Mr Hong, a Malaysian citizen and tax resident has the following income for the year ended 31 December 2018 RM RM Sole proprietorship business Net profit per accounts 120,000 After including the Lottery winnings 38,000 After deducting the followings Salary to Mr Hong 101,000 Salary to handicapped employees 14,400 Employees Provident Fund and SOCSO (Hongs personal contribution) 11,110 Van running expenses 22,000 Depreciation 7,300 The Inland Revenue Board has agreed that three quarters of the Van running expenses were incurred for the business purposes The Capital allowance in respect of the van for the year of assessment 2018 amounts to RM 23,200 The Inland Revenue Board has agreed that three quarters of the capital allowance were incurred for the business purposes Rental income from a furnished house for the year 2018 Statement of receipts and outgoings Receipts Rent January to March RM2,500 per month 7,500 April to July vacant 0 August to December RM2,620 per month 13,100 20,600 Outgoings Quit rent and assessment 540 Cost of replacing the lounge furniture 7,340 Fire Insurance 750 (8,630) 11,970 Mr Hong has made the following claims for the year of assessment 2018 Tax relief for his disabled wife who was living together with him for the year of assessment 2018 Personal contribution to Employees Provident Fund (EPF) and SOCSO of RM 76 He made a cash donation of RM2,800 to the State Government (approved by DGIR) He purchased a personal laptop amounting of RM 5,400 during that year of assessment He had not purchased any laptop since 2010 The receipt was submitted to IRB He purchased books and magazines for himself and his wife amounting RM 1,200 The receipts were submitted to IRB He paid medical insurance for himself and wife of RM 550 per month Mr Hong is currently living with his father and mother He has another younger brother who is also a taxpayer REQUIRED Formulate the income tax computation for Mr Hong for the year of assessment 2018 Your answer should include the amount of income tax payable he should pay for that year

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Posted on Oct 05, 2020

Mr. Hong, a Malaysian citizen and tax resident has the following income for the year ended 31 December 2018: RM RM Sole proprietorship business: Net

Mr. Hong, a Malaysian citizen and tax resident has the following income for the year ended 31 December 2018:

RM	RM
Sole proprietorship business:
Net profit per accounts	120,000
After including the Lottery winnings	38,000
After deducting the followings:
Salary to Mr. Hong	101,000
Salary to handicapped employees	14,400
Employees Provident Fund and SOCSO (Hong’s personal contribution)	11,110
Van running expenses	22,000*
Depreciation	7,300
* The Inland Revenue Board has agreed that three quarters of the Van running expenses were incurred for the business purposes.
The Capital allowance in respect of the van for the year of assessment 2018 amounts to RM 23,200. The Inland Revenue Board has agreed that three quarters of the capital allowance were incurred for the business purposes.
Rental income from a furnished house for the year 2018:
Statement of receipts and outgoings:
Receipts –Rent
January to March @ RM2,500 per month	7,500
April to July -vacant	0
August to December @ RM2,620 per month	13,100	20,600
Outgoings:
Quit rent and assessment	540
Cost of replacing the lounge furniture	7,340
Fire Insurance	750	(8,630)
11,970

Mr. Hong has made the following claims for the year of assessment 2018:

Tax relief for his disabled wife who was living together with him for the year of assessment 2018.
Personal contribution to Employees Provident Fund (EPF) and SOCSO of RM 76.
He made a cash donation of RM2,800 to the State Government (approved by DGIR)
He purchased a personal laptop amounting of RM 5,400 during that year of assessment. He had not purchased any laptop since 2010. The receipt was submitted to IRB.
He purchased books and magazines for himself and his wife amounting RM 1,200. The receipts were submitted to IRB.
He paid medical insurance for himself and wife of RM 550 per month.
Mr Hong is currently living with his father and mother. He has another younger brother who is also a taxpayer.

REQUIRED:

Formulate the income tax computation for Mr. Hong for the year of assessment 2018. Your answer should include the amount of income tax payable he should pay for that year.