TAXA TION 1

The following tax rates, allowances and values are to be used in answering the questions. Income tax rates Resident individuals Chargeable income Rate Cumulative tax RM % RM First 5,000 (0 - 5,000) 0 0 Next 15.000 (5,001 - 20,000) 1 150 Next 15,000 (20,001 - 35,000) 3 600 Next 15,000 (35,001 - 50,000) 8 1,800 Next 20,000 (50,001 - 70,000) 13 4,400 Next 30,000 (70,001 - 100,000) 21 10,700 Next 150,000 (100,001 - 250,000) 24 46,700 Next 150,000 (250,001 - 400,000) 24.5 83,450 Next 200,000 (400,001 - 600,000) 25 133,450 Next 400,000 (600,001 - 1,000,000) 26 237,450 Next 1,000,000 (1,000,001 2,000,000) 28 517,450 Exceeding 2,000,000 30 Resident company Paid up ordinary share capital First RM600,000 17% 24% Excess over RM600,000 24% 24% RM2,500,000 or less More than RM2,500,000 Non-residents Company Individual 24% 30% Value of benefits in kind Car benefit scale Cost of car Prescribed annual value of (when new) private usage of car Fuel per annum RM RM RM Up to 50,000 1,200 600 50,001 to 75,000 2,400 900 75,001 to 100,000 3,600 1,200 100,001 to 150,000 5.000 1,500 150,001 to 200,000 7,000 1,800 200,001 to 250,000 9,000 2,100 250,001 to 350,000 15,000 2,400 350,001 to 500,000 21,250 2,700 500,001 and above 25,000 3,000 The value of the motor car benefit equal to half the prescribed annual value (above) is taken if the motor car provided is more than five (5) years old. Where a driver is provided by the employer, the value of the benefit is fixed at RM600 per month. RM per month Other benefits Household furnishings, apparatus and appliances: Semi-furnished with furniture in the lounge, dining room, or bedroom Semi-furnished with furniture as above plus air-conditioners and/or curtains and carpets Fully furnished premises 70 140 280 Domestic help Gardener 400 300 RM 9,000 6,000 8,000 Personal reliefs and allowances Self Disabled self, additional Medical expenses expended on parents (maximum) Medical expenses expended on self, spouse or child with serious disease, including up to RM1,000 for medical examination (maximum) Parental care (each) Basic supporting equipment for disabled self, spouse, child or parent (maximum) Study course fees for skills or qualifications (maximum) Lifestyle allowance (maximum) Spouse relief Disabled spouse, additional Child - basic rate (each) Child - higher rate (each) Disabled child (each) Disabled child, additional (each) Childcare (below six years old) (maximum) Breastfeeding equipment (maximum) Life insurance premiums (maximum) EPF / Approved provident fund (maximum) Private retirement scheme contributions, deferred annuity premiums (maximum) Medical and/or education insurance premiums for self, spouse or child (maximum) Deposit for a child into the National Education Savings Scheme (maximum) Employee's contribution to Social Security Organisation (SOCSO) scheme (maximum) Local tour - tour package, accommodation and entrance fees (maximum) Personal computer, smartphone and tablet (maximum) Healthy lifestyle - sports equipment, rental/entrance fees to sport facility & registration fee for sports competition. (maximum) 8,000 1,500 6,000 7,000 2,500 4,000 5,000 2,000 8,000 6,000 8,000 3,000 1,000 3,000 4,000 3,000 3,000 8,000 250 1,000 2,500 500 Rebates Chargeable income not exceeding RM35,000 Individual Individual entitled to a deduction in respect of a spouse or a former wife RM 400 800 a 4 Global Sdn Bhd (GSB) was incorporated on 1.1.2020 and commenced its operations on 1.4.2020 with a share capital of RM2 million. GSB is in the business of publishing books and offering career guidance and recruitment services and makes up its accounts annually to 31 December The statement of profit or loss of GSB for the financial year ended 31.12.2021 is as follows: Notes RM'000 RM000 Sales 14,000 Less: Cost of sales 1 (7,000) Gross profit 7,000 Add: Dividend income 500 Other income 2 30 530 Less: Expenses 7,530 Statutory audit fees 43 Cash losses due to theft and embezzlement SO Donations 100 Entertainment expenses 122 Foreign exchange loss 170 Insurance premiums 7 90 Legal and professional fees 28 Allowance for receivables and irrecoverable debts written off 30 Repair and maintenance expenses 10 68 Pre-commencement expenses 11 20 Salaries and wages 12 5,832 Travelling expenses 13 79 6,632 Profit before tax 898 1. Cost of sales Included in the cost of sales are: RM1000 Depreciation of plant and equipment 1400 Royalty fees paid to a non-resident company where the withholding tax 1800 has not yet remitted due to cash tight. 9 2. The other income arose from key-man's endowment policy in respect of the managing director 3. This figure includes an amount embezzled of RM20,000 by one of the directors. A police report was lodged but was dismissed. 4. GSB contributed computers worth RM100,000 to National Library of Malaysia to improve the library facility. National library of Malaysia is a public library. 5. Entertainment expenses comprise: Gifts without a business logo for a customer's annual dinner Entertainment of employees of related companies Promotional samples 6. The foreign exchange loss comprises: RM'000 66 8 48 Foreign exchange loss realised on trade payables Foreign exchange gain realised on the purchase of machienry RM000 180 (10) 170 6 7. Insurance premiums include: RM000 Insurance premium to cover risk of loss of income of the company's 60 key personnel Insurance premium paid for a 'key-man whole life policy to insure the 10 life of the marketing manager (the beneficiary stated in this policy is the company) 8. Legal and professional fees comprise: RM000 Costs of defending legal proceedings brought by former employees 10 claiming unjust dismissal Tax fees for appealing against a penalty on late instalment tax payment 12 Company secretarial fees 9. Allowance for receivables and irrecoverable debts written off comprise: RM'000 General allowance for trade receivables 15 Specific allowance for trade receivables 15 10. Repair and maintenance expense include the costs of installing a ramp to provide access for disabled employees for RM3,000. 11. The total pre-commencement expenses incurred during the period up to 31.12.2021 comprised: RM000 Salaries and employee's provident fund (EPF) related expenses Recruitment expenses 12. Salaries and wages include: RM 000 Leave passage - local trip for managing director 20 Salaries of directors 2000 EPF contributions for directors 500 10 10 13. Travelling expenses include: Business trip to China Local travelling expenses claimed by marketing staff Participated in an approved international trade fair. Total six days accommodation and food and drinks for participating staff. RM'000 20 20 20.5 14. GSB's capital allowances have been computed at RM2million for the YA 2021. Required: Compute the chargeable income of GSB for the YA 2021. (30 marks)