Stage 1 (Individual) Deloitte Tax Challenge 2019

  • ITA 1967
  • MFRS
  • IFRS
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| Attempts: 3,727 | Questions: 123 | Updated: Mar 20, 2025
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1. Which of the following can be arranged into a 5-letter English word?

Explanation

The letters "R I L S A" can be rearranged to form the English word "RAILS".

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About This Quiz
Stage 1 (Individual) Deloitte Tax Challenge 2019 - Quiz

This quiz from the Stage 1 (Individual) Deloitte Tax Challenge 2019 assesses knowledge of Malaysian tax law, focusing on income definitions, tax deductions, and rebates. It is designed for individuals preparing for tax-related roles, enhancing understanding of complex tax regulations.

2.
You may optionally provide this to label your report, leaderboard, or certificate.
2. What does RMCD stand for?

Explanation

RMCD stands for Royal Malaysian Customs Department. This is the correct answer because it accurately represents the acronym and the organization it refers to. The Royal Malaysian Customs Department is a government agency responsible for enforcing customs and trade regulations in Malaysia. They are responsible for collecting customs duties, preventing smuggling, and facilitating international trade.

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3. Which one of the five choices makes the best comparison? PEACH is to HCAEP as 46251 is to:

Explanation

The correct answer is 15264. In the given comparison, the word PEACH is spelled backwards as HCAEP. Similarly, the number 46251 should be spelled backwards to find the corresponding number. Out of the given choices, only 15264 is the reverse of 46251, making it the best comparison.

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4. (68+42) x ? = 308/5 Complete the equation by correctly identifying the missing part of the calculation from the below.

Explanation

In order to find the missing part of the calculation, we need to solve the equation (68+42) x ? = 308/5. Simplifying the equation, we have 110 x ? = 61.6. Dividing both sides by 110, we get ? = 61.6/110. Evaluating this expression, we find that ? is approximately equal to 0.56, which is equivalent to 56%. Therefore, the missing part of the calculation is 56%.

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5. If you rearrange the letters "CIFAIPC" you would have the name of a(n):

Explanation

By rearranging the letters "CIFAIPC," we can form the word "PACIFIC." The Pacific Ocean is the largest and deepest ocean on Earth, covering more than 30% of the planet's surface. It is known for its vastness and diverse marine life, making it a suitable answer for this question.

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6. Which of the following would not fall under the definition of an asset?

Explanation

Owner's equity would not fall under the definition of an asset because it represents the residual interest in the assets of an entity after deducting liabilities. It is the owner's claim on the assets of the business and is classified as part of the liabilities and equity section of the balance sheet, rather than being considered an asset itself. Assets, on the other hand, are economic resources that are owned or controlled by an entity, with the expectation that they will provide future economic benefits.

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7. Knowing people is important. _________________________________________________________.

Explanation

Having a strong network of connections is crucial for success. The more connections you have, the greater your chances of achieving success. These connections can provide opportunities, support, and valuable advice that can help you progress in your personal and professional life. By building and nurturing relationships with a diverse range of people, you increase your access to resources, knowledge, and opportunities that can contribute to your success.

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8. An amount of 3,000 is received on account from a customer in relation to a balance outstanding for services provided. Which account is credited?

Explanation

When a customer pays an outstanding balance for services provided, the amount received is credited to the "Accounts receivable" account. This account represents the amount owed to the company by its customers. By crediting the "Accounts receivable" account, it reduces the outstanding balance and reflects the fact that the customer has made a payment towards their debt.

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9. _________________________________________________________. He was expecting my call — I told him I would call right after lunch.

Explanation

The correct answer is "I was supposed to call my client but I forgot." This answer accurately reflects the situation described in the given statement. The speaker had a responsibility or obligation to call their client, but they forgot to do so.

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10. What is 17/68 of 12.5% of 19/57 of 30/45 of 144?

Explanation

The question is asking for 17/68 of 12.5% of 19/57 of 30/45 of 144. To solve this, we can start by finding the value of 30/45 of 144, which is 96. Then, we can find 19/57 of 96, which is 32. Finally, we can find 12.5% of 32, which is 4. So, 17/68 of 4 is 1. Hence, the answer is 1.

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11. Which of the following rates are applicable to agriculture allowance in respect of different assets? I. 100% II. 50% III. 20% IV. 10%

Explanation

The rates applicable to agriculture allowance in respect of different assets are 50%, 20%, and 10%. This means that for certain agricultural assets, a deduction of 50%, 20%, or 10% can be claimed as an allowance. The answer "II, III and IV" indicates that all these rates are applicable to agriculture allowance.

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12. What is the missing number in the sequence shown below? 1 - 8 - 27 - ? - 125 - 216

Explanation

The sequence shown is a pattern of cubes of consecutive numbers. 1^3 = 1, 2^3 = 8, 3^3 = 27, 4^3 = 64, 5^3 = 125, 6^3 = 216. Therefore, the missing number in the sequence is 64.

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13. If you rearrange the letters "LNGEDNA" you have the name of a(n):

Explanation

By rearranging the letters "LNGEDNA," we can form the word "ENGLAND," which is the name of a country.

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14. Your presentation should include visual aids, ______________________________________.

Explanation

The correct answer is "such as pictures, tables, and graphs". This answer suggests that visual aids such as pictures, tables, and graphs should be included in the presentation. These visual aids can help to enhance the understanding and engagement of the audience by providing visual representations of data, concepts, or ideas. They can make the presentation more visually appealing and can also help to simplify complex information. Including visual aids can make the presentation more effective and memorable for the audience.

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15. Out of 384 guests at a conference, a quarter took their coffee with sugar only, 5/8 took it with both milk and sugar, one out of every 16 guests took it with milk only and the rest took it black with neither milk nor sugar. How many guests took it black with neither milk nor sugar?

Explanation

We can solve this problem by setting up a system of equations. Let's assume that there are x guests who took their coffee with sugar only, y guests who took it with both milk and sugar, z guests who took it with milk only, and w guests who took it black with neither milk nor sugar.

According to the given information, we can set up the following equations:
x + y + z + w = 384 (total number of guests)
x = 1/4 * 384 (a quarter took it with sugar only)
y = 5/8 * 384 (5/8 took it with both milk and sugar)
z = 1/16 * 384 (one out of every 16 guests took it with milk only)

Simplifying these equations, we find:
x = 96
y = 240
z = 24

To find the number of guests who took it black with neither milk nor sugar, we can substitute the values of x, y, and z into the first equation:
96 + 240 + 24 + w = 384
360 + w = 384
w = 24

Therefore, 24 guests took it black with neither milk nor sugar.

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16. Mary, who is sixteen years old, is four times as old as her brother. How old will Mary be when she is twice as old as her brother?

Explanation

Mary is currently 16 years old and four times as old as her brother. This means her brother is 16/4 = 4 years old. In order for Mary to be twice as old as her brother, her brother would have to be 4 x 2 = 8 years old. Since Mary is currently 16 years old, she would be 16 + 8 = 24 years old when she is twice as old as her brother. Therefore, the answer is 24.

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17. The acquirer must submit Form CKHT 2A within ……… days from the date of acquisition of the property.

Explanation

The correct answer is 60. This means that the acquirer must submit Form CKHT 2A within 60 days from the date of acquisition of the property. This form is likely a requirement for the acquirer to report the acquisition and provide necessary information to the relevant authorities. The 60-day timeframe allows for a reasonable amount of time for the acquirer to gather the required information and complete the form.

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18. What is the missing term in the break even formula below? Break even units = Operating expenses / (Selling price – ?)

Explanation

The missing term in the break even formula is "Cost per unit". In order to calculate the break even units, we need to divide the operating expenses by the difference between the selling price and the cost per unit. This formula helps determine the number of units that need to be sold in order to cover all the operating expenses and reach the break even point.

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19. Any unabsorbed capital allowance may be carried forward to be set off against (Note: there is no substantial change in shareholding)

Explanation

Any unabsorbed capital allowance refers to the amount of capital allowance that has not been fully utilized in a particular tax year. This unutilized amount can be carried forward to be set off against the income of the following years from the same business source. This means that if a business has not fully utilized its capital allowance in a given year, it can offset this unused amount against its future income from the same business source. This allows businesses to effectively utilize their capital allowances over multiple years and reduce their tax liability.

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20. Which of the following will be subject to withholding tax?

Explanation

The appearance fee paid to Jackie Chan for a show in Malaysia will be subject to withholding tax. Withholding tax is a tax that is deducted at the source of income, usually by the payer of the income. In this case, the fee paid to Jackie Chan is considered income and will be subject to withholding tax in Malaysia. The other options mentioned (consultancy fee, commission fee, technical seminar fee) may also be subject to withholding tax depending on the specific tax laws in the respective countries, but the question specifically asks for the fee that will be subject to withholding tax.

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21. After submitting her 2017 return form before the due date 30 June 2018, Ms Tan submitted an amended tax return for the year of assessment 2017 on 10 August 2018 which resulted in an additional tax payable of RM500. What would be the amount payable inclusive of penalties, if any?

Explanation

Ms Tan submitted an amended tax return after the due date, which means she is liable to pay penalties. The penalties for late submission of an amended tax return in Malaysia are as follows: 5% of the additional tax payable if the amended return is submitted within 60 days from the due date, and 10% if it is submitted after 60 days. Since Ms Tan submitted the amended return on 10 August 2018, which is more than 60 days after the due date, the penalty would be 10% of the additional tax payable. Therefore, the total amount payable, inclusive of penalties, would be RM500 + 10% of RM500, which equals RM550.00.

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22. A business has the following items:-
  • Land : RM 1,500,0000
  • Machinery : RM 80,000
  • Cash : RM 20,000
  • Owner's equity : RM 900,000
  • Loan : RM 500,000
What is the value of creditors?

Explanation

The value of creditors is RM 200,000. This is because creditors represent the amount of money that a business owes to its suppliers or lenders. In this case, the business has a loan of RM 500,000, which is the only liability mentioned. Therefore, the value of creditors is equal to the loan amount, which is RM 200,000.

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23. In the two numerical sequences below, one number that appears in the top sequence should appear in the bottom sequence and vice versa. Which two numbers should be changed around?  
  • 10, 20, 60, 180, 360, 720
  • 10, 30, 60, 120, 360, 1080

Explanation

In the given sequences, all the numbers are multiples of 10. However, in the second sequence, the number 120 should be changed to 180 and vice versa. This is because in the first sequence, the numbers are increasing by multiplying by 3, while in the second sequence, the numbers are increasing by multiplying by 2. So, to maintain the pattern, the numbers 120 and 180 need to be swapped.

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24. Which of the following statements are false?

Explanation

Debtors are not a debt for your business. Debtors refer to individuals or entities who owe money to your business as a result of purchasing goods or services on credit. They represent an asset for your business as they are expected to pay their debts in the future, which increases the business's accounts receivable.

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25. Optimal Sdn Bhd is planning to make payment in respect of services rendered by a non-resident. When should Malaysian withholding tax payment be made?

Explanation

The correct answer is "Within 1 month when Optimal Sdn Bhd electronically transfers the payment to the non-resident." This is because Malaysian withholding tax payment should be made within 1 month of transferring the payment to the non-resident. This ensures that the tax is withheld and paid to the relevant authorities in a timely manner.

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26. In a transfer pricing comparability analysis, which companies with principal activities below would be comparable to a manufacturer of garments? I. Manufacturer of swimsuit II. Manufacturer of sports equipment III. Manufacturer of apparel IV. Manufacturer of jeans

Explanation

Companies that are comparable to a manufacturer of garments would be those involved in the manufacturing of similar products or products within the same industry. Swimsuits, apparel, and jeans are all garments, so a manufacturer of swimsuits (I), a manufacturer of apparel (III), and a manufacturer of jeans (IV) would be comparable to a manufacturer of garments. Therefore, the correct answer is I, III, and IV.

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27. The incorrect tax treatment for purchase of assets under a hire-purchase transaction is

Explanation

The correct answer is to claim capital allowance on principal and interest payments made during the year. In a hire-purchase transaction, the ownership of the asset is transferred to the purchaser only after the final payment is made. Until then, the purchaser is considered as the hirer. Therefore, the correct tax treatment is to claim capital allowance on the principal payments made during the year, as the hirer is not the legal owner of the asset. Additionally, the interest payments should be expensed off, as they are considered as financing costs rather than capital expenditure.

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28. C Manufacturers Sdn Bhd commenced its business in 2001. In year 2003, the company first undertook its expansion project. Based on the current legislation, what is the final year which C Manufacturers Sdn Bhd is entitled for the claim of Reinvestment Allowance?

Explanation

Based on the information provided, C Manufacturers Sdn Bhd commenced its business in 2001 and undertook its expansion project in 2003. The claim for Reinvestment Allowance is usually available for a certain period of time after the expansion project. Since the question does not specify the duration of the claim period, we can assume it is the standard 5-year period. Therefore, the final year for which C Manufacturers Sdn Bhd is entitled to claim the Reinvestment Allowance would be 2018, as it is five years after the expansion project in 2003.

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29. Solar Power Sdn Bhd would like to embark into the business of producing solar energy in Sarawak and would incur huge investment to purchase solar PV system. Which government agency should Solar Power Sdn Bhd approach to apply for the investment tax allowance incentive?

Explanation

Solar Power Sdn Bhd should approach the Malaysian Investment Development Authority (MIDA) to apply for the investment tax allowance incentive. MIDA is the government agency responsible for promoting and facilitating investments in Malaysia. They provide various incentives and support for businesses, including tax incentives for investment in certain sectors, such as renewable energy. Since Solar Power Sdn Bhd wants to invest in producing solar energy, they would be eligible to apply for the investment tax allowance incentive offered by MIDA.

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30. Which of the following entertainment expenses qualify for 50% tax deduction? I. Redemption of gifts based on a scheme of accumulated points II. Expenditure on leave passage benefit provided by an employer to its employees to Pulau Pangkor as its yearly event III. A dinner provided to an important supplier IV. Entertainment given to internal auditors from holding company

Explanation

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31. Sofmicro Inc. incorporated in the United States of America is a company that has been providing technical services to its subsidiaries in Malaysia. Its employees would frequently travel to Malaysia to provide onsite support. Which of the following would apply to Sofmicro, Inc? I. Sofmicro Inc. has established a taxable presence in Malaysia. As such, it would be liable to Malaysian corporate tax II. Sofmicro Inc. would be required to withhold 10% of payments made to its customers III. Sofmicro Inc. employees will be subject to Malaysian tax in respect of their income earned in Malaysia IV. Sofmicro Inc. earnings would be subject to a Malaysian withholding tax of 10%

Explanation

Sofmicro Inc. would be liable to Malaysian corporate tax because it has established a taxable presence in Malaysia. Additionally, Sofmicro Inc. employees would be subject to Malaysian tax on their income earned in Malaysia. Furthermore, Sofmicro Inc. earnings would be subject to a Malaysian withholding tax of 10%. Therefore, the correct answer is I, III, and IV.

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32. Bee Sdn Bhd has made a royalty payment to a Japanese company on 20 March 2018 in respect of royalty for the month of February 2018 charged in invoice dated 10 March 2018. When was the withholding tax due to be paid to the IRB on the above royalty payment?

Explanation

The withholding tax on the royalty payment was due to be paid to the IRB one month from 20 March 2018 because the payment was made on that date.

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33. Which interest is chargeable to tax as part of a Section 4(a) business income? I. Interest that is charged on a trade debtor for late payment of the debt II. Interest that is paid by an employee on a loan given by the employer III. Interest on a debenture which is held for trading IV. The interest relates to a business of lending money which is licensed

Explanation

Interest on a debenture held for trading is chargeable to tax as part of a Section 4(a) business income. This is because the debenture is held as part of a trading activity, indicating that it is being actively bought and sold for profit. Additionally, the interest that relates to a business of lending money which is licensed is also chargeable to tax as part of a Section 4(a) business income. This is because the business of lending money is considered a commercial activity, and the interest earned from it is treated as taxable income.

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34. Which of the following tax incentives have been replaced by the new principal hub incentive scheme? I. Regional Distribution Centre II. Multimedia Super Corridor company III. International Procurement Centre IV. Operational Headquarter

Explanation

The new principal hub incentive scheme has replaced the Regional Distribution Centre, International Procurement Centre, and Operational Headquarter tax incentives. The Multimedia Super Corridor company tax incentive has not been replaced by the new scheme.

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35. How many birthdays does the average man have?

Explanation

The average man has one birthday. This is because a birthday refers to the day a person is born, and a person only has one day of birth. However, every year, the person celebrates their birthday, but it is not considered as having multiple birthdays. Therefore, the correct answer is one.

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36. Which of the following costs are included cost of inventory? I. Freight in II. Sales returns III. Production overhead IV. Interest and finance costs

Explanation

The cost of inventory includes both the cost of transportation (freight in) and the cost of production overhead. Freight in refers to the cost of transporting the inventory to the company's location, which is directly related to the cost of acquiring the inventory. Production overhead includes indirect costs such as rent, utilities, and depreciation, which are incurred during the production process and are allocated to the cost of inventory. Sales returns and interest and finance costs are not directly associated with the cost of inventory and therefore are not included.

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37. Which of the following entertainment expenses qualify for 100% tax deduction? I. Promotional gift with company logo II. Cost of lunch incurred by a salesman entertaining his customers III. Annual dinner to employees IV. Cash contribution for customer's annual dinner

Explanation

Promotional gifts with company logos can be considered as a marketing expense and are therefore eligible for a 100% tax deduction. Annual dinners for employees can be considered as a business expense to boost employee morale and are also eligible for a 100% tax deduction. However, the cost of lunch incurred by a salesman entertaining his customers and cash contributions for a customer's annual dinner are not eligible for a 100% tax deduction.

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38. Lyn & Sue UK Limited has set up a representative office in Kuala Lumpur. Which of the following activities are not allowed for a representative office?

Explanation

A representative office is typically established to serve as a liaison between the parent company and its affiliates or subsidiaries in a foreign country. Its main purpose is to gather market intelligence, conduct research, and promote the parent company's products or services. Therefore, import and export activities and leasing warehouse activities are not allowed for a representative office as these are operational functions that involve direct business transactions, which are outside the scope of a representative office's responsibilities.

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39. Jack is taller than Peter, and Bill is shorter than Jack. Which of the following statements would be more accurate?

Explanation

Based on the given information, Jack is taller than Peter, and Bill is shorter than Jack. Therefore, it can be concluded that Bill is shorter than Peter. None of the statements provided in the options accurately describe the relationship between Bill and Peter's height.

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40. In preparing the income tax computation for XYZ Sdn Bhd, the following qualify for tax deduction:- I. Expenses relating to maintenance of shareholders' register II. Immigration and professional fees in relation to employment pass for employees III. Gift with company's logo for customer's annual dinner IV. Expenditure on renovation to set up a new branch V. Legal fees incurred for recovery of trade debts

Explanation

The expenses relating to maintenance of shareholders' register (I) do not qualify for tax deduction as they are not directly related to the business operations or generating income. However, immigration and professional fees in relation to employment pass for employees (II), gift with company's logo for customer's annual dinner (III), and legal fees incurred for recovery of trade debts (V) are all expenses that are necessary for the business operations and can be considered as legitimate deductions for tax purposes. Therefore, the correct answer is II, III and V.

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41. The operating lease payment of a new non-commercial motor vehicle started in January 2018. The cost of the motor vehicle in January 2018 was RM130,000. The total lease payments is RM160,000 over four years. The total lease payments that is deductible shall not exceed

Explanation

The total lease payments that are deductible shall not exceed RM100,000. This is because the cost of the motor vehicle in January 2018 was RM130,000, but the total lease payments over four years is only RM160,000. Therefore, the maximum amount that can be deducted is RM100,000, which is the total lease payments.

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42. The following are qualifying services for purposes of enjoying principal hub tax incentive except for:-

Explanation

Tax services are not considered qualifying services for enjoying the principal hub tax incentive. This means that companies providing tax services do not qualify for any tax incentives or benefits under this program. The other services listed, such as strategic business planning and corporate development, brand management, and sales and marketing, are considered qualifying services and may be eligible for tax incentives.

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43. We will have some important visitors here tomorrow for the proposal meeting. _________________________.

Explanation

The correct answer is "I'd appreciate it if you could dress professionally." This is the most polite and appropriate way to make a request for someone to dress professionally for the important meeting. The use of "could" instead of "can" adds a sense of politeness and makes it more of a suggestion rather than a demand.

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44. Which of the following interest expense does not qualify for tax deduction?

Explanation

Interest expense arising from bank loan to purchase shares where single tier dividend was received does not qualify for tax deduction because it is related to an investment in shares, which is considered a capital expense rather than a business expense. The purpose of the loan was to generate dividend income, which is a form of return on investment, and not to support business operations or generate income for the business. Therefore, it does not meet the criteria for tax deductibility.

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45. The following expenditure incurred by Agro Palm Sdn Bhd which is in the business of oil palm plantation qualifies for agriculture allowance:- I. Terracing of land for the purpose of planting oil palm II. Replanting of crops on land cleared for planting III. Construction of an estate office IV. Construction of drains in the plantation

Explanation

The correct answer is I, III and IV. Terracing of land for the purpose of planting oil palm qualifies for agriculture allowance as it directly relates to the agricultural activity. Construction of drains in the plantation also qualifies as it is necessary for the proper irrigation and drainage of the crops. However, the construction of an estate office does not directly relate to the agricultural activity and therefore does not qualify for agriculture allowance.

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46.  Which of the following expense is eligible for double deduction claim?

Explanation

Payment for services of a contract research and development company is eligible for double deduction claim. This means that the company can claim a deduction for this expense twice, reducing their taxable income. This is because expenses related to research and development are often seen as investments in innovation and are therefore encouraged by the government. By allowing double deduction, the government aims to incentivize companies to invest in research and development activities, which can lead to technological advancements and economic growth.

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47.  __________ I work on this engagement all day, I'll never finish on time.

Explanation

The phrase "Even if" is the correct answer because it is used to introduce a hypothetical condition or situation that may not actually happen. In this context, it suggests that regardless of the amount of time spent working on the engagement, the speaker believes that they will not be able to finish on time.

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48. Which phrases shown below are applicable to the Guidelines on Tax Treatment related to the Implementation of MFRS 121 (Impact of Foreign Currency Translation)? I. Foreign currency II. Presentation currency III. Functional currency IV. Currency in which financial statements are presented

Explanation

The phrases "Foreign currency," "Presentation currency," "Functional currency," and "Currency in which financial statements are presented" are all applicable to the Guidelines on Tax Treatment related to the Implementation of MFRS 121 (Impact of Foreign Currency Translation).

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49. Which statement is incorrect? I. Balancing allowance is the withdrawal of capital allowance previously claimed II. The balancing charge cannot be greater than the total amount of capital allowance claimed previously III. Upon disposal of an asset in a control transfer situation, we do not compute balancing charge/balancing allowance IV. Balancing charge/allowance is only computed where there is a sale proceed  

Explanation

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50. Which of the following activities carried on by a Labuan entity will be taxed under Labuan Business Activity Tax Act, 1990? I. Shipping operations II. Trading of goods III. Labuan insurance business carried on by a branch of a Malaysian insurer IV. Management

Explanation

All of the activities mentioned in options I, II, III, and IV will be taxed under the Labuan Business Activity Tax Act, 1990. This means that shipping operations, trading of goods, Labuan insurance business carried on by a branch of a Malaysian insurer, and management activities carried on by a Labuan entity will all be subject to taxation under this act.

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51. A local company resident in Malaysia carrying on activities of manufacturing or agriculture is exempted from the payment of income tax in respect of income derived from export sales. Which of the following amount of income to be exempted applies to the above export incentive:- I. 30% of the value of increased exports where a company has achieved a significant increase in exports II. 50% of the value of increased exports where a company has penetrated new markets III. 80% of the value of increased exports where a company has been awarded the Export Excellence Award

Explanation

The correct answer is "I and II". This means that a local company resident in Malaysia carrying on activities of manufacturing or agriculture can be exempted from the payment of income tax in respect of income derived from export sales if they have achieved a significant increase in exports (30% of the value of increased exports) or if they have penetrated new markets (50% of the value of increased exports). The exemption does not apply to companies that have been awarded the Export Excellence Award (III).

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52. Some months have 31 days; how many have 28?

Explanation

All months have at least 28 days, as the shortest month, February, has 28 days. Therefore, all 12 months have 28 days or more.

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53. On 25 September 2018, Datuk Catherine has acquired a high end residential property in Mont Kiara from the secondary market. Which of the following are amongst her RPGT obligations to be performed within 60 days from the date of sales and purchase agreement? I. To submit Form CKHT 1A to Malaysian tax authority II. To submit Form CKHT 2A to Malaysian tax authority III. To remit a retention sum at 2% of sales consideration or amount received, whichever is lower, to Malaysian tax authority IV. To remit a retention sum at 3% of sales consideration or amount received, whichever is lower, to Malaysian tax authority

Explanation

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54. Which income is said to be derived from Malaysia?

Explanation

The income that is said to be derived from Malaysia in this scenario is the interest paid by a Malaysian tax resident to a non-resident. This means that a Malaysian individual or entity is making interest payments to someone who is not a resident of Malaysia. This income is considered to be derived from Malaysia because it is being generated within the country and is subject to Malaysian tax laws.

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55. Failure of an employer to give notice to the Director General of Inland Revenue in respect of the following event would likely result in a fine of RM200 to RM20,000:-

Explanation

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56. An individual can be a tax resident in Malaysia for the basis year for year of assessment 2017 if:- I. He is in Malaysia for a period of 92 days in the basis year 2017 and stayed in Malaysia in the basis year 2014 (180 days), basis year 2015 (130 days) and basis year 2016 (153 days) II. He is in Malaysia for periods of 182 days in the basis years 2014, 2015 and 2016, 20 days in 2017 and 188 days in 2018 III. He is in Malaysia for 30 days and that period is linked by the basis year 2016 of 181 consecutive days (total of 211 days) IV. He is in Malaysia for 183 days in the basis year 2017

Explanation

An individual can be a tax resident in Malaysia for the basis year for year of assessment 2017 if they meet any of the following conditions:
- They are in Malaysia for a period of 92 days in the basis year 2017 and have stayed in Malaysia for a total of 180 days in 2014, 130 days in 2015, and 153 days in 2016 (Condition I).
- They are in Malaysia for periods of 182 days in each of the basis years 2014, 2015, and 2016, 20 days in 2017, and 188 days in 2018 (Condition II).
- They are in Malaysia for 30 days and that period is linked by the basis year 2016 of 181 consecutive days, making a total of 211 days (Condition III).
- They are in Malaysia for 183 days in the basis year 2017 (Condition IV).

Therefore, the correct answer is I, II, and IV.

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57. The following are methods normally used to ascertain a taxpayer's omitted income:- I. Means test II. Capital statement III. Gross profit ratio of another taxpayer's business IV. Receipts and payments for incomplete records and small business concern

Explanation

The correct answer is I, II and IV. These methods are commonly used to determine a taxpayer's omitted income. The means test is used to assess the taxpayer's ability to pay taxes based on their income and assets. The capital statement helps in evaluating the taxpayer's financial position by examining their assets and liabilities. Receipts and payments for incomplete records and small business concern can be used to estimate the taxpayer's income by analyzing their financial transactions. These methods in combination provide a comprehensive approach to ascertain a taxpayer's omitted income.

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58. Which are the following services qualify for Multimedia Super Corridor (MSC) incentive? I. Global business services II. Trading activity for off-the shelf hardware and software III. Data centre IV. Creative content and technology

Explanation

The services that qualify for the Multimedia Super Corridor (MSC) incentive are Global business services, Data centre, and Creative content and technology. This means that options I, III, and IV are correct. Option II is not correct because trading activity for off-the-shelf hardware and software does not qualify for the MSC incentive. Therefore, the answer is I, III, and IV.

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59. TSY Sdn Bhd is a company set up in Malaysia to manufacture a promoted product. The company began its operations 3 months ago and it is expected that capital expenditure of RM50 million would be incurred on factories, plant and machinery in the next 5 years to build and expand its operations. Projected profit for the initial years would be low due to high capital investments and cost penetration strategy to gain market share. In order to maximise tax-exempt income, which of the following incentive should the company apply for?

Explanation

The company should apply for the Investment Tax Allowance. This incentive allows the company to deduct a certain percentage of its qualifying capital expenditure from its taxable income. Since TSY Sdn Bhd is expected to incur a significant amount of capital expenditure in the next 5 years, this incentive will help reduce their taxable income and maximize their tax-exempt income. This will be beneficial for the company as it is projected to have low profits in the initial years due to high capital investments.

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60. Which of the following expenses qualify for double deduction under the Income Tax Act, 1967? I. Training provided to students from public universities under a structured internship programme II. Revenue expenditure incurred for obtaining accreditation as a certification body as evidenced by a certificate issued by the relevant authority III. Cash contribution to the Bantuan Pelajar Miskin 1Malaysia Fund by a Malaysian company carrying on a business IV. Contribution by a licensed insurer to the Malaysian Motor Insurance Pool

Explanation

Expenses that qualify for double deduction under the Income Tax Act, 1967 are those that provide benefits to the public or contribute to the development of the country. Option I states that training provided to students from public universities under a structured internship program qualifies for double deduction. This can be seen as a contribution to the education and development of students, which aligns with the purpose of the double deduction. Option III states that cash contribution to the Bantuan Pelajar Miskin 1Malaysia Fund by a Malaysian company carrying on a business also qualifies for double deduction. This contribution can be seen as a social responsibility initiative that supports underprivileged students, which again aligns with the purpose of the double deduction. Therefore, the correct answer is I and III.

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61. Which of the statements shown below is correct in respect of employment income? I. An employee who receives gratuity on 1 July 2018 before the age of 55 years will be taxed on the gratuity by spreading it over the 10 years of his employment II. An employee who receives gratuity on 1 July 2018 before the age of 55 years will be taxed on the gratuity by spreading it over the last 5 years that he was employed III. An employee who receives gratuity on 1 July 2018 before the age of 55 years will be taxed on the gratuity in 2018 IV. None of the above is correct

Explanation

The correct answer is III because an employee who receives gratuity before the age of 55 years will be taxed on the gratuity in the year that it is received. The other statements are incorrect as they suggest that the gratuity will be taxed over a period of time or based on the employee's employment duration, which is not the case.

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62. Which of the following statements in relation to loans to a director by a company is correct? I. If the loan is financed by a bank loan, the company is deemed to have interest income chargeable to tax II. If the loan is financed by the company's own funds, the company is not deemed to have gross income from interest III. If a company obtains a loan from the bank to make loans to a director who is also an employee, the interest cost incurred by the company will be the perquisite to the director IV. The average lending rate by commercial banks as published by Bank Negara Malaysia will be used to calculate the interest income deemed received by the company

Explanation

The correct answer is III and IV. This means that statement III, which states that if a company obtains a loan from the bank to make loans to a director who is also an employee, the interest cost incurred by the company will be the perquisite to the director, is correct. Additionally, statement IV is also correct, which states that the average lending rate by commercial banks as published by Bank Negara Malaysia will be used to calculate the interest income deemed received by the company.

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63. A business has the following items:-
  • Land : RM 1,000,0000
  • Machinery : RM 20,000
  • Cash : RM 10,000
  • Debt : RM 30,000
  • Retained earnings : RM 10,000
What is the value of total equity?

Explanation

The value of total equity is RM 1,000,000 because it is the sum of the land, machinery, cash, debt, and retained earnings.

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64. Which of the following statements in relation to agriculture allowance is correct? I. A person who transfers an asset in a basis period for a year of assessment would not be entitled to agriculture allowance II. A recipient of the asset would qualify for agriculture allowance on the purchase price III. An agriculture charge is made on a person who disposes the asset within 5 years from the date of incurring the expenditure IV. The agriculture charge is calculated based on the allowances given in the previous years

Explanation

Statement III states that an agriculture charge is made on a person who disposes of the asset within 5 years from the date of incurring the expenditure. Statement IV states that the agriculture charge is calculated based on the allowances given in the previous years. Therefore, both statements III and IV are correct.

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65. There are some conditions for a person to qualify for initial allowance in respect of an industrial building except I. he incurred capital expenditure on the construction of a building II. he incurred capital expenditure on the purchase of a building III. he was the owner of the building at the end of the basis period IV. the building was about to be used as an industrial building

Explanation

The correct answer is "All of the above". This means that all the conditions mentioned in options I, II, III, and IV are required for a person to qualify for the initial allowance in respect of an industrial building. In other words, if any of these conditions are not met, the person would not be eligible for the initial allowance.

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66. In the case of an investment holding company (not listed in Bursa Malaysia), permitted expenses include

Explanation

The correct answer is "management fees, telephone and postage charges, salaries and accounting fees". This is because the question asks for the permitted expenses for an investment holding company that is not listed in Bursa Malaysia. Among the given options, these expenses are typically allowed for such a company. Directors fees, audit, secretarial and tax fees are not mentioned as permitted expenses, and rental of office, rental and maintenance of equipment are not usually considered as expenses for an investment holding company.

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67. When would a corporation be subject to Malaysian withholding tax (other than Section 107A)? I. When the corporation is a non-resident II. When the income is deemed derived from Malaysia III. When the income is not attributable to a business carried on by the non-resident in Malaysia IV. When there is an office in Malaysia

Explanation

A corporation would be subject to Malaysian withholding tax when it is a non-resident, when the income is deemed derived from Malaysia, and when the income is not attributable to a business carried on by the non-resident in Malaysia. Having an office in Malaysia is not mentioned as a condition for being subject to withholding tax. Therefore, the correct answer is I, II, and III.

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68. Which of the following instruments are chargeable to stamp duty? I. Statutory declaration II. Register of particulars of directors and secretaries III. Service agreement IV. Power of letter of attorney

Explanation

Statutory declaration, service agreement, and power of letter of attorney are chargeable to stamp duty. This means that when these instruments are executed or signed, a fee must be paid to the government for the stamp duty. The register of particulars of directors and secretaries, however, is not chargeable to stamp duty.

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69. Which of the statements regarding foreign exchange gains and losses that are shown below is not correct? I. Foreign exchange loss incurred on payment to foreign creditors for purchase of stock is not deductible as it is not realised II. Realised foreign exchange gain for purchase of a machinery is taxable III. Unrealised foreign exchange loss for purchase of computers is not deductible IV. All realised exchange losses are given the same treatment for tax purposes

Explanation

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70. A store reduced the price of one of its products by 25 percent. What percentage of the reduced price must it be increased by to put the product back to its original price?

Explanation

When a store reduces the price of a product by 25 percent, it means that the product is being sold for 75 percent of its original price. To put the product back to its original price, the store needs to increase the reduced price by a certain percentage. This can be calculated by finding what percentage of the reduced price is needed to make it equal to 100 percent (the original price). In this case, the percentage increase needed is 33 percent.

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71. Which of the following payment(s) made to a non-resident person by a Labuan company are not subject to withholding tax?

Explanation

All of the above payments made to a non-resident person by a Labuan company are not subject to withholding tax. This means that royalties, management and technical fees for services rendered in Malaysia, and interest on a loan provided by its overseas holding company are exempt from withholding tax.

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72. Dizi Sdn Bhd was newly incorporated on 1 July 2018 with a paid up ordinary share capital of RM3 million. The company will close its accounts on 31 December. When should the company start furnishing its tax estimate to the Inland Revenue Board?

Explanation

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73. All expenses incurred on food and drinks qualify for 100% tax deduction except for:-

Explanation

Expenses incurred on food and drinks provided in a meeting with suppliers do not qualify for 100% tax deduction. This is because the purpose of the meeting is to discuss business matters with the suppliers, and the provision of food and drinks in this context is considered as a business expense. However, expenses on food and drinks provided during the launch of the 1st housing project, during a directors' first meeting in the year, and meals provided to employees during a holiday to Genting Highlands are eligible for 100% tax deduction.

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74. Which of the following types of R&D expenditure qualify for double deduction? I. Cost of moulds, dies and soft tools which cannot be reused II. Maintenance cost of motorcars used by research employees/consultants III. Consultancy fee paid to particular organizations for use of testing equipment IV. Cost of attending courses and seminars relevant to research project

Explanation

The types of R&D expenditure that qualify for double deduction are the cost of moulds, dies, and soft tools that cannot be reused, consultancy fees paid to particular organizations for the use of testing equipment, and the cost of attending courses and seminars relevant to the research project. These expenses are considered necessary and directly related to the research and development activities, making them eligible for double deduction.

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75. A company is not eligible for group relief in the basis period for a year of assessment where in that period the company is:- I. a pioneer company II. a company that has claimed reinvestment allowance III. a company that has been granted a deduction for the cost of acquisition of proprietary rights IV. a company that is claiming accelerated capital allowance for information and communication technology equipment

Explanation

A company is not eligible for group relief in the basis period for a year of assessment if it falls under any of the following categories: being a pioneer company, claiming reinvestment allowance, or being granted a deduction for the cost of acquisition of proprietary rights. Therefore, the correct answer is I, II, and III.

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76. The adjusted loss surrendered by a surrendering company to a claimant company shall be allowed as a deduction against:-

Explanation

The correct answer is "The defined aggregate income of the claimant company." This means that the adjusted loss surrendered by a surrendering company can be deducted from the defined aggregate income of the claimant company.

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77. Which of the following activities qualify for pioneer status incentive? I. Deep sea fishing II. Manufacturing of bicycle III. Vegetable cultivation IV. Manufacturing of solar panel V. Integrated logistics service

Explanation

The activities that qualify for pioneer status incentive are deep sea fishing, vegetable cultivation, manufacturing of solar panels, and integrated logistics service. These activities are considered innovative and contribute to the development of the economy. Manufacturing of bicycles is not included as it is not mentioned as a qualifying activity for pioneer status incentive.

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78. Which statements are applicable to interest income? I. Interest is taxable when it is received II. Interest is taxable in the period when it is receivable III. Interest arising from a related party transaction is deemed to have been received when it is due to be paid

Explanation

Interest income is taxable when it is received, meaning that it is subject to taxation in the period when it is actually received by the individual or entity. Additionally, interest income is taxable in the period when it is receivable, meaning that it is subject to taxation even if it has not yet been received but is expected to be received in the future. Finally, interest arising from a related party transaction is deemed to have been received when it is due to be paid, meaning that it is subject to taxation at the time it is scheduled to be paid. Therefore, all of the statements are applicable to interest income.

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79. In year of assessment 2018, an individual can claim relief of RM1,500 for a parent subject to certain conditions being satisfied. Which of the following conditions is correct? I. The parent must be aged 65 years and above II. The individual must not claim relief for parents' medical treatment, special needs and carer expenses III. The relief will be apportioned equally between brothers and sisters who are making the claim IV. The maximum relief that can be claimed by an individual for his parents is RM1,500

Explanation

The correct answer is II and III. This means that in order for an individual to claim a relief of RM1,500 for a parent in the year of assessment 2018, they must not claim relief for parents' medical treatment, special needs, and carer expenses. Additionally, the relief will be apportioned equally between brothers and sisters who are making the claim.

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80. Which of the following is not an anagram of a type of fruit?

Explanation

All of the given options can be rearranged to form the name of a fruit except for "real madam". "rip coat" can be rearranged to form "apricot", "burly beer" can be rearranged to form "blueberry", "pipe panel" can be rearranged to form "pineapple", and "alert women" can be rearranged to form "watermelon". However, "real madam" cannot be rearranged to form the name of any fruit.

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81. Which of the company below qualifies for Reinvestment Allowance? I. Tecorp Sdn Bhd purchased new machineries in a project to automate its production of chilli sauce II. Z Hotel Sdn Bhd in a project of expansion of its number of rooms and restaurant III. FAA Co-operative Society diversified its fruit farm of mangoes, rambutan and mangosteen to durians and incurred cost of clearing land and planting IV. TDD Sdn Bhd incurred additional cost in purchase of a building for use as an additional store for goods in its trading business  

Explanation

Companies that qualify for Reinvestment Allowance are those that have incurred capital expenditure for the purpose of automation, expansion, or diversification of their business. In this case, Tecorp Sdn Bhd qualifies because they purchased new machineries to automate their production. FAA Co-operative Society also qualifies because they diversified their fruit farm and incurred costs for clearing land and planting. Z Hotel Sdn Bhd and TDD Sdn Bhd do not qualify as their projects do not involve automation, expansion, or diversification. Therefore, the correct answer is I and III.

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82. Puan Aishah Yahya, a Malaysian citizen, has purchased bumiputera shares of a real property company (RPC) in January 2013 and sold these shares on 30 September 2018 to realise a gain of RM100,000. The RPGT payable on such gain would be ….

Explanation

The RPGT payable on the gain of RM100,000 from the sale of bumiputera shares is RM5,000. RPGT stands for Real Property Gains Tax, which is a tax imposed on the gains made from the disposal of real property in Malaysia. In this case, Puan Aishah Yahya sold her bumiputera shares of a real property company, which qualifies as a real property. The RPGT rate for individuals who are Malaysian citizens and have held the property for more than 5 years is 5%. Therefore, the tax payable on the gain of RM100,000 would be RM5,000.

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83. Which of the following statements in relation to recovery of tax from a taxpayer leaving Malaysia is correct? I. The Director General may issue a certificate to a Commissioner of Police or a Director of Immigration requesting for that taxpayer to be prevented from leaving Malaysia II. The certificate will only be served on the taxpayer by personal service and the receipt of the certificate is to be duly acknowledged III. In issuing the certificate, the Director General has to prove that the taxpayer intends to leave Malaysia permanently IV. If the taxpayer attempts to leave Malaysia after the certificate has been issued, it is a criminal offence

Explanation

The correct answer is I and IV. This means that statement I, which states that the Director General may issue a certificate to prevent a taxpayer from leaving Malaysia, is correct. Additionally, statement IV, which states that it is a criminal offence for the taxpayer to attempt to leave Malaysia after the certificate has been issued, is also correct.

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84. TropiWorld Berhad has purchased a piece of oil palm land from the local natives for the purpose of its upcoming mega property development project. What would be the instrument of land transfer for stamp duty purposes?

Explanation

The instrument of land transfer for stamp duty purposes in this scenario would be Form 14A. This form is typically used for the transfer of immovable property, such as land, and is required to be submitted to the relevant authority for the payment of stamp duty. The Sales and Purchase Agreement is a legal document that outlines the terms and conditions of the land transfer, but it is not specifically used for stamp duty purposes. Form 32A is used for the transfer of shares, while a contract note is a document that confirms a transaction in securities.

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85. Which of the following statements are correct regarding the basis period for a company which normally closes its accounts on 31 July? I. The new financial period 01.08.2017 to 28.02.2018 shall be the basis period for year of assessment 2018 II. The new financial period 01.08.2017 to 31.08.2018 shall be the basis period for year of assessment 2018 III. The new financial period 01.08.2017 to 31.12.2018 shall be the basis period for year of assessment 2018 IV. The new financial period 01.08.2017 to 31.01.2019 shall be the basis period for year of assessment 2019

Explanation

The correct answer is I, II and III. This is because the basis period for a company is determined by its financial period. In this case, the company closes its accounts on 31 July, so the new financial period starting on 01.08.2017 and ending on 31.12.2018 would be the basis period for the year of assessment 2018. Additionally, the financial period ending on 31.08.2018 would also be included in the basis period for the year of assessment 2018. Therefore, statements I and II are correct. Statement III is also correct as it includes the entire financial period ending on 31.12.2018.

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86. Which of the statements that are shown below is correct in respect of child care provided to employees? I. Expenses incurred by an employer for the provision and maintenance of a child care centre provided for the benefit of the employees are deductible II. Child care allowances paid by the employer to his employees who have children are also allowable III. For resident employers, an additional deduction for the expenses stated in l. and ll. above is allowed IV. The child care centres must be registered with the Ministry of Finance

Explanation

Expenses incurred by an employer for the provision and maintenance of a child care centre provided for the benefit of the employees are deductible. Child care allowances paid by the employer to employees who have children are also allowable. For resident employers, an additional deduction for these expenses is allowed. Therefore, statements I, II, and III are correct. However, statement IV is not mentioned in the explanation and cannot be determined from the given information.

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87. Which of the statements shown below is correct in respect of a child care centre operator? I. A company carrying on the business of a child care centre and who incurred qualifying building expenditure can claim industrial building allowance II. For an existing building which is used for the purpose of a child care centre, the owner is eligible to claim industrial building allowance on the residual expenditure of the building III. A child care centre operator is given tax exemption in respect of his business statutory income for a period of five consecutive years of assessment IV. The statutory income that is exempted is determined before capital allowances

Explanation

The correct answer is I, II and III.


I. A company operating a child care center and incurring qualifying building expenditure can claim industrial building allowance. This means that they can deduct a certain percentage of the qualifying building expenditure from their taxable income, reducing their tax liability.

II. The owner of an existing building that is used for a child care center is eligible to claim industrial building allowance on the residual expenditure of the building. This means that they can claim deductions on the remaining expenditure of the building that has not been claimed previously.

III. A child care center operator is given tax exemption in respect of their business statutory income for a period of five consecutive years of assessment. This means that they do not have to pay taxes on their business income for a period of five years.

Therefore, all of the statements I, II, and III are correct in respect of a child care center operator.

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88. An audit was conducted on the business premises of Mr Tan. He was asked to give the name and address of the person who prepared his income statement and statement of affairs. However, Mr Tan did not give a reply as he wanted to protect his friend. Mr Tan can be charged in court and if found guilty he is liable to a fine of:-

Explanation

Mr Tan can be charged in court and if found guilty, he is liable to a fine of RM1,000 - RM10,000. This is because Mr Tan failed to comply with the audit request by not providing the name and address of the person who prepared his income statement and statement of affairs. By refusing to cooperate and protect his friend, Mr Tan has violated the law and can be penalized with a fine within the given range.

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89. Which of the following statements in respect of incentives for "Approved Food Production Projects" is true? I. A company enjoying tax incentives under the Promotion of Investments Act, 1986 is not eligible to apply for the deduction for investment in an approved food production project as it is mutually exclusive II. The cost of investment amount which is allowed as a deduction in the basis period is deducted at adjusted income level III. Any consideration for disposal of shares made within 5 years in which the said investment cost was claimed as a deduction by the investing company will be treated as part of adjusted income IV. For expansion projects of existing approved food production projects, the operating company undertaking the approved food production project would be entitled for an additional five years tax exemption incentive  

Explanation

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90. Which of the following qualifies as an industrial building? I. A factory II. A workshop used for repair and servicing of goods returned by consumers III. A warehouse within the factory compound used to store raw material used in production IV. A building used in the telecommunication services industry  

Explanation

An industrial building refers to a building that is used for industrial purposes. Option I, a factory, qualifies as an industrial building as it is a place where goods are manufactured or processed. Option III, a warehouse within the factory compound used to store raw material, also qualifies as it is an essential part of the production process. Option IV, a building used in the telecommunication services industry, can also be considered an industrial building as it is used for a commercial activity related to the industry. Therefore, the correct answer is I, III, and IV.

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91. Management is very concerned about this. _________________________________________.

Explanation

The correct answer is "It's important that the problem be dealt with right away". This is the correct form of the verb "deal" in the subjunctive mood. In this context, the management is expressing a concern and emphasizing the urgency of addressing the problem immediately.

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92.  I know how to prepare a pivot table on Microsoft Excel. If you ____________________________________.

Explanation

The correct answer is "had told me you were having trouble, I would have helped you". This answer is in the past perfect tense, indicating that the person should have informed the speaker about their trouble in the past. The speaker is expressing their willingness to help if they had been aware of the trouble.

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93. In arriving at the adjusted income of a business for a company, the following would not qualify for tax deduction:- I. Incorporation expenses of a company with authorised capital not exceeding RM2.5 million at the point of incorporation II. Donations to approved institutions in a relevant year for a year of assessment III. Expenditure on providing infrastructure in relation to its business which is available for public use IV. Revenue expenditure incurred by employers on the provision and maintenance of childcare centre for the benefit of the employees

Explanation

The correct answer is II and III because they both would qualify for tax deduction.

II. Donations to approved institutions in a relevant year for a year of assessment are typically tax-deductible expenses.

III. Expenditure on providing infrastructure in relation to its business which is available for public use can also be considered as a tax-deductible expense as it contributes to the community and public welfare.

Therefore, II and III would not qualify for tax deduction is an incorrect statement.

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94. Bes Berhad is an investment holding company listed in Bursa Malaysia. Which of the following tax treatment is correct for Bes Berhad? I. Rental, dividend and interest income are treated as investment income II. Permitted expenses can be allowed in the income tax computation III. Capital allowance is not allowed as a deduction against the adjusted income from each source of income IV. All income will be business income  

Explanation

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95. Income of BC Sdn Bhd includes the items below. Please identify the income which is subject to income tax. I. Insurance compensation on factory partly damaged by fire II. Interest income derived from deposit placed with a local licensed bank III. Waiver of trade payable IV. Realised gain on foreign exchange arising from purchase of machinery from Japan

Explanation

The income subject to income tax includes insurance compensation on factory partly damaged by fire, interest income derived from deposit placed with a local licensed bank, and waiver of trade payable. These sources of income are considered taxable as they are considered as revenue or gains for the business. The realized gain on foreign exchange arising from the purchase of machinery from Japan is not subject to income tax as it is a capital gain and not considered part of the business's regular income.

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96. Which of the following statements are correct when ascertaining the chargeable income of a person as provided in the Income Tax Act, 1967? I. Royalty income received by a non-resident can be disregarded if withholding tax has been deducted II. Interest income of a resident individual on which tax has been deducted can be disregarded III. A withdrawal made by an individual from a private retirement scheme on which tax has been deducted may be disregarded IV. Rental income of a person from moveable property which has been subject to withholding tax may be disregarded

Explanation

The correct answer is II and III.

Statement II is correct because if tax has already been deducted from the interest income of a resident individual, it can be disregarded when calculating the chargeable income.

Statement III is correct because if tax has already been deducted from a withdrawal made by an individual from a private retirement scheme, it may be disregarded when calculating the chargeable income.

Statement I is incorrect because royalty income received by a non-resident cannot be disregarded solely based on withholding tax deduction. Other factors such as tax treaties and residency status need to be considered.

Statement IV is not included in the options.

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97. Which of the following statements are true?

Explanation

If a business's liabilities are greater than its assets, it means that the business owes more money than it has in terms of resources and investments. This indicates that the business may have trouble meeting its financial obligations and may struggle to generate enough income to cover its debts. Therefore, having liabilities greater than assets is generally considered a bad financial position for a business.

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98. The risk of a transfer pricing audit increases when a company has …………. I. Consistent losses II. Exceptionally high profits III. Significant related party transactions IV. A pool of diversified products

Explanation

When a company consistently incurs losses, it may raise concerns for tax authorities as it could indicate potential manipulation of transfer prices to shift profits to lower-tax jurisdictions. Significant related party transactions also increase the risk of transfer pricing audit as these transactions are more likely to be scrutinized for potential transfer pricing manipulation. Therefore, the correct answer is I and III.

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99. My team will definitely have the work done on time for IRB submission. ____________________.

Explanation

The correct answer is "We're used to working with strict deadlines." This answer is correct because it uses the correct tense and structure. "We're used to" indicates that the team is accustomed to working with strict deadlines, suggesting that they have experience and are comfortable with meeting them. Additionally, "working" is the correct verb form to use in this context.

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100. Which of the following investment income is not taxable in the hands of Encik Ahmad who is Malaysian-resident:- I. Interest received from Islamic convertible loan stocks issued in non-Ringgit currency by a bank licensed under the Islamic Banking Act, 1983 II. Interest received from Islamic securities (non-convertible) originating from Malaysia that is issued in any currency other than Ringgit and approved by the Labuan Financial Services Authority III. Interest income received from Sukuk (maturity in June 2018) issued in Ringgit by a Syariah-compliant Malaysian company and approved by the Securities Commission. IV. Interest received from Islamic convertible loan stocks issued in Ringgit by a bank licensed under the Islamic Financial Services Act, 2013  

Explanation

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101. Which of the following are incentives provided under the Promotion of Investments Act, 1986? I. Investment Tax Allowance II. Infrastructure allowance III. Deduction for promotion of exports IV. Export allowance

Explanation

The correct answer is I and III. The Promotion of Investments Act, 1986 provides incentives such as Investment Tax Allowance (I) and Deduction for promotion of exports (III). Infrastructure allowance (II) and Export allowance (IV) are not mentioned as incentives provided under this act.

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102. Which of the following statements is correct pertaining to the general principles of a double taxation agreement (DTA)? I. DTA cannot impose tax if domestic tax law does not provide for a particular tax II. A relief is given in the country of source to relieve the burden of double taxation III. DTA overrides the domestic tax law IV. If income is liable to be taxed in both countries, the DTA determines the taxing rights between the country of residence and the country of source

Explanation

The correct answer is I, III and IV.



Statement I is correct because a DTA cannot impose a tax if the domestic tax law of a country does not provide for that particular tax.

Statement III is correct because a DTA can override the domestic tax law of a country.

Statement IV is correct because if income is liable to be taxed in both countries, the DTA determines the taxing rights between the country of residence and the country of source.

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103. What are the conditions to be fulfilled to qualify for the principal hub incentive? I. Carry out at least 3 qualifying services II. Serves and controls network companies in at least 3 countries outside Malaysia III. A specified minimum business spending in the 3rd year of assessment IV. Minimum annual sales turnover of RM100,000,000

Explanation

To qualify for the principal hub incentive, the conditions that need to be fulfilled are carrying out at least 3 qualifying services (condition I) and having a specified minimum business spending in the 3rd year of assessment (condition III). These two conditions must be met in order to qualify for the incentive. The other conditions mentioned, such as serving and controlling network companies in at least 3 countries outside Malaysia (condition II) and having a minimum annual sales turnover of RM100,000,000 (condition IV), are not necessary for qualification.

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104. Which of the following traveling expenses would qualify for tax deduction?

Explanation

The given question asks which traveling expenses would qualify for tax deduction. However, none of the options provided would qualify for tax deduction. The expenses for air fares to Pulau Langkawi for the directors and their family members, air fares to Phuket for the employees and their immediate family for the annual company trip, and air fares to Singapore for the directors to attend a charity concert together with their business associates do not meet the criteria for tax deductible expenses. Therefore, the correct answer is "None of the above."

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105. Mr. Lim was employed as a sales manager in Company ABC in January 2009. He retired from the company on 15 May 2018 on reaching the age of 55. He was paid a lump sum payment of RM200,000 and a gold-plated watch costing RM2,000. What is the taxable amount of the above payment/gift received by Mr. Lim?

Explanation

The taxable amount of the payment/gift received by Mr. Lim is RM193,000. This is because the lump sum payment of RM200,000 and the cost of the gold-plated watch RM2,000 are considered as retirement benefits, which are taxable. Therefore, the total taxable amount is RM202,000. However, since Mr. Lim retired on reaching the age of 55, he is entitled to a tax exemption of RM9,000. Thus, the taxable amount is reduced to RM193,000.

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106. Which statements are correct in determining the amount of interest income deemed to be received by the company? I. If the loans by the company to directors are interest free, the amount of interest will be computed based on the prescribed formula II. If the loan is partially repaid by the director during the basis period for a year of assessment, the computation of interest income will be reduced proportionately III. If a company charges interest on loans to directors, the amount of deemed interest income based on the formula will be reduced by the interest paid by the director IV. If the interest charged on the loans by the company is more than the interest computed by using the formula, the deemed interest income will be the lower amount

Explanation

The correct answer is I and II. This means that statement I, which states that if the loans by the company to directors are interest-free, the amount of interest will be computed based on the prescribed formula, is correct. Additionally, statement II is also correct, as it states that if the loan is partially repaid by the director during the basis period for a year of assessment, the computation of interest income will be reduced proportionately. Therefore, both of these statements are accurate in determining the amount of interest income deemed to be received by the company.

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107. In order to be eligible for group relief for a year of assessment (YA), both surrendering and claimant companies must:-

Explanation

The correct answer is that both surrendering and claimant companies must have paid-up share capital in respect of ordinary shares of more than RM2.5 million at the beginning of the basis period for that YA. This means that in order to be eligible for group relief, both companies must have a significant amount of capital invested in ordinary shares. This requirement ensures that only companies with a certain level of financial stability and resources are able to benefit from group relief.

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108.  Which of the following statements is true?

Explanation

A Labuan company (LC) has the option to choose whether or not to be taxed according to the Income Tax Act, 1967. This means that LC has the power to decide whether it wants to be subject to taxation or not. This gives LC flexibility in managing its tax obligations and allows it to make a strategic decision based on its specific circumstances.

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109. Which of the following definitions are found in the provision relating to companies group relief as at YA 2018? I. "Equity holder" means any holder of ordinary share in the claimant or surrendering company II. "Residual assets" means net assets of the claimant or surrendering company after distribution made to:-
  • creditors of that company in respect of commercial loans; and
  • holders of shares other than ordinary share
III. "Commercial loan" means any borrowing which entitles the creditor to any return which is of only:-
  • a fixed amount or at a fixed rate per cent of the amount of the borrowing; or
  • of a fixed rate per cent of the profits of the company
IV. "Ordinary share" means any share other than a share which carries only a right to any dividend which is of:-
  • a fixed amount or at a fixed rate per cent of the nominal value of the shares; or
  • a fixed rate per cent of the profits of the company

Explanation

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110. Based on your research on the taxability of the unit holders of a unit trust fund, the investment in a unit trust fund will not provide tax savings to an investor company if:

Explanation

Investment in a unit trust fund will not provide tax savings to an investor company if the unit trust mainly receives interest derived from convertible loan stock paid or credited by companies listed in Bursa Malaysia. This is because the income derived from convertible loan stock is considered interest income, which is taxable. Therefore, the investor company will not receive any tax savings from this type of income.

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111. Which of the following is an offence under the Income Tax Act, 1967?

Explanation

The correct answer is "Failure of an employer to comply with a direction to deduct tax." This is an offence under the Income Tax Act, 1967 because employers have a legal obligation to deduct and remit taxes from their employees' salaries. Failure to comply with this direction can result in penalties and legal consequences.

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112. Mr. Smith is seconded to Malaysia to provide technical services to Dan Sdn Bhd for a period 9 months. His salary is paid by Tom Co. Ltd. in the home country and Dan Sdn Bhd pays technical fee to Tom Co. Ltd. for the services rendered by Mr. Smith. Which of the following is not true? I. Technical fee is not subject to withholding tax but Mr. Smith's salary is subject to withholding tax II. Technical fee is subject to withholding tax but Mr. Smith's salary is not subject to income tax III. Both technical fee and Mr. Smith's salary is given tax deduction if withholding tax has been deducted and remitted to the Inland Revenue Board IV. Technical fee and Mr. Smith's salary are subject to tax in Malaysia

Explanation

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113. Which of the following statements relating to agriculture allowance is correct? I. Qualifying agriculture expenditure (excluding a building) is incurred when it is payable II. Oil palm trees planted in replacement of rubber trees qualifies for agriculture allowance III. Clearing of land by a company specialised in producing high quality oil palm seedlings in a nursery qualifies for agriculture allowance IV. Re-afforestation of timber qualifies for agriculture allowance

Explanation

The correct answer is I, II and IV.

Statement I is correct because qualifying agriculture expenditure is considered incurred when it is payable, excluding a building.

Statement II is correct because oil palm trees planted in replacement of rubber trees qualify for agriculture allowance.

Statement IV is correct because re-afforestation of timber also qualifies for agriculture allowance.

Therefore, the correct answer is I, II and IV, as all three statements are correct.

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114. In considering a deduction for tax rebate (other than zakat or fitrah) which of the following is correct? 

Explanation

An individual resident taxpayer with a total income of RM40,000 is eligible for a tax rebate. This means that if an individual resident taxpayer has a total income of RM40,000, they can claim a tax rebate. The other options mentioned in the question, such as an individual resident taxpayer who has claimed personal relief not being eligible for a tax rebate or the husband not being able to claim a tax rebate if the wife has claimed one, are not correct.

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115. Which of the following is not subject to stamp duty?

Explanation

Transfer of stock in trade is not subject to stamp duty because stock in trade refers to the inventory or goods that a business carries for the purpose of selling or trading. Since stock in trade is considered a part of the normal course of business operations, it is exempt from stamp duty, which is a tax levied on certain documents or transactions. Goodwill, transfer of shares, and other transactions may be subject to stamp duty depending on the jurisdiction and the value of the transaction.

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116. Which of the following companies can enjoy pioneer status in 2018? I. A company located in a promoted area II. A company producing a product under an industrial linkage programme III. A company undertaking reinvestment in a resource-based industry IV. A company participating in production of automotive component modules

Explanation

In order to enjoy pioneer status in 2018, a company must meet certain criteria. The given answer states that companies undertaking reinvestment in a resource-based industry (III) and companies participating in the production of automotive component modules (IV) can enjoy pioneer status. This means that if a company falls under either of these categories, they will be eligible for pioneer status in 2018.

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117. It was nice meeting you. _________________________________.

Explanation

The correct answer is "I look forward to working with you" because this phrase is commonly used to express anticipation and enthusiasm for future collaboration. The verb "look forward to" is followed by the gerund form of the verb, "working," which is the correct grammatical structure in this context. The other options either use the incorrect verb form ("work") or the incorrect tense ("I'm looking forward to work with you").

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118. What number should replace the question mark?

Explanation

In the given sequence, the numbers are arranged in descending order. The first number, 15, is followed by 8, which is then followed by 4, and finally 5. Therefore, the number that should replace the question mark is 15, as it follows the pattern of the sequence.

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119. What is the stamp duty rate for disposal of shares?

Explanation

The stamp duty rate for disposal of shares is 0.10%. This means that when shares are sold or transferred, a tax of 0.10% of the value of the shares is levied. This tax is imposed by the government and is paid by the seller or transferor of the shares.

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120. AB Ltd, a company resident in Australia, has received payment of RM2,500,000 from CD Sdn Bhd for the supply, installation and commissioning of machines at the factory of CD Sdn Bhd for a duration of 3 months. It was agreed that RM2,000,000 is for the supply of machines and the balance of RM500,000 is for installation and commissioning services. What is the amount of withholding tax payable on the above payment of RM2,500,000?

Explanation

The correct answer is RM0 because withholding tax is not applicable in this scenario. Withholding tax is a tax deducted at source on certain types of income, such as dividends, interest, or royalties. In this case, the payment of RM2,500,000 is for the supply, installation, and commissioning of machines, which does not fall under the categories that are subject to withholding tax. Therefore, no withholding tax is payable on this payment.

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121. My previous boss always insisted ______________________________________________. He didn't tolerate people arriving late.

Explanation

The correct answer is "we be on time." This is because the sentence is in the past tense, and the verb "insisted" is followed by the subjunctive form of the verb "be." The subjunctive form is used to express a suggestion, request, or demand. In this case, the boss is demanding that "we" (the speaker and others) be on time.

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122. Mr. Klaus is a resident of Germany. In February 2018 he was selected by a Malaysian company to provide architectural services with regard to a new office building. His fees was RM1 million. Most of the time spent on the job was in Germany. He estimated that the value of his time spent in Malaysia with regard to the project was RM200,000. The withholding tax to be deducted by the Malaysian company is?

Explanation

The withholding tax to be deducted by the Malaysian company is RM14,000. Withholding tax is a tax deducted at source by the payer of the income. In this case, the Malaysian company is required to deduct withholding tax on the fees paid to Mr. Klaus for his architectural services. The withholding tax rate in Malaysia for non-residents providing technical or professional services is 10%. Therefore, the withholding tax on Mr. Klaus' fees of RM1 million would be RM100,000. However, since Mr. Klaus estimated that the value of his time spent in Malaysia was only RM200,000, the withholding tax would be 10% of RM200,000, which is RM20,000. However, the question asks for the withholding tax to be deducted by the Malaysian company, so the correct answer is RM14,000.

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123. Which of the following term is defined in the Income Tax Act, 1967?

Explanation

The term "Plant" is defined in the Income Tax Act, 1967.

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