EXERCISES (TUTO 1)

QUESTION 1

Taxes can be divided into two categories. Explain the meaning of each category with example.

Taxes can be divided into 2 which are direct and indirect taxes. Direct tax is a tax which is levied on
the income or profits of the person who pays it. The examples are, income tax, real property gains tax,
stamp duty and many more. Indirect tax, is a tax levied on goods and services rather than income and
profits. Examples of indirect tax are service tax, sales tax and custom duty.

QUESTION 2

List down the types of income received by a resident person that can be chargeable to income tax.

This falls under Section 4 of Income Tax Act (ITA) 1967. There are several subsections under Section 4.
Section 4a states that profits or gains of a trade, business, profession or vocation. Section 4b states
that profits or gains from personal services, like employment. Section 4c states that dividends, interest
and discounts. Section 4d states on rents, royalties or premiums. Section 4e states that pension,
charges or annuity or other periodical payments. Finally section 4f states that gains or profit not falling
under any of the foregoing paragraphs.

*If not resident it’s under section 4A of ITA 1967

QUESTION 3

Betty is an accountant in Malaysia. In 2018, she involved in the purchase and sale of share in Bursa
Malaysia and made a total gain of RM100,000, out of the 5 transactions she entered to. Explain, with
reasons, whether the gain is liable to income tax.

No, she is not liable to income tax. This is because Betty is an accountant. The purchase and sale of
shares in Bursa Malaysia is not part of her ordinary job or activity. Besides that, this is a disposal of
shares, RM 100,000 is not an interest but a gain. Thus she is not liable for income tax. If the purchase
and sale of shares is Betty’s job, she is liable to pay for the income tax as stated in Section 4b of ITA
1967.

QUESTION 4

Manday worked in Australia as an employee of TBL Singapore Limited. With her income from
employment, she bought a car, which she sent over to Malaysia in 2017. Manday was not in
Malaysia for the year 2016 and was in Malaysia from October to December 2017. Is she liable to tax
on the income represented by the car?

No, she is not liable to pay tax for the car. This is because Manday used her income from Australia to
pay for the car. This is not subject to tax in Malaysia since 2004. The Foreign Source of income is
exempted since 2004.

QUESTION 5

Teoh wrote a will to leave all his wealth to his son before he passed away in July 2018. Explain, with
reasons, whether the wealth of Teoh is liable to income tax.

Yes, Teoh is liable to income tax. This is because the agent will compute the tax using the amount of
his wealth. A deceased person must also pay income tax, by a near relative.