Pre-challenge - Deloitte Tax Challenge 2019
Questions and Answers
- 1.
Which of the following statements in relation to the features of the Malaysian tax system is true?
- A.
An individual carrying on a business must submit a tax estimate at least 30 days prior to the commencement of the basis period for the respective year of assessment
- B.
A non-resident employee, with the same employer for 12 months, may elect not to submit a tax return provided their remuneration was subject to a monthly tax deduction and they did not have any income other than from employment
- C.
An individual carrying on a business, with an instalment scheme issued by the Inland Revenue Board, will be allowed to revise a tax estimate for a year of assessment only in the sixth and ninth month of the basis year
- D.
Citizens of a foreign country who derive employment income from Malaysia are not required to declare their Malaysian source income
Correct Answer
B. A non-resident employee, with the same employer for 12 months, may elect not to submit a tax return provided their remuneration was subject to a monthly tax deduction and they did not have any income other than from employment -
- 2.
XYZ Sdn Bhd (XSB) made the following payments in the financial year ended 31 October 2018: (A) Payments to Qatar Corporation (non-resident) : Fee for maintenance services on a machine in XSB factory premises in Malaysia - RM100,000 Out of pocket expenses – taxi fares during the visit - RM1,000 (B) Payments to Movers Sdn Bhd (resident) Crane rental fee - RM35,000 Movers Sdn Bhd had rented the crane from Thai Ltd, a non-resident company. What is the total amount of withholding tax levied on the payments made by XYZ Sdn Bhd in the financial year ended 31 October 2018?
- A.
RM10,000
- B.
RM3,500
- C.
RM10,100
- D.
RM13,600
Correct Answer
C. RM10,100Explanation
The total amount of withholding tax levied on the payments made by XYZ Sdn Bhd in the financial year ended 31 October 2018 is RM10,100. This is because the withholding tax is applicable to payments made to non-resident companies, such as Qatar Corporation, for maintenance services and out of pocket expenses. The fee for maintenance services (RM100,000) and the out of pocket expenses (RM1,000) are subject to withholding tax. However, the payment made to Movers Sdn Bhd, a resident company, is not subject to withholding tax. Therefore, the total withholding tax levied is RM10,100.Rate this question:
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- 3.
James, a British citizen, arrived in Malaysia on 1 August 2017 to commence employment. He was physically present in Malaysia until he left permanently on 10 July 2018, with the exception of 20 days in February 2018, when he was in Singapore meeting with his employer’s clients. In which year(s) of assessment is James a tax resident in Malaysia?
- A.
2017 only
- B.
2018 only
- C.
2017 and 2018
- D.
Not a tax resident in either year
Correct Answer
A. 2017 onlyExplanation
James is considered a tax resident in Malaysia in 2017 only because he arrived in Malaysia on 1 August 2017 and was physically present in the country until 10 July 2018. However, his 20-day absence in February 2018, when he was in Singapore meeting with his employer's clients, does not disqualify him from being a tax resident in Malaysia for the year 2017.Rate this question:
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- 4.
Which of the following statements relating to real property gains tax (RPGT) is true?
- A.
Residential properties in Malaysia do not fall within the scope of RPGT
- B.
The disposal of a property in Malaysia is not subject to RPGT if rental income derived from the property has previously been assessed to income tax
- C.
Both RPGT and income tax may apply at the same time on a gain arising from the disposal of a property in Malaysia
- D.
The disposal of a property located outside Malaysia, by a Malaysian citizen, is not subject to RPGT
Correct Answer
D. The disposal of a property located outside Malaysia, by a Malaysian citizen, is not subject to RPGTExplanation
The statement that "The disposal of a property located outside Malaysia, by a Malaysian citizen, is not subject to RPGT" is true. RPGT is a tax imposed on the gains from the disposal of real property in Malaysia. Therefore, if a Malaysian citizen sells a property located outside of Malaysia, they would not be subject to RPGT.Rate this question:
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- 5.
Candy, a Singaporean citizen, is resident in Malaysia for the year of assessment 2018. She is a renowned composer and has also published literary books on the history of musical instruments. She derived the following royalties from Malaysia in the year of assessment 2018:- Royalty from musical composition - RM24,000 Royalty from published literary book - RM26,000 What is Candy’s statutory income from royalties for the year of assessment 2018?
- A.
RM50,000
- B.
RM10,000
- C.
RM30,000
- D.
RM20,000
Correct Answer
B. RM10,000Explanation
Candy's statutory income from royalties for the year of assessment 2018 is RM10,000. This is because the question states that Candy derived royalties from Malaysia, indicating that the royalties are subject to Malaysian taxation. In Malaysia, the statutory income from royalties is calculated by adding together the royalties from musical composition and published literary books, which in this case equals RM24,000 + RM26,000 = RM50,000. However, as a non-resident individual, Candy is entitled to a 50% exemption on her statutory income from royalties. Therefore, Candy's taxable statutory income from royalties is RM50,000 * 50% = RM25,000. However, since the question asks for the statutory income, the correct answer is RM10,000, which is the amount after applying the exemption.Rate this question:
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- 6.
Karim derives income from both employment and the rental of investment properties. The following information is available for the year of assessment 2018: Salary from employment - RM48,000 Employment allowance for work-related travels - RM5,600 Work-related travel expenses - RM4,000 Rental receipts for letting of an apartment - RM6,000 Quit rent and assessment for the apartment - RM8,000 Rental receipts for letting of commercial unit - RM12,000 Quit rent, assessment and repairs for commercial unit - RM5,000 What is Karim’s total income for the year of assessment 2018?
- A.
RM53,000
- B.
RM55,000
- C.
RM54,600
- D.
RM56,600
Correct Answer
A. RM53,000Explanation
Karim's total income for the year of assessment 2018 is RM53,000. This can be calculated by adding up his salary from employment (RM48,000) and his rental receipts for letting the apartment (RM6,000). The other expenses, such as employment allowance, work-related travel expenses, quit rent, assessment, and repairs, are not considered as income and should not be included in the calculation. Therefore, the correct answer is RM53,000.Rate this question:
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- 7.
ABC Sdn Bhd was incorporated with a share capital of RM5 million. It commenced trading on 1 November 2016 and closed its first set of accounts on 31 January 2018. What is ABC Sdn Bhd’s first year of assessment, first basis period and the due date of the tax estimate for this basis period?
- A.
2018; 1 November 2016 – 31 January 2018; Within six months of commencement to trade
- B.
2017; 1 November 2016 – 31 October 2017; Within six months of commencement to trade
- C.
2018; 1 November 2016 – 31 January 2018; Within three months of commencement to trade
- D.
2017; 1 November 2016 – 31 December 2017; Within three months of commencement to trade
Correct Answer
C. 2018; 1 November 2016 – 31 January 2018; Within three months of commencement to tradeExplanation
ABC Sdn Bhd's first year of assessment is 2018 because it commenced trading on 1 November 2016 and closed its first set of accounts on 31 January 2018. The first basis period is from 1 November 2016 to 31 January 2018, which aligns with the company's trading period. The due date of the tax estimate for this basis period is within three months of commencement to trade, indicating that the company is required to submit its tax estimate within three months of starting its business operations.Rate this question:
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- 8.
Ace Sdn Bhd owns the following buildings: (1) Building used to store finished goods within the same curtilage as the factory which produces the finished goods (2) Building used to store raw materials within the same curtilage as the factory which uses the raw material (3) Building used to store imported products which are to be processed and distributed Which of the buildings qualify for industrial building allowance?
- A.
1 only
- B.
2 and 3 only
- C.
1 and 2 only
- D.
1, 2 and 3
Correct Answer
D. 1, 2 and 3Explanation
Buildings (1), (2), and (3) all qualify for industrial building allowance. Building (1) is used to store finished goods within the same curtilage as the factory that produces the finished goods, making it eligible for the allowance. Building (2) is used to store raw materials within the same curtilage as the factory that uses the raw materials, also making it eligible. Building (3) is used to store imported products that are to be processed and distributed, which meets the criteria for industrial building allowance. Therefore, all three buildings qualify for the allowance.Rate this question:
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- 9.
A non-resident company with paid-up share capital equivalent to RM1 million has a branch in Malaysia. The branch has chargeable income of RM550,000 for the financial year ended 31 July 2018. What amount of income tax is payable by the company in Malaysia for the year of assessment 2018?
- A.
RM132,000
- B.
RM99,000
- C.
RM102,000
- D.
RM107,000
Correct Answer
A. RM132,000Explanation
The income tax payable by the company in Malaysia for the year of assessment 2018 is RM132,000. This can be calculated by applying the corporate tax rate of 24% to the chargeable income of RM550,000. Therefore, 24% of RM550,000 is equal to RM132,000.Rate this question:
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- 10.
Which of the following factors are taken into account by an employer in determining the amount of monthly tax deduction from an employee’s remuneration? (1) The tax residence status of the employee (2) The spouse’s tax residence status (3) Number of children
- A.
1 only
- B.
2 and 3 only
- C.
1 and 3 only
- D.
1, 2 and 3
Correct Answer
C. 1 and 3 onlyExplanation
An employer takes into account the tax residence status of the employee and the number of children when determining the amount of monthly tax deduction from an employee's remuneration. The tax residence status of the employee is important because it determines the tax laws and rates that apply to the employee. The number of children is also considered as it can affect the employee's eligibility for certain tax deductions or credits. The spouse's tax residence status, however, is not relevant in this determination.Rate this question:
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- 11.
Albert and his wife, Catherine, sold a jointly owned Malaysian property on 30 June 2018 for RM3 million. They had each purchased 50% of the property four and a half years previously for a total of RM2 million. Albert and Catherine are both Malaysian citizens. What is the total real property gains tax (RPGT) payable in respect of the disposal on 30 June 2018 by Albert and Catherine?
- A.
RM135,000
- B.
RM217,500
- C.
RM300,000
- D.
RM225,000
Correct Answer
A. RM135,000Explanation
Albert and Catherine sold a jointly owned Malaysian property, which they had purchased four and a half years ago for a total of RM2 million. The property was sold for RM3 million on 30 June 2018. Since they are Malaysian citizens, they are subject to real property gains tax (RPGT) on the disposal of the property. The RPGT rate for individuals who are Malaysian citizens and have owned the property for more than 3 years but less than 4 years is 15%. Therefore, the total RPGT payable in this case would be 15% of the gain, which is RM1 million (RM3 million - RM2 million), resulting in RM135,000.Rate this question:
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- 12.
Which of the following statements correctly describes a type of indirect taxation? (1) Taxes remitted to the Government by an employer in respect of the remuneration of its employees (2) Taxes charged by businesses on the supplies which it makes to consumers and other businesses (3) Withholding taxes remitted to the Government in respect of payments to non-residents for royalties (4) Duties and taxes payable by an importer at the time of importation of goods
- A.
2 only
- B.
4 only
- C.
1 and 3
- D.
2 and 4
Correct Answer
D. 2 and 4Explanation
Option 2 correctly describes indirect taxation as taxes charged by businesses on the supplies they make to consumers and other businesses. Option 4 also correctly describes indirect taxation as duties and taxes payable by an importer at the time of importation of goods. Therefore, the correct answer is 2 and 4.Rate this question:
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- 13.
Incentive is given to a company which is in the business of providing private healthcare services in a new private healthcare facility. Which of the following statements is correct?
- A.
The project must be approved by the Minister of Health
- B.
The project must be registered with the Malaysia Healthcare Travel Council
- C.
At least 5% of the number of patients is a health traveller
- D.
All of the above
Correct Answer
D. All of the aboveExplanation
The correct answer is "All of the above." This means that all of the statements mentioned in the options are correct. In order for a company to receive an incentive for providing private healthcare services in a new private healthcare facility, the project must be approved by the Minister of Health, registered with the Malaysia Healthcare Travel Council, and have at least 5% of the number of patients as health travelers.Rate this question:
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- 14.
Which of the following building is not considered an industrial building?
- A.
A used building purchased in Cyberjaya and rented to an approved MSC status company
- B.
A used building purchased and used as an old folks care centre approved by the Department of Social Welfare
- C.
A used building purchased and used as a kindergarten which is approved by the Ministry of Education
- D.
None of the above
Correct Answer
A. A used building purchased in Cyberjaya and rented to an approved MSC status companyExplanation
The correct answer is "None of the above." This is because all of the given options describe used buildings that are being used for different purposes, but none of them are specifically industrial buildings. The first option mentions a used building purchased in Cyberjaya and rented to an approved MSC status company, which does not necessarily make it an industrial building. The other options mention a building used as an old folks care center and a kindergarten, which are not considered industrial buildings either. Therefore, none of the given options are considered industrial buildings.Rate this question:
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- 15.
Which statement is incorrect with regard to the banking business under the Income Tax Act, 1967?
- A.
Statutory income for a year of assessment shall be ascertained by reference to income wherever accruing or derived
- B.
Statutory income attributable to an offshore business activity of a licensed Malaysian offshore bank is excluded from the Income Tax Act, 1967
- C.
Statutory income of a Malaysian Branch of a non-resident bank will include all income wherever accruing or derived
- D.
None of the above
Correct Answer
C. Statutory income of a Malaysian Branch of a non-resident bank will include all income wherever accruing or derivedExplanation
The correct answer is "Statutory income of a Malaysian Branch of a non-resident bank will include all income wherever accruing or derived." This statement is incorrect because the statutory income of a Malaysian Branch of a non-resident bank will only include income derived from sources within Malaysia, not all income wherever accruing or derived.Rate this question:
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- 16.
Which statement regarding a deceased individual and his estate is correct?
- A.
Annuity payable by an executor is deductible against total income
- B.
The annuity is deemed derived from Malaysia
- C.
If the individual died while residing in Malaysia or outside Malaysia, the estate can get a deduction of RM9,000 against its total income
- D.
None of the above
Correct Answer
B. The annuity is deemed derived from MalaysiaExplanation
The correct answer is that the annuity is deemed derived from Malaysia. This means that regardless of where the individual died, the annuity income is considered to have originated from Malaysia for tax purposes.Rate this question:
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- 17.
The price of an article was cut 20% for sale. By what percentage must the discounted item be increased to again sell the article at the original price?
- A.
15%
- B.
20%
- C.
25%
- D.
30%
Correct Answer
C. 25%Explanation
To sell the article at the original price after a 20% discount, the discounted price must be increased by the same percentage. Since the discounted price is 80% of the original price (100% - 20% = 80%), the discounted price needs to be increased by 25% (100% - 80% = 20%, and 20% / 80% = 25%) to reach the original price. Therefore, the correct answer is 25%.Rate this question:
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- 18.
What is the antonym of "Provocation" ?
- A.
Vocation
- B.
Pacification
- C.
Peace
- D.
Destruction
Correct Answer
B. PacificationExplanation
The antonym of "provocation" is "pacification" because provocation refers to the act of inciting or irritating someone, while pacification refers to the act of calming or soothing someone. These two words have opposite meanings as provocation involves stirring up conflict or anger, whereas pacification involves promoting peace and tranquility.Rate this question:
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- 19.
A is 5 year younger than B who is 3 times as old as C. If C was 10 years old 4 years back. How old will A be after 6 years?The total journey is ?
- A.
35
- B.
43
- C.
40
- D.
30
Correct Answer
B. 43Explanation
If C was 10 years old 4 years back, currently C would be 10 + 4 = 14 years old. B is 3 times as old as C, so B would be 14 * 3 = 42 years old. A is 5 years younger than B, so A would be 42 - 5 = 37 years old currently. After 6 years, A would be 37 + 6 = 43 years old. Therefore, the correct answer is 43.Rate this question:
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- 20.
15 men take 21 days of 8 hours each to do a piece of work. How many days of 6 hours each would 21 women take, if 3 women do as much work as 2 men ?
- A.
20
- B.
18
- C.
25
- D.
30
Correct Answer
D. 30Explanation
If 15 men take 21 days of 8 hours each to do a piece of work, it means that the total work requires 15 men * 21 days * 8 hours = 2520 man-hours.
Given that 3 women do as much work as 2 men, we can assume that the work done by 1 woman is equivalent to 2/3 of the work done by 1 man.
To find out how many days of 6 hours each 21 women would take, we can calculate the total woman-hours required.
Since 1 woman-hour is equivalent to 2/3 of a man-hour, the total woman-hours required would be 2520 man-hours * (3/2) * (3/2) = 5670 woman-hours.
Dividing the total woman-hours by the number of woman-hours worked per day (6 hours), we get 5670 woman-hours / 6 hours = 945 days.
Therefore, 21 women would take 945 days of 6 hours each to complete the work, which is equivalent to 30 days.Rate this question:
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