan Alima) from October 2020 to December 2020.

Puan Alima works as a clerk in an accounting firm and has the following income in 2020. Gross employment income of RM42,000. She contributed to the compulsory rate of 11% to Employment Provident Fund. She received RM1,460 dividend (single tier) from Tenaga National Bhd and interest of RM1,500 from a saving account (RM80,000) in Bank Simpanan National in 2020. In 2020, she also earned a rental income from a house in Puncak Alam. The monthly rental is RM800. In 2020 she made an extension to the kitchen costing RM5,000. The quit rent and assessment for 2020 is RM650 and 320 respectively.

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En Hashim and Pn Alima have 3 children.

1. Suria 22 years old, a full-time student at University of South Australia, Australia. Monthly expenses of RM4,500 is incurred for her education and maintenance expenses. She also worked part time as a waitress and earned RM800 per month.
2. Salman 17 years old, attending school in Singapore.
3. Fiza 10 years old, mentally retarded and attending special school for handicapped.

Fiza is taken care by Pn Alima. Both En Hashim and Pn Alima contribute for her maintenance and both child relief.

En Hashims mother underwent a kidney operation and the surgery cost of RM7,000 was claimed by En Hashim as payment made by him on 31 March 2020. Meanwhile Pn Alima purchased a wheel chair costing RM7,000 for her father.

Contribution to EPF and life insurance in 2019 are as follows:

	EPF	Life Insurance
	RM	RM
En Hashim	nil	8,400
Pn Alima	4,620	4,000

In 2020, En Hashim donated 5 units of air-conditioner worth RM10,000 to Rumah Anak Yatim Ampang (an approved institution) while Pn Alima made a cash donation of RM2,000 to the same organization.

En Hashim paid zakat RM2,000 in 2020.

Pn Alima bought medical insurance for Fiza and the insurance premium amounting RM3,200 per annum.

Required:

1. Compute the income tax payable for Encik Hashim and Puan Alima for the year of assessment 2020.

Show your working in arriving the Business Statutory Income [section 4(a)] of Encik Hashim. Note, you need to find the capital allowance, balancing allowance or balancing charge of the asset own by PPC.

2. Using the IRB form (form B / form BE), fill the relevant form as thought you are summitting their income returns on their behalf.