Reference no: EM132687061

Question

Sidek is a an accountant of a company from which he receives a salary of RM10,000 per month. The benefits provided to him included:

i. Accommodation for which the company pays monthly rental of RM3,000 (the company did not provide any furnishings for the house).
ii. A company car costing RM150,000.
iii. A gardener who is paid RM400 per month (paid by company).
iv. A domestic servant who is paid RM500 per month (reimbursed by company).
v. Leave passage for himself and his family (in 2019, they went to New Zealand for their holidays and the company paid RM6,000 for their air fares).

Sidek also received the following Malaysian income during the year ended 31 December 2019:

i. Dividend income of RM3,500 from a listed company in Bursa Malaysia.
ii. Interest income of RM3,800 from a 15-month fixed deposit in a Malaysian bank.
iii. Royalties of RM22,500 from the publisher of his book on taxation. He also incurred RM2,000 for the cost of editing.
iv. Rental income of RM2,200 per month. He pays interest of RM560 per month on a loan obtained to purchase the property. He also paid assessment and quit rent of RM1,350 per annum as well as cost of repairs amounting to RM4,500 made up of repainting (RM1,000) and extension of the kitchen (RM3,500).

Sidek's wife, Suria earns a salary of RM3,200 per month as an account executive. She is allowed to make use of a company car (cost RM70,000) during office hours but is not allowed to drive it home. She also has interest income of RM850 from her savings account with Bank Simpanan Nasional. She made a cash donation of RM2,500 to an approved institution as well as donated books worth RM1,200 to the same institution.

Besides, Suria also owns a laundry service known as Twinkle Laundry, which commenced business on 1 April 2017. The accounts were prepared to 31 December. The laundry has an adjusted income of RM25,000 and also claimed for capital allowance. Below are information relating to their additional acquisition of assets (treated as general machine) in 2019:

Sidek and Suria made the following claims in their tax return for the year of assessment 2019:

i. Sidek and Suria contributed to the EPF at the rate of 11%.
ii. They have three children: Arina, Azira and Azrul. Arina, 20 years, is studying accounting at the UniSHAMS, Kedah. Azira, 15 years, is schooling in Singapore. Azrul, 13 years, is schooling in Malaysia and staying with them.
iii. Sidek incurred RM5,500 of medical expenses in respect of his parents.
iv. Sidek has a life insurance policy taken out on the life of Suria on which he pays a premium of RM1,400 per annum.
v. Sidek contributed RM10,000 of medical equipment to Pantai Medical Center.
vi. During the year, Suria was diagnosed with second stage cancer that requires her to undergo treatment. Sidek paid the cost of the treatment of RM35,000. This is inclusive of the cost of a complete medical check-up of RM1,500.
vii. Sidek and Suria purchased magazines, sports equipment and smartphones totaling RM5,000 and RM4,000, each of them.
viii. Suria purchased a set of breastfeeding equipment worth RM500 for her sister in law as a gift to their newborn baby girl.
ix. Sidek paid MTD amounting to RM1,000 per month while Suria RM30 per month.
x. Sidek and Suria paid zakah on their incomes amounting to RM700 each of them.

Required:

a. Compute the income tax payable of Sidek and Suria for the year of assessment 2019 if Sidek and Suria elected for separate assessment, where Sidek elected to claim child relief for Arina.

b. Compute the income tax payable of Sidek and Suria for the year of assessment 2019 if Sidek and Suria elected for joint assessment.