Reference no: EM132602125

Question -

(a) Rita, a tax resident, is married to Param, a non-resident for Malaysian tax purposes. The couple have two children, Maria, aged 20 years, and Renga, aged 19 years. It has been agreed that Rita will claim any available child reliefs for both of the children.

Rita has been employed as an actress by Lol Productions Sdn Bhd (LolP) since 1 March 2016.

Details of her employment income for 2016 are as below: (1) A monthly salary of RM4,500. (2) Employees' Provident Fund (EPF) contributions of 20% by LolP and 11% by Rita. (3) Social security contributions (SOCSO) assumed of 2% per month by LolP and 1% per month by Rita. (4) Rent-free accommodation provided to her by LolP from 1 March 2016 with an annual rateable value of RM46,000 as determined by the local authority. The premises is owned by her employer. (5) Traditional medical treatment of RM1,200 for Rita paid for by LolP. (6) A mobile phone costing RM3,500 provided to Rita by LolP. The phone is registered in LolP's name and LolP paid phone bills totalling RM1,200 in 2016.

Details of Rita's other income and expenditure incurred during the year 2016 are as follows: (i) Dividend income of RM20,000 received from an investments in the shares of an Australian company. (ii) Maria is studying in a local university under a full scholarship. Rita incurred RM1,000 for her studies in 2016. (iii) Renga is pursuing a professional accountancy course and serving under an articleship with a firm in Malaysia and has received a total allowance of RM5,000 per annum from this employer for the past two years. Rita incurred RM1,000 for his studies in 2016. (iv) A personal computer was acquired for RM4,000. Rita's last claim for relief on a personal computer was in the year 2013. (v) Full medical examination fees paid of RM1,200 for Rita and RM300 for Renga. (vi) A medical insurance premium of RM3,800 for the year 2016 for Rita. This amount was only paid on 17 January 2017. (vii) A private retirement scheme contribution of RM5,500. The scheme is approved by the relevant authority. (viii) A donation of RM1,000 paid on 16 July 2016 to an approved charitable institution in Malaysia.

Required: Compute the income tax payable by Rita for the year of assessment 2016. Note: You should indicate by the use of the word 'nil' any item referred to in the question for which no adjusting entry needs to be made in the tax computation.

(b) Param was employed as a director by MAL Sdn Bhd (MAL) from 1 October to 31 December 2016 at a gross monthly salary of RM20,000. MAL deducted the required amount of monthly tax deduction from his salary each month.

Required: (i) State the basis MAL Sdn Bhd should use to calculate the monthly tax deduction from Param's director's salary for each month and the due date for it to remit the deduction to the Inland Revenue Board.

(ii) Compute the income tax payable by Param for the year of assessment 2016, clearly indicating the reliefs (if any) to which he is entitled.