Subject: Individual Income Tax (Malaysian Tax)

Question: Tina Ong, the sole proprietor of a food catering business, submits her profit and loss account for the year ended 31 December 2020 as follows:

	Notes	RM	RM
Sales			189,000
Less:
Cost of Sales	1	56,840
Remuneration	2	74,700
Van running expenses	3	17,200
Leave Passage	4	960
Donations(approved)		300
			150,000
Net Profit			39,000

Notes:

1. Cost of sales includes the cost of meals consumed by Tina Ong and her family amounting to RM 10,800. The catering price of these meals would be RM 13,000.

2. Remuneration includes a sum of RM 50,400 in respect of the salary paid to Tina Ong.

3. The van, which was leased by Tina Ong, is used partly for private purposes. The IRB has accepted that one quarter of the van expenses are attributable to these private purposes.

4. The leave passage cost relates to a trip made by Tina Ong and her children to visit her parents in Sabah

Tina Ong owns three shop houses and residential house which were all rented out during the year 2020. The receipts and payments in respect of each of the properties for the period 1 January 2020 to 31 December 2020 were as follows:

Shop house in Penang-rent at RM 2,400 per month

	RM	RM
Receipts:
Rental January to December		28,800
Water & Electricity deposit		1,200
		30,000
Payments:
Assessment	1,660
Penalty for late payment of assessment	90
Quit Rent	360
Interest on loan used to acquire the shop house	22,400
		24,510
		5,490

Shop house in Ipoh-rent at RM 700 per month

	RM	RM
Receipts:
Rental January, November & December		2,100
Rent Deposit (refundable)		700
		2,800
Payments:
Fire Insurance	550
Repairs	2,900
Agents Fees	700
		4,150
		(1,350)

Shop house in Kuala Lumpur-rent at RM 4,000 per month

	RM	RM
Receipts:
Rental for January to April		16,000
Rent deposit forfeited		4,000
		20,000
Payments:
Cost of improvement to property	8,200
Interest on loan used to acquire the shop house	29,000
		37,200
		(17,200)

Residential house-rent at RM 1,000 per month (October to December 2020)

	RM	RM
Receipts:
Rental commenced on 1 October 2020 (not previously rented out)		3,300
Payments:
Assessment for full year	480
Quit rent for a full year	120
Agents fees to find tenant	1,100
		1,700
		1,600

Tina Ong received alimony to RM 19,200 in YA 2020

Tina Ong made the following claims in her tax return for YA 2020:

Maintenance of her two children, aged 9 and 10 (nobody else contributed).

Insurance premiums amounting to RM3,700 in respect of her own life.

Required:

a) Explain your treatment of the rental of properties

b) Compute the chargeable income of Tina Ong for YA 2020