ACC 4041

TUTORIAL 2 CORPORATE TAXATION

Factor Sdn Bhd which with a paid up capital of RM2.4 million is a manufacturer of sports
equipment under the brand name Perkasa. The equipment is of export quality.
The profit and loss account of the company for the year ended 30 June 2016 is as follows:
Note

RM

1
2
3

35,000
1,521,000
30,000

Sales
Add: Other income
Interest
Dividend (net)
Rental
Less:
Cost of sales
Less:
Remuneration
Staff welfare
Freight and insurance
General and administration
Professional charges and
subscriptions
Repairs and maintenance
Entertainment
Leasing
Donation
Miscellaneous
Net profit before taxation

5
6
7
8

956,100
415,000
310,000
230,000

99,500

10
11
12
13
14

193,5000
595,000
32,400
8,000
33,000

RM
4,952,000

1,586,000
6,538,000
1,921,000
4,617,000

2,872,500
1,744,500

Notes:
1. Interest from excess funds deposited with an overseas bank was credited and remitted to
Malaysia on 30 June 2016.
2. Dividends were received from the following:
Gross
RM
Fair Sdn Bhd
- Interim (14 January 2016)
700,000
- Final (21 March 2016)
500,000
Clear Pte Ltd (Hong Kong)
0

Tax
RM

Nett
RM

196,000
140,000
0

504,000
360,000
657,000

These shares were acquired during 2001 to 2015 as investments from the companys surplus
cash. Dividend income from Clear Pte Ltd was remitted to Malaysia during the financial year.
3. Rental is earned from letting an apartment in Perth, Australia. The company bought the
apartment five years ago. Only RM30,000 was remitted to Malaysia on 31 May 2016 out of
the net rental income of RM75,000.

4. Cost of sales includes:

Provision for stock obsolescence
Insurance premium paid to an insurance company in
Taiwan for export of cargo to Taiwan
Damaged goods written off

RM
22,000
51,000
48,000

5. Remuneration comprises:
EPF (employers contribution)
Bonus (3 months salary)
Salary of an expatriate employee
Contribution to an unapproved provident fund

RM
157,500
150,000
39,000
9,600

6. Staff welfare comprises:

Staff medical and dental benefits
Leave passage for directors
Loan to employees written off
Maintenance of child care centre

RM
95,000
35,000
110,000
175,000

7. Freight and insurance

This includes RM120,000 premium paid to Cyber Insurance Bhd, a company incorporated in
Malaysia, for goods imported.
8. General and administration expenses comprise:
Food for shareholders attending the annual general meeting
Annual subscription to Trade Association of Manufacturers
Fine for exceeding speed limit on the highway while
sending goods to customers
Compensation paid to an ex-staff for loss of employment

RM
150,500
18,000
7,500
54,000

9. Professional charges and subscriptions comprise:

Legal fees on recovery of trade debt
Legal fees for handling income tax appeal
Fees for renewal of an existing trademark
Staff recruitment charges paid to an employment agency
Business zakat

RM
10,500
9,000
17,000
18,000
45,000

10. Repairs and maintenance comprise:

RM
Extension of the factory porch for the Managing Directors
parking bay
Upgrading of the factorys security system
Directors motor vehicle expenses (business purpose)
Resurfacing the factory car park
Depreciation on fixed assets

67,500
31,500
10,500
36,000
48,000

11. Entertainment expenses include:

Dinners for clients
Lunch provided to employees
Sponsorship of a local cultural activity (approved by the
Ministry of Culture, Arts and Tourism)
Cost of souvenirs at an International Trade Fair in New
Zealand to promote Malaysian products

RM
42,000
21,500
315,000
66,500

12. Leasing
A new car (cost: RM190,000) for the General Manager was leased at a monthly rate of
RM2,900 since July 2015.
13. Donations
The company donated sports equipment worth RM2,000 to an orphanage (approved
institution). In addition, each orphan received a cash donation of RM50. The total cash
donation distributed was RM6,000.
14. Miscellaneous expenses comprise:
Stamp duty on increase in authorised share capital
Foreign exchange gain on import of trading stock
(unrealised)
Foreign exchange loss on import of machinery (unrealised)

RM
8,000
(22,000)
47,000

Other Information:
i.

Capital allowances brought forward from previous year amounted to RM13,500.

ii.

Capital allowances (excluding new assets acquired) for the year of assessment 2016
amounted to RM215,000.

iii.

The business loss brought forward from the year of assessment 2015 was RM35,550.

Required:
Compute the tax payable by Factor Sdn Bhd for the year of assessment 2016. Every
item mentioned in the notes to the accounts must be stated in your computation
irrespective of whether an adjustment is required or not. Where no adjustment is
required, indicate NIL in the appropriate column.
Note: Your computation should start with the profit before taxation figure and follow the
description used in the Income Statement and where applicable the description used in the
notes to the accounts. In making your tax adjustments to the entries, you should indicate Nil
where no adjustments are made or are not required. You do not need to explain the
adjustments that you are making.