Stage 1 (Team) Deloitte Tax Challenge 2019

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Stage 1 (Team) Deloitte Tax Challenge 2019 - Quiz


Questions and Answers
  • 1. 

    Which of the following expenses qualify for deduction under the Income Tax Act, 1967? I. Contribution to Universiti Putra Malaysia library II. Discount on bond issued which was used in the business operations III. Renovation of business premises to assist a disabled employee in performing his duties IV. Cash contribution to a research institute

    • A.

      I and II

    • B.

      I, II and III

    • C.

      I, II and IV

    • D.

      All of the above

    Correct Answer
    B. I, II and III
    Explanation
    The expenses that qualify for deduction under the Income Tax Act, 1967 are: I) Contribution to Universiti Putra Malaysia library, II) Discount on bond issued which was used in the business operations, and III) Renovation of business premises to assist a disabled employee in performing his duties. These expenses are considered eligible for deduction as they are directly related to the business operations and contribute to the development and improvement of the business.

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  • 2. 

    Which of the following statements are correct? I. Payment of alimony to an ex-wife by an individual is deductible as a personal relief up to RM4,000 II. An individual can claim RM7,500 relief if his wife is disabled III. An individual who is studying part time for the Bachelor of Economics majoring in statistics at a local university is allowed a deduction for the fees paid but subject to a maximum of RM7,000 IV. An individual who had spent RM1,000 for a medical check-up for himself and his wife can claim relief of RM1,000 under medical expenses  

    • A.

      I and II

    • B.

      II and III

    • C.

      II, III and IV

    • D.

      All of the above

    Correct Answer
    A. I and II
    Explanation
    The correct answer is I and II. Statement I is correct because payment of alimony to an ex-wife is deductible as a personal relief up to RM4,000. Statement II is correct because an individual can claim RM7,500 relief if his wife is disabled.

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  • 3. 

    Which of the following allowances / benefits-in-kind received by an employee are exempted from income tax? I. Interest subsidy of RM15,000 on a loan of RM250,000 used to purchase an apartment in Pandan Indah II. Car park allowance of RM200 per month for parking in Menara LGB III. Child care allowance of RM200 per month for a child born in June 2002 IV. Petrol allowance of RM400 per month

    • A.

      I and II

    • B.

      I, II and III

    • C.

      I, II and lV

    • D.

      All of the above

    Correct Answer
    C. I, II and lV
  • 4. 

    Which of the following payments are subject to Malaysian withholding tax? I. Payment of rental by a Malaysian company to a Singapore resident company for a ship used in international waters II. Payment by a Malaysian company to an Australian company for architectural drawings of a 50-storey condominium. The drawings were completed in Australia and discussions were held over a period of time via tele-conference. III. Payment by XYZ Construction Pte. Ltd. (Malaysian Branch) (resident in Japan) to ABC Pte. Ltd. (resident in Japan) for construction of a bridge on the Malaysian West Coast Expressway IV. MNM Pte. Ltd. provided invoicing and book-keeping services to MNM Pte. Ltd (Malaysian Branch) for which a charge was made in the Branch accounts for these services that were performed outside Malaysia

    • A.

      I and II

    • B.

      I and III

    • C.

      I, II and III

    • D.

      All of the above

    Correct Answer
    B. I and III
    Explanation
    Payments subject to Malaysian withholding tax are those made by a Malaysian company to a non-resident company for services rendered in Malaysia. In this case, payment of rental by a Malaysian company to a Singapore resident company for a ship used in international waters (I) is subject to withholding tax because the ship is being used in Malaysia. Similarly, payment by XYZ Construction Pte. Ltd. (Malaysian Branch) to ABC Pte. Ltd. for construction of a bridge on the Malaysian West Coast Expressway (III) is also subject to withholding tax as it involves construction services provided in Malaysia. Therefore, the correct answer is I and III.

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  • 5. 

    Malaysia has entered into a comprehensive double taxation agreement with the following countries:- I. Bangladesh and Iran II. San Marino and Argentina III. Finland and United States of America IV. Mauritius and Croatia

    • A.

      I and II

    • B.

      I and IV

    • C.

      III and IV

    • D.

      All of the above

    Correct Answer
    B. I and IV
    Explanation
    Malaysia has entered into a comprehensive double taxation agreement with Bangladesh and Iran (Option I) as well as with Mauritius and Croatia (Option IV). Therefore, the correct answer is I and IV.

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  • 6. 

    Which of the following statements regarding the development of an approved node in Iskandar Development Region are true? I. An approved developer is exempted from payment of income tax on income arising from sale of rights over any land in an approved node until year of assessment 2016 II. An approved developer is exempted from payment of income tax on rental of building located in an approved node until year of assessment 2020 III. An approved developer is exempted from payment of income tax on sale of building located in an approved node until year of assessment 2018 IV. An approved developer is exempted from payment of income tax on the provision of management and supervisory services to a developer undertaking a project located in an approved node until year of assessment 2018  

    • A.

      I

    • B.

      II

    • C.

      III

    • D.

      None of the above

    Correct Answer
    B. II
    Explanation
    An approved developer in Iskandar Development Region is exempted from payment of income tax on rental of buildings located in an approved node until the year of assessment 2020. This means that the developer does not have to pay income tax on the rental income generated from the buildings in the approved node until 2020. This exemption provides a financial incentive for developers to invest in and develop buildings in the Iskandar Development Region.

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  • 7. 

    Which of the following statements regarding the Returning Expert Programme are true? I. An approved individual is an individual who is a Malaysian citizen and resident in Malaysia II. An application under the Returning Expert Programme must be made between 1 January 2012 and 31 December 2020 III. The applicant should not derive any employment income in Malaysia for at least a continuous period of twenty four months prior to the date of application IV. An option to be taxed at 15% shall be made in the year of assessment or the following year of assessment of the approved individual’s return to Malaysia  

    • A.

      I and II

    • B.

      I and IV

    • C.

      I, II and III

    • D.

      All of the above

    Correct Answer
    B. I and IV
    Explanation
    The statement "I. An approved individual is an individual who is a Malaysian citizen and resident in Malaysia" is true because the Returning Expert Programme is specifically for Malaysian citizens who are residents in Malaysia.

    The statement "IV. An option to be taxed at 15% shall be made in the year of assessment or the following year of assessment of the approved individual's return to Malaysia" is also true because one of the benefits of the programme is the option for approved individuals to be taxed at a lower rate of 15% in the year of assessment or the following year after their return to Malaysia.

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  • 8. 

    Which of the following period will equal to the basis period for a year of assessment? I. A company changes its date of closing its financial accounts and prepares its audited accounts for the period 1 July 2018 to 31 March 2019 II. A company commences business and prepares its accounts from 1 February 2018 to 31 October 2018 III. A company commences its business and prepares its accounts from 1 April 2018 to 31 December 2018 IV. A company commences its business and prepares its accounts from 1 November 2017 to 31 January 2019

    • A.

      I and II

    • B.

      I and III

    • C.

      III only

    • D.

      All of the above

    Correct Answer
    D. All of the above
    Explanation
    All of the above options can be considered as the basis period for a year of assessment. In option I, the company changed its financial accounts closing date, so the period from 1 July 2018 to 31 March 2019 can be considered as the basis period. In option II, the company commenced business and prepared its accounts from 1 February 2018 to 31 October 2018, which can also be considered as the basis period. Similarly, in option III, the company commenced business and prepared its accounts from 1 April 2018 to 31 December 2018, which can be considered as the basis period. Lastly, in option IV, the company commenced business and prepared its accounts from 1 November 2017 to 31 January 2019, which can also be considered as the basis period. Hence, all of the above options fulfill the criteria for the basis period.

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  • 9. 

    Which of the following statements are correct? I. Lease rental of a commercial vehicle exceeding RM100,000 will be disallowed II. Entertainment that is wholly and exclusively incurred in the production of income will be allowed 50% unless provided otherwise III. If information that is requested by the Director General of Inland Revenue with regard to the recipients of commission is not furnished within a specified time, the whole commission will be disallowed IV. Payment of salaries to partners in a limited liability partnership (LLP) is not deductible though the LLP agreement does mention the payment of salaries to partners.  

    • A.

      I and II

    • B.

      II only

    • C.

      II and III

    • D.

      All of the above

    Correct Answer
    C. II and III
    Explanation
    Statement I is incorrect because there is no mention of lease rental of a commercial vehicle exceeding RM100,000 being disallowed.

    Statement II is correct because entertainment expenses that are wholly and exclusively incurred in the production of income are allowed at a rate of 50%, unless provided otherwise.

    Statement III is correct because if the requested information regarding the recipients of commission is not furnished within a specified time, the whole commission will be disallowed.

    Therefore, the correct answer is II and III.

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  • 10. 

    Real property gains tax is not chargeable in the following transactions:- I. The transfer of assets by an individual to a company controlled by him II. The transfer of assets of a deceased person to the trustees of a trust created under a will III. The disposal of the asset to the Government or State Government IV. Gift of asset to a nephew

    • A.

      I and II

    • B.

      I, II and III

    • C.

      I, II and IV

    • D.

      All of the above

    Correct Answer
    A. I and II
    Explanation
    Real property gains tax is not chargeable in the transfer of assets by an individual to a company controlled by him, as well as in the transfer of assets of a deceased person to the trustees of a trust created under a will. This means that if an individual transfers their assets to a company they control or if the assets of a deceased person are transferred to the trustees of a trust, no real property gains tax will be applicable.

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  • 11. 

    The following are losses arising from the disposal of chargeable asset which are deductible for computation of Real Property Gains Tax:- I. A loss arising from a disposal of an asset though Inland Revenue Board has not been notified of such disposal II. A loss arising from the disposal of shares in a real property company III. A loss arising from a disposal of an asset which if such disposal had it been a gain would not be taxable. IV. A loss arising from the disposal of an asset in the fifth year from the date of acquisition

    • A.

      I and II

    • B.

      II and III

    • C.

      II, III and IV

    • D.

      IV only

    Correct Answer
    D. IV only
    Explanation
    A loss arising from the disposal of an asset in the fifth year from the date of acquisition is deductible for computation of Real Property Gains Tax. This means that if an individual sells an asset and incurs a loss on it, they can deduct that loss from their taxable income for Real Property Gains Tax purposes. However, losses arising from the disposal of an asset though Inland Revenue Board has not been notified of such disposal, a loss arising from the disposal of shares in a real property company, and a loss arising from a disposal of an asset which if such disposal had it been a gain would not be taxable are not deductible for computation of Real Property Gains Tax.

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  • 12. 

    Which of the following statements are true? I. The Director General of Inland Revenue may appoint any person as an agent of a taxpayer II. The agent cannot appeal against the appointment if he holds assets on behalf of taxpayer III. The agent can be assessed and charged to tax on behalf of taxpayer

    • A.

      I only

    • B.

      I and II

    • C.

      I and III

    • D.

      All of the above

    Correct Answer
    C. I and III
    Explanation
    The statement I is true because the Director General of Inland Revenue has the authority to appoint any person as an agent of a taxpayer. This means that the Director General can delegate certain tax-related responsibilities to someone else on behalf of the taxpayer.

    The statement III is also true because the agent can be assessed and charged to tax on behalf of the taxpayer. This means that if the agent is found to have taxable income or assets, they can be held accountable for paying the taxes on behalf of the taxpayer.

    Therefore, the correct answer is "I and III" because both statements I and III are true.

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  • 13. 

    Which of the following statements are correct? I. An income tax appeal can be made to the Special Commissioners of Income Tax, the High Court and, finally, the Court of Appeal. II. An income tax appeal can be made to the Special Commissioners of Income Tax, the High Court, the Court of Appeal and, finally, the Federal Court III. An income tax appeal can be made to the High Court, the Court of Appeal and the Federal Court IV. An income tax appeal can be made to the Special Commissioners of Income Tax, the Sessions Court, the High Court and, finally, the Court of Appeal

    • A.

      I and II

    • B.

      I and III

    • C.

      I, II and III

    • D.

      All of the above

    Correct Answer
    B. I and III
  • 14. 

    Which of the following receipts are taxable? I. Payment received for the late delivery of a merchant ship sent for repair II. Payment received for the cancellation of the contract to supply goods by one of the many suppliers III. Payment received for not carrying out mining operations near the railway tracks

    • A.

      I and II

    • B.

      II and III

    • C.

      All of the above

    • D.

      None of the above

    Correct Answer
    A. I and II
    Explanation
    Receipts for late delivery of a merchant ship sent for repair and for the cancellation of a contract to supply goods by one of the many suppliers are both taxable. This means that income received from these sources is subject to taxation. Receipts for not carrying out mining operations near railway tracks, on the other hand, are not taxable.

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  • 15. 

    A new workshop had the following record of events. When did the workshop commence business?

    • A.

      First rented its premises on 15 January 2018

    • B.

      First hired its staff on 1 March 2018

    • C.

      First opened the premises to the public on 15 March 2018

    • D.

      First car serviced on 18 March 2018

    Correct Answer
    C. First opened the premises to the public on 15 March 2018
    Explanation
    The workshop commenced business on 15 March 2018 when it first opened its premises to the public. This is the first event mentioned that indicates the workshop is ready to start serving customers. The previous events of renting the premises and hiring staff are necessary steps in preparation for opening to the public, but it is the actual opening to the public that marks the beginning of the workshop's business operations. The first car being serviced on 18 March 2018 further confirms that the workshop was already in operation by that time.

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  • 16. 

    In July 2017, Axis Sdn Bhd, a Malaysian tax resident company entered into a royalty agreement with its parent company, Nex GmbH where Axis is to pay royalty to Nex GmbH on an annual basis for the use of know-how. Axis accrued the royalty of RM20,000 in its books for the year ended 30 June 2018. What is the correct tax treatment for Axis for year of assessment 2018? I. Axis must deduct and remit withholding tax of RM2,000 to the IRB within one month of the accrual date II. Axis must deduct and remit withholding tax of RM1,400 to the IRB within one month of the accrual date as per double taxation agreement III. Axis does not need to deduct and remit withholding tax but a claim for Section 33 deduction may involve an imposition of penalty IV. Axis can claim Section 33 deduction for year of assessment 2018 and does not have to account for withholding tax until the royalty is paid

    • A.

      I and II

    • B.

      I and III

    • C.

      III

    • D.

      All of the above

    Correct Answer
    C. III
  • 17. 

    Generis Sdn Bhd organized a family trip to Pulau Langkawi for its employees in July 2018. The total cost is RM70,000 comprising cost of travel fares amounting to RM40,000 and cost of meals and accommodation amounting to RM30,000. Please select the correct statement regarding the tax treatment of the expense:-

    • A.

      Generis Sdn Bhd is allowed a deduction for the cost of meals and accommodation of RM30,000 only as leave passage is specifically disallowed by the Act

    • B.

      Generis Sdn Bhd is allowed a deduction for the total cost of RM70,000 as the RM40,000 is not a leave passage

    • C.

      Generis Sdn Bhd is allowed a deduction for the full cost of RM70,000 where the family trip is held yearly within Malaysia

    • D.

      None of the above

    Correct Answer
    C. Generis Sdn Bhd is allowed a deduction for the full cost of RM70,000 where the family trip is held yearly within Malaysia
  • 18. 

    Which of the following instruments is not chargeable to stamp duty? I. Statutory declaration II. Cheque III. Insurance policy

    • A.

      I and II

    • B.

      II

    • C.

      II and III

    • D.

      None of the above

    Correct Answer
    D. None of the above
    Explanation
    Stamp duty is a tax levied on certain legal documents, such as agreements, contracts, and property transactions. In this case, all three instruments mentioned - statutory declaration, cheque, and insurance policy - can be subject to stamp duty depending on the jurisdiction and the specific circumstances. Therefore, none of the given options correctly identify an instrument that is not chargeable to stamp duty.

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  • 19. 

    Which of the following is incorrect based on the current practice of the Malaysian Inland Revenue Board? I. Amounts paid to a non-resident for technical services rendered in Malaysia and Singapore is subject to withholding tax II. Reimbursement of out-of-pocket expenses paid to non-resident in connection with technical services rendered in Malaysia is subject to withholding tax III. Withholding tax borne by a payer is tax deductible

    • A.

      I and II

    • B.

      I and III

    • C.

      III

    • D.

      None of the above

    Correct Answer
    B. I and III
    Explanation
    According to the current practice of the Malaysian Inland Revenue Board, amounts paid to a non-resident for technical services rendered in Malaysia and Singapore are subject to withholding tax. Therefore, statement I is incorrect. Additionally, withholding tax borne by a payer is not tax deductible according to the current practice. Therefore, statement III is also incorrect. The correct answer is I and III.

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  • 20. 

    Encik Lim is 45 years old and in good health. On 30 June 2018, he received a sum of RM195,000 as compensation for loss of office as Director of a public-listed company, a position which he has held since 1 January 2012. What amount will be included in his employment income for the year of assessment 2018?

    • A.

      RM195,000

    • B.

      RM156,000

    • C.

      RM135,000

    • D.

      RM130,000

    Correct Answer
    C. RM135,000
    Explanation
    Encik Lim will have RM135,000 included in his employment income for the year of assessment 2018. This is because the compensation he received for loss of office as a Director is considered as employment income.

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  • 21. 

    Which of the following are duty free islands as at 31.12.2018? I. Pulau Langkawi II. Pulau Pangkor III. Pulau Labuan IV. Pulau Tioman

    • A.

      I and III

    • B.

      II and III

    • C.

      I, II and III

    • D.

      I, III and IV

    Correct Answer
    D. I, III and IV
    Explanation
    Pulau Langkawi, Pulau Labuan, and Pulau Tioman are duty-free islands as of December 31, 2018.

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  • 22. 

    Which of the following cannot be considered as ‘plant’ or ‘industrial building’ for the purpose of claiming capital allowance? I. Artificial grass surface of a futsal centre II. A building in a simulated training grounds of a driving school III. Warehouse for storage of goods by a trading company IV. Law books of a legal firm

    • A.

      I and II

    • B.

      II and III

    • C.

      I and IV

    • D.

      None of the above

    Correct Answer
    B. II and III
    Explanation
    The question asks for a choice that cannot be considered a "plant" or "industrial building" for the purpose of claiming capital allowance. Capital allowance is a tax deduction that businesses can claim on certain types of assets, such as machinery and buildings used for business purposes.

    Option II, a building in a simulated training grounds of a driving school, cannot be considered a plant or industrial building as it is not used for the production or storage of goods, but rather for training purposes.

    Option III, a warehouse for storage of goods by a trading company, can be considered a plant or industrial building as it is used for the storage of goods, which is a business activity.

    Therefore, the correct answer is II and III.

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  • 23. 

    Excise duty is applicable upon the import of :- I. Cars II. Cigarettes III. Liquor IV. Mobile phones

    • A.

      I and II

    • B.

      I, II and III

    • C.

      I and III

    • D.

      All of the above

    Correct Answer
    B. I, II and III
    Explanation
    Excise duty is a tax imposed on certain goods produced or manufactured within a country. In this case, the correct answer is I, II and III because excise duty is applicable on the import of cars, cigarettes, and liquor. These goods are subject to excise duty to generate revenue for the government and to discourage their consumption. Mobile phones, on the other hand, are not mentioned in the list and therefore not subject to excise duty upon import.

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  • 24. 

    Which of the following allowances does have a claw back provision in respect of allowances claimed on assets disposed within a specified number of years of acquisition? I. Investment Tax Allowance II. Capital Allowance III. Reinvestment Allowance IV. Investment allowance for service sector

    • A.

      I and II

    • B.

      I, II and III

    • C.

      II, III and IV

    • D.

      All of the above

    Correct Answer
    B. I, II and III
    Explanation
    The correct answer is I, II and III.

    A claw back provision allows the government to reclaim or reduce the tax benefits or allowances previously claimed by a taxpayer. In this case, the question is asking which allowances have a claw back provision in relation to assets that are disposed of within a specified number of years after acquisition. Investment Tax Allowance, Capital Allowance, and Reinvestment Allowance all have this claw back provision, as they are subject to certain conditions and restrictions that may lead to a reduction or recapture of the allowances if the assets are disposed of too soon. Therefore, the correct answer is I, II and III.

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  • 25. 

    Which of the following is the basis for the valuation of unquoted shares for stamp duty purposes? I. Sale consideration II. Net tangible asset value III. Cost plus

    • A.

      I

    • B.

      I and II

    • C.

      I and III

    • D.

      All of the above

    Correct Answer
    B. I and II
    Explanation
    The valuation of unquoted shares for stamp duty purposes is based on the sale consideration and the net tangible asset value. Sale consideration refers to the price at which the shares are sold in the market, while net tangible asset value refers to the value of the company's tangible assets minus its liabilities. Both of these factors are important in determining the value of unquoted shares for stamp duty purposes. Cost plus, on the other hand, is not mentioned as a basis for valuation in this context.

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  • 26. 

    Which pre-commencement of business expenses are tax deductible in year of assessment 2018? I. Revenue expenditure wholly and exclusively incurred in the production of gross income II. Expenditure incurred in advertising for staff six months before commencement of business III. Expenditure incurred in training staff before commencement of business IV. Certain capital expenditure on incorporating the new company with authorised share capital not exceeding RM2.5 million such as cost of preparing and printing of the memorandum and articles of association of the company.  

    • A.

      I

    • B.

      II and III

    • C.

      II, III and IV

    • D.

      All of the above

    Correct Answer
    C. II, III and IV
    Explanation
    Expenditure incurred in advertising for staff six months before commencement of business, expenditure incurred in training staff before commencement of business, and certain capital expenditure on incorporating the new company with authorized share capital not exceeding RM2.5 million such as the cost of preparing and printing the memorandum and articles of association of the company are all tax deductible pre-commencement of business expenses in the year of assessment 2018.

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  • 27. 

    With reference to Malaysian tax legislation, an investment holding company refers to:-

    • A.

      A company which holds investments like shares and houses only

    • B.

      A company which receives passive income only

    • C.

      A company that has gross income of 80% or more from the holding of investments

    • D.

      A company listed on Bursa Malaysia that holds shares of more than 80% in subsidiary companies

    Correct Answer
    C. A company that has gross income of 80% or more from the holding of investments
    Explanation
    The correct answer is "A company that has gross income of 80% or more from the holding of investments." This means that an investment holding company is a company that primarily generates income from holding investments such as shares and houses. This definition distinguishes it from other types of companies that may receive passive income or hold shares in subsidiary companies.

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  • 28. 

    How is the residence status for a company determined under the Malaysian domestic law?

    • A.

      According to the citizenship of more than 50% of the directors

    • B.

      Country of incorporation of the company

    • C.

      Principal place of business of the company

    • D.

      Place of exercise of management and control

    Correct Answer
    D. Place of exercise of management and control
    Explanation
    The residence status for a company under Malaysian domestic law is determined by the place of exercise of management and control. This means that if the company's management and control activities are carried out in Malaysia, then the company will be considered a resident for tax purposes. The other options, such as the citizenship of the directors, country of incorporation, and principal place of business, may be relevant factors but the determining factor is the place where the management and control activities take place.

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  • 29. 

    Which of the following buildings qualify for capital allowances if the business concerned is registered as required? I. An airport building in Johor Bharu II. A 3-star hotel building in Pulau Pangkor III. A private maternity home located in Kuala Lumpur IV. A laboratory used for an approved research

    • A.

      I and II

    • B.

      I and III

    • C.

      I, II and IV

    • D.

      All of the above

    Correct Answer
    D. All of the above
    Explanation
    All of the buildings mentioned in the options qualify for capital allowances if the business concerned is registered as required. This means that the airport building in Johor Bharu, the 3-star hotel building in Pulau Pangkor, the private maternity home located in Kuala Lumpur, and the laboratory used for approved research are all eligible for capital allowances.

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  • 30. 

    What is the time limit for the claim of relief for error or mistake in respect of company's annual tax return for year of assessment 2012 submitted on 31 July 2013?

    • A.

      Up to 31 December 2017

    • B.

      Up to 31 December 2018

    • C.

      Up to 31 July 2019

    • D.

      Up to 31 December 2019

    Correct Answer
    B. Up to 31 December 2018
    Explanation
    The time limit for the claim of relief for error or mistake in respect of the company's annual tax return for the year of assessment 2012 is up to 31 December 2018. This means that the company has until the end of 2018 to make any claims for relief regarding errors or mistakes in their tax return for the specified year. After this date, they will no longer be able to claim such relief.

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  • 31. 

    A company that gives loans to directors in 2018 is deemed to have gross income from interest on such loans. Among the principles used in calculating the interest income are :- I. The average lending rate of commercial banks II. The amount of interest charged by the company III. The reference lending rate as determined by Bank Negara IV. The interest is calculated on the outstanding loan as at the company’s financial year-end

    • A.

      I and II

    • B.

      II and III

    • C.

      I, II and III

    • D.

      II, III and IV

    Correct Answer
    A. I and II
    Explanation
    The correct answer is I and II because the principles used in calculating the interest income from loans to directors include the average lending rate of commercial banks (I) and the amount of interest charged by the company (II). These factors determine the interest income earned by the company from these loans. The reference lending rate as determined by Bank Negara (III) and the calculation of interest on the outstanding loan as at the company's financial year-end (IV) are not mentioned as principles used in calculating the interest income in this specific scenario.

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  • 32. 

    Which of the following personal reliefs available for year of assessment 2018 are correct? I. Medical treatment for parents can be claimed up to RM6,000 II. Basic supporting equipment for taxpayer or wife who is disabled can be claimed up to RM6,000 III. Medical expenses for taxpayer or wife who is suffering from serious disease can be claimed up to RM6,000 IV. Deposit by taxpayer for his child in a Skim Simpanan Pendidikan Nasional account can be claimed up to RM6,000

    • A.

      I and III

    • B.

      II and IV

    • C.

      II, III and IV

    • D.

      All of the above

    Correct Answer
    C. II, III and IV
    Explanation
    Personal reliefs available for year of assessment 2018 include claiming medical treatment expenses for parents up to RM6,000 (I), claiming basic supporting equipment for a disabled taxpayer or spouse up to RM6,000 (II), claiming medical expenses for a taxpayer or spouse suffering from a serious disease up to RM6,000 (III), and claiming a deposit for a child in a Skim Simpanan Pendidikan Nasional account up to RM6,000 (IV). Therefore, the correct answer is II, III and IV.

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  • 33. 

    Choose the correct statements. I. Only the precedent partner of a partnership is assessable to tax on the income from a partnership II. Only the precedent partner in a partnership that has been converted to a limited liability partnership is still assessable on income relating to the years prior to the conversion III. A partner in a partnership that has been converted to a limited liability partnership is still assessable on income relating to the years prior to the conversion IV. A company that has been converted to a limited liability partnership is still assessable on income relating to the years prior to the conversion

    • A.

      I and II

    • B.

      II and III

    • C.

      III only

    • D.

      III and IV

    Correct Answer
    C. III only
  • 34. 

    Which of the following conditions are true for an individual who elects not to furnish a return form? I. He has employment income only II. His employment with the one employer can be for less than 12 months in a calendar year III. He can have 2 employers if there is no period of unemployment in a calendar year IV. His employer should not be responsible for paying his tax  

    • A.

      I, II and III

    • B.

      I, II and IV

    • C.

      I, III and IV

    • D.

      All of the above

    Correct Answer
    B. I, II and IV
    Explanation
    An individual who elects not to furnish a return form must meet the following conditions:
    I. He has employment income only, meaning he does not have any other sources of income such as business income or investment income.
    II. His employment with the one employer can be for less than 12 months in a calendar year, indicating that he may have worked for multiple employers within a year.
    IV. His employer should not be responsible for paying his tax, suggesting that the individual is responsible for paying his own taxes instead of having them deducted by the employer. Therefore, the correct answer is I, II and IV.

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  • 35. 

    Which of the following statements regarding assessments are false? I. If no assessment had been made on a taxpayer for a year of assessment, the Director General may make an assessment within five years after the expiration of that year of assessment II. If tax had been repaid to a taxpayer for a year of assessment after an appeal and it was discovered that it was an error, the Director General may raise an assessment within five years after the expiration of that year of assessment III. If taxpayer had been negligent in completing his return form and there is additional assessment to be raised, the Director General may raise an assessment within seven years after the expiration of that year of assessment IV. If no assessment had been made on a taxpayer for a year of assessment, the Director General may make an assessment within seven years after the expiration of that year of assessment in relation to a transaction with an associated company  

    • A.

      I and II

    • B.

      I and IV

    • C.

      II and III

    • D.

      I, III and IV

    Correct Answer
    C. II and III
    Explanation
    The given answer states that statements II and III are false. Statement II claims that if tax had been repaid to a taxpayer after an appeal and it was discovered to be an error, the Director General may raise an assessment within five years after the expiration of that year of assessment. This statement is false because the Director General can actually raise an assessment within seven years, not five. Statement III claims that if a taxpayer had been negligent in completing their return form and there is additional assessment to be raised, the Director General may raise an assessment within seven years after the expiration of that year of assessment. This statement is false because the Director General can actually raise an assessment within five years, not seven.

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  • 36. 

    Which of the following statements regarding appeals are true? I. A person can appeal to the Special Commissioners by giving to the Director General a written notice of appeal within thirty days from date of service of the assessment II. In an advance assessment, a person can appeal to the Special Commissioners by giving to the Director General a written notice of appeal within three months of the year of assessment III. A court-appointed receiver deemed as an agent for another person under Section 68 can file an appeal against an assessment IV. No appeal can be made in the case of a company filing a return within the stipulated time and the Director General is deemed to have made an assessment  

    • A.

      I only

    • B.

      I and III

    • C.

      I, II and III

    • D.

      All of the above

    Correct Answer
    A. I only
    Explanation
    A person can appeal to the Special Commissioners by giving a written notice of appeal to the Director General within thirty days from the date of service of the assessment. This means that statement I is true. There is no information given regarding statements II, III, and IV, so we cannot determine if they are true or false. Therefore, the correct answer is "I only".

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  • 37. 

    Which of the following statements are correct? I. A United Kingdom-registered company that commences business in Malaysia need not file an estimate of tax payable for the first two years of assessment if its paid-up share capital at the beginning of each of the basis period is RM2.5 million or less II. A limited liability partnership that commences operation and makes up accounts for a period of 6 months need not file an estimate of tax payable for the first year of assessment III. The estimate of tax payable furnished by a company shall be paid in instalments beginning on the 15th of the second month IV. The Director General may direct a limited liability partnership to make payment by instalments on account of tax which may be payable for a year of assessment

    • A.

      I and II

    • B.

      I and III

    • C.

      III and IV

    • D.

      None of the above

    Correct Answer
    C. III and IV
  • 38. 

    Which of the following statements are correct? I. Penalty on conviction for omitting income is a maximum fine of RM10,000 and a special penalty of twice the amount of tax omitted II. Penalty on conviction for not filing a return form is a maximum fine of RM10,000 or imprisonment of maximum 6 months or both III. Penalty on conviction for not permitting the entry of authorized officers of the Inland Revenue Board to office premises is a maximum fine of RM10,000 or imprisonment of maximum one year or both IV. Penalty on conviction for failure to furnish an estimate of tax payable is a maximum fine of RM10,000 or imprisonment of maximum 6 months or both

    • A.

      I and II

    • B.

      I and III

    • C.

      I, III and IV

    • D.

      None of the above

    Correct Answer
    B. I and III
    Explanation
    The correct answer is I and III. This is because statement I states that the penalty for omitting income is a maximum fine of RM10,000 and a special penalty of twice the amount of tax omitted. Statement III states that the penalty for not permitting authorized officers of the Inland Revenue Board to office premises is a maximum fine of RM10,000 or imprisonment of maximum one year or both. Statements II and IV are not correct as they do not match the penalties mentioned in the question.

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  • 39. 

    Which of the following statements relating to real estate investment trusts (REIT) are true? I. Remuneration of a REIT manager is deductible II. The trustee fee is an allowable expense under Section 33(1) III. Legal, valuation and consultancy fees incurred for establishing a REIT are deductible in ascertaining the adjusted income from the letting of property IV. The establishment of REIT expenditure is deductible in the basis period for a year of assessment in which the business commenced

    • A.

      I and III

    • B.

      I, II and IV

    • C.

      I, III and IV

    • D.

      All of the above

    Correct Answer
    C. I, III and IV
    Explanation
    The explanation for the correct answer is that statement I is true because the remuneration of a REIT manager is deductible. Statement III is also true because legal, valuation, and consultancy fees incurred for establishing a REIT are deductible in determining the adjusted income from the letting of property. Lastly, statement IV is true because the establishment of REIT expenditure is deductible in the basis period for a year of assessment in which the business commenced. Therefore, the correct answer is I, III, and IV.

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  • 40. 

    Interest arising from the following is not taxable in the hands of a real estate investment trust:- I. Non-convertible debentures approved by the Securities Commission II. A bank or financial institution licensed under the Banking and Financial InstitutionsServices Act 19892013 III. Bonds issued by Pengurusan Danaharta Nasional Berhad IV. Foreign source interest income remitted to Malaysia

    • A.

      I and II

    • B.

      I, II and III

    • C.

      II, III and IV

    • D.

      All of the above

    Correct Answer
    D. All of the above
    Explanation
    All of the options mentioned in the answer are correct. According to the given information, interest arising from non-convertible debentures approved by the Securities Commission, a bank or financial institution licensed under the Banking and Financial Institutions Services Act 19892013, bonds issued by Pengurusan Danaharta Nasional Berhad, and foreign source interest income remitted to Malaysia are not taxable in the hands of a real estate investment trust. Therefore, all of the options mentioned in the answer are correct.

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  • 41. 

    Which of the following statements are incorrect? I. A Joint Management Body or a Management Corporation is given the same treatment as a club II. The financial year in respect of a club is the basis period for that year of assessment III. A residents association is resident in Malaysia for the basis year for a year of assessment if the management and control of its affairs are exercised in Malaysia by the management committee IV. Transactions with members are not considered as trade dealings if the ownership of the club is different from its membership

    • A.

      I and II

    • B.

      I and III

    • C.

      II and IV

    • D.

      All of the above

    Correct Answer
    C. II and IV
  • 42. 

    Which of the following statements are correct regarding a non-trade association? I. The rental income received by the association from its member who operates a cafe within the association’s premise is taxable II. Fees received for hire of the association’s hall to the public are taxable III. Income from transactions with the spouse of members are not subject to tax IV. The payment by a vending machine operator to the association for placing the vending machine in the premises is taxable

    • A.

      I and II

    • B.

      I, II and IV

    • C.

      II, III and IV

    • D.

      All of the above

    Correct Answer
    B. I, II and IV
    Explanation
    I. The rental income received by the association from its member who operates a cafe within the association's premise is taxable. This is because rental income is generally considered taxable income.

    II. Fees received for hire of the association's hall to the public are taxable. This is because fees received for services provided, such as renting out a hall, are typically considered taxable income.

    III. Income from transactions with the spouse of members are not subject to tax. This statement is not mentioned in the options.

    IV. The payment by a vending machine operator to the association for placing the vending machine in the premises is taxable. This is because any form of payment or income received is usually considered taxable.

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  • 43. 

    Which of the following statements regarding furnishing of information to the tax authorities are correct? I. The Director General has the authority to request for information within a specified time from a taxpayer either in writing or orally II. If taxpayer fails to furnish the supporting document within the time specified in the notice, the expense will not be allowed as a deduction III. DG may give due consideration to allow a deduction of expenses if the taxpayer can show proof that the documents are lost or destroyed as a result of natural disaster IV. The Director General will consider an application for extension of time if the time specified in the notice has just expired

    • A.

      I and II

    • B.

      II and III

    • C.

      I, II and III

    • D.

      All of the above

    Correct Answer
    C. I, II and III
    Explanation
    The given answer is correct because it accurately identifies the statements that are correct regarding furnishing of information to the tax authorities. Statement I states that the Director General has the authority to request information from a taxpayer within a specified time. Statement II states that if the taxpayer fails to furnish supporting documents within the specified time, the expense will not be allowed as a deduction. Statement III states that the Director General may consider allowing a deduction of expenses if the taxpayer can provide proof that the documents were lost or destroyed due to a natural disaster. Therefore, the correct answer is I, II, and III.

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  • 44. 

    Which of the following statements are true regarding a private retirement scheme (PRS):- I. An individual who makes contributions to the scheme is allowed to claim a deduction on the amount contributed subject to a maximum of RM3,000 in a year of assessment II. The tax deduction is effective until the year of assessment 2020 III. The RM3,000 deduction for PRS is calculated separately from premiums paid for deferred annuity IV. Employers can contribute to the PRS on behalf of their employees and claim a deduction subject to a maximum

    • A.

      I and II

    • B.

      I and IV

    • C.

      II and IV

    • D.

      I, II and IV

    Correct Answer
    B. I and IV
    Explanation
    An individual who contributes to a private retirement scheme (PRS) is allowed to claim a deduction on the amount contributed, up to a maximum of RM3,000 in a year of assessment. This means that the individual can reduce their taxable income by the amount contributed to the PRS, resulting in a lower tax liability. Additionally, employers can also contribute to the PRS on behalf of their employees and claim a deduction, subject to a maximum limit. This encourages individuals and employers to save for retirement and provides tax incentives to do so. The statement about the tax deduction being effective until the year of assessment 2020 is not mentioned in the explanation.

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  • 45. 

    Which of the following is true regarding a private retirement scheme (PRS)? I. The PRS provider needs to deduct withholding tax at 8% on the amount withdrawn by the investor before the age of 55 years II. If an investor switches a fund to another fund managed by a different PRS provider, withholding tax would be imposed III. If a PRS fund distributes profits to investors in the form of units and credit them in the investors_ accounts, such profit distributions will be taxable IV. Withdrawal from PRS because of serious disease is not taxable

    • A.

      I and IV

    • B.

      II and III

    • C.

      I, III and III

    • D.

      All of the above

    Correct Answer
    A. I and IV
    Explanation
    Option I states that the PRS provider needs to deduct withholding tax at 8% on the amount withdrawn by the investor before the age of 55 years. This means that if an investor withdraws money from their PRS before the age of 55, the PRS provider will deduct 8% of the withdrawn amount as withholding tax. Option IV states that withdrawal from PRS because of a serious disease is not taxable. This means that if an investor needs to withdraw money from their PRS due to a serious disease, they will not be subject to any tax on the withdrawal. Therefore, options I and IV are true regarding a private retirement scheme (PRS).

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  • 46. 

    Which of the following statements are relevant to forest allowance? I. A person who extracts timber under a concession is entitled to claim forest allowance on expenditure incurred on the construction of roads in the forest II. The roads constructed in the forest shall be of little value to any person if the activity of timber extraction ceases, except if they are used in connection with the business of timber from another forest or the working of a farm after timber have been extracted III. Expenditure incurred on buildings which are situated in the forest also qualifies for the allowance IV. A person may make an election to treat the buildings as industrial buildings

    • A.

      I and II

    • B.

      II and III

    • C.

      I, II and III

    • D.

      All of the above

    Correct Answer
    D. All of the above
    Explanation
    Forest allowance refers to the entitlement of a person who extracts timber under a concession to claim allowances on certain expenditures related to the forest. Statement I states that forest allowance can be claimed on expenditure incurred on the construction of roads in the forest. Statement II explains that these roads may have little value if timber extraction ceases, unless they are used for other timber-related activities or farming. Statement III states that expenditure on buildings in the forest also qualifies for the allowance. Lastly, statement IV mentions that a person can choose to treat the buildings as industrial buildings. Therefore, all of the above statements are relevant to forest allowance.

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  • 47. 

    Which of the following statements are correct regarding capital allowance for small value assets:- I. Small value asset means plant or machinery used for the purpose of a person’s business where the qualifying plant expenditure of the asset is not more than RM1,300 II. The restriction to a maximum amount of RM13,000 for small value assets does not apply to a company with authorised capital of ordinary shares not exceeding RM2.5 million at the beginning of the basis period for a year of assessment III. This special allowance for small value asset is 100% of qualifying plant expenditure incurred IV. Taxpayer has the option to claim normal capital allowances  

    • A.

      I and II

    • B.

      I, II and III

    • C.

      I, III and IV

    • D.

      All of the above

    Correct Answer
    C. I, III and IV
    Explanation
    The correct answer is I, III and IV.



    Statement I states that a small value asset is a plant or machinery used for the purpose of a person's business where the qualifying plant expenditure of the asset is not more than RM1,300. This is a correct statement.

    Statement III states that the special allowance for small value assets is 100% of qualifying plant expenditure incurred. This means that the taxpayer can claim the full amount of qualifying plant expenditure as a capital allowance. This is also a correct statement.

    Statement IV states that the taxpayer has the option to claim normal capital allowances. This means that the taxpayer can choose to claim capital allowances in the normal manner instead of the special allowance for small value assets. This is a correct statement.

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

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  • 48. 

    Which of the following statements regarding basis period for a company are correct:- I. On commencement of operations, the first accounting period of 8 months is the basis period for the first year of assessment II. On commencement of operations, if a company prepares accounts for a period of less than 12 months ending on a day in the second year, the basis period for the first year of assessment will end on 31 December III. If a company fails to close its accounts on the same date of 31 December in the following year, the Director General of Inland Revenue will determine the basis periods for the failure year and the year following the failure year IV. A basis period for a year of assessment can be more than 12 months

    • A.

      I and II

    • B.

      I, II and IV

    • C.

      I, III and IV

    • D.

      All of the above

    Correct Answer
    C. I, III and IV
    Explanation
    Statement I is correct because on commencement of operations, the first accounting period of 8 months is considered as the basis period for the first year of assessment.

    Statement III is correct because if a company fails to close its accounts on the same date of 31 December in the following year, the Director General of Inland Revenue will determine the basis periods for the failure year and the year following the failure year.

    Statement IV is correct because a basis period for a year of assessment can be more than 12 months, depending on the specific circumstances of the company.

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  • 49. 

    The following statements are applicable to a unit trust:- I. A trust body is not resident in Malaysia for the basis year for a year of assessment if any trustee member of the trust body is not resident in Malaysia for that basis year II. The manager’s remuneration, secretarial, audit and accounting fees incurred by a unit trust are not allowable as they are not wholly and exclusively incurred in the production of the investment income III. Rental income received by a unit trust [other than real estate investment trust (REIT) / property trust fund (PTF)] is not treated as a business source IV. A unit trust other than a REIT / PTF that receives rental income from its properties is entitled to claim a special deduction for qualifying capital expenditure incurred

    • A.

      I and II

    • B.

      II and III

    • C.

      II, III and IV

    • D.

      All of the above

    Correct Answer
    C. II, III and IV
    Explanation
    Statement II states that certain expenses incurred by a unit trust, such as manager's remuneration and audit fees, are not allowable as they are not wholly and exclusively incurred in the production of investment income. Statement III states that rental income received by a unit trust (excluding REITs and PTFs) is not treated as a business source. Statement IV states that a unit trust (excluding REITs and PTFs) that receives rental income can claim a special deduction for qualifying capital expenditure incurred. Therefore, the correct answer is II, III, and IV.

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  • 50. 

    Which of the following statement is incorrect? I. In Howden Boiler & Armaments Co Ltd v Stewart boiler making and ammunition shells making were treated as two businesses II. In Gloucester Railway Carriage and Wagon Co Ltd v CIR the sale of railway wagons that were previously let out on hire were treated as part of the business of selling new wagons III. In Mamor Sdn Bhd v DGIR the extraction of timber was inseparable from the development of land as an oil palm plantation IV. In River Estates Sdn Bhd v DGIR the timber extraction business and the plantation business were two businesses  

    • A.

      I

    • B.

      II

    • C.

      III

    • D.

      IV

    Correct Answer
    A. I
    Explanation
    The incorrect statement is I. In the case of Howden Boiler & Armaments Co Ltd v Stewart, boiler making and ammunition shells making were not treated as two separate businesses.

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Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Mar 21, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Sep 11, 2019
    Quiz Created by
    Mydtc
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