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Cover sheet
Candidate ID Word count
Candidate declaration
I declare that: This is my own original work and I have acknowledged all materials, sources and references used in the preparation of this assignment. I have abided by the Institutes Bye-Laws. This assignment has not been submitted previously for assessment. I have not copied in part or whole or plagiarised the work of other candidates, students and/or authors. The electronic version of this assignment has been submitted in compliance with the project requirements.
I consent to the Institute notifying my employer and/or any tertiary institution at which I am enrolled if this assignment constitutes an actual or reasonably suspected breach of any of the Institutes Bye-Laws and Exam Regulations. I acknowledge that the Institute will retain the original of this assignment. In submitting this assignment to the Institute, I declare it is my own work undertaken for the purpose of meeting the assessment requirements of the MICPA Programme module in which I am currently enrolled. I understand that the Institute will check my assignment for plagiarism and will retain a copy of my assignment for future plagiarism checking. This declaration confirms the above statements.
Signature:
Date:
Cover sheet
Candidate ID Word count
Candidate declaration
I declare that: This is my own original work and I have acknowledged all materials, sources and references used in the preparation of this assignment. I have abided by the Institutes Bye-Laws. This assignment has not been submitted previously for assessment. I have not copied in part or whole or plagiarised the work of other candidates, students and/or authors. The electronic version of this assignment has been submitted in compliance with the project requirements.
I consent to the Institute notifying my employer and/or any tertiary institution at which I am enrolled if this assignment constitutes an actual or reasonably suspected breach of any of the Institutes Bye-Laws and Exam Regulations. I acknowledge that the Institute will retain the original of this assignment. In submitting this assignment to the Institute, I declare it is my own work undertaken for the purpose of meeting the assessment requirements of the MICPA Programme module in which I am currently enrolled. I understand that the Institute will check my assignment for plagiarism and will retain a copy of my assignment for future plagiarism checking. This declaration confirms the above statements.
Signature:
Date:
Project
All rights reserved. No part of this document may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying or otherwise, by any third party, without the prior written permission of MICPA.
Contents
Due date Structure Marking summary Word limit Objective How to submit your project Submit electronic version by e-mail Submit a hard copy by mail Project Part A (37 points) Part B (50 points) 2 2 2 2 2 3 3 3 5 5 7
Due date
Due date: 11.55 pm, July 25, 2011 (Monday), Malaysian time, to be submitted via email to taxproject@micpa.com.my. No late submissions will be accepted.
Structure
There are two parts to this project, Part A and Part B, which are required to be submitted as two separate files: Part A Part B
Marking summary
A total of 89 technical points will be awarded for this project, allocated for each Part as follows:
Part A B Total Technical points 37 50 87 Additional points 1 1 2 Total 38 51 89
The two (2) additional points awarded are for presentation, clarity and logic. The total points will then be converted into an assessment mark out of 20.
Word limit
The overall word limit is 1,200 words. Part A 600 words Part B 600 words.
Objective
The project aims to help you: achieve the Taxation communication skills). module objectives (specifically problem-solving and
2.
3.
The subject line should include the work Project along with your candidate ID. You must submit your project before the due date and time.
4. 5.
6.
c) check that you have included your candidate ID in the top right corner of each page d) check the page number is on the bottom of each page e) check the electronic version is exactly the same as the paper copies f) 7. attach the cover sheet(s) to the project and staple together (as indicated on the cover sheet).
Ensure your candidate ID, candidate name and module code is written clearly on the front of the envelope.
Project
Part A (37 points)
Jacqueline Sdn Bhd, which operates a manufacturing concern, owns 90% of the shares in Joel Sdn Bhd, an information technology company, and 60% of Jessica Sdn Bhd, which is involved in food manufacturing. Jason Sdn Bhd, a management consultancy firm, is owned by Jacqueline Sdn Bhd (10%), Joel Sdn Bhd (20%). The balance is held by Jessica Sdn Bhd which it purchased on 23 August 2009. All the companies are incorporated under the Companies Act 1965, are tax residents in Malaysia, have a 31 December year-end and have a paid-up capital of RM 3 million. All other shareholdings are held by non-related parties. Details of the financial results of the various companies for the year ended 31 December 2010 are as follows:
Jessica Sdn Bhd RM000 Profit/(Loss) before tax Expense items include: Entertainment of staff EPF contribution (25%) Halal certification expenditure Cash donations: - government - approved institutions - health care centre - Zakat perniagaan Other information: Capital allowances Interest income Rental income 300 Joel Sdn Bhd RM000 (580) Jason Sdn Bhd RM000 (120) Jacqueline Sdn Bhd RM000 250
40 75
60
20
80
50 14 25 20 15
40 80
70 30
45 20
44 120 120
Note: Joel Sdn Bhd incurred RM100,000 on developing a website which is functional for e-commerce transactions. This was reflected as an exceptional item after profit before tax in the profit and loss account for the year ended 31 December 2010.
Required
a) State the conditions that must be satisfied before a company qualifies for claiming group relief under Section 44A of the Income Tax Act 1967. State and explain (with reasons) whether ALL the companies mentioned in the question are related to each other (for group relief purposes) for the year of assessment 2010. Compute the chargeable income for the year of assessment 2010 for each of the companies with a view to achieve optimum tax efficiency by utilising any group relief incentives. Identify which company with current year losses, cannot surrender its losses to the other companies in the Group although it is a related company, and explain why. For any company which is surrendering its losses to other companies in the Group, compute any unutilised balance of the losses.
[7 points]
b)
[6 points]
c)
[18 points]
d)
[3 points]
e)
[3 points] 37 points
Notes: i. Qualifying export sales (FOB) in 2005 was RM190,000. ii. FOB prices are taken to be 20% less than CIF prices. iii. Business losses brought forward from year of assessment 2007 was RM6,000. iv. The sales figures is marked up at 15% of ex-factory price and the raw materials used for export sales is in the same proportion as it bears to total sales
Required
In relation to the above information, prepare a report in a suitable format to the CFO of Debonair Sdn Bhd to advise on the following. a) Evaluate the advice of the previous tax agents given for the years of assessment 2006 and 2007. Determine whether the Company would have been eligible for any export incentives and if so, briefly explain the conditions to qualify and the mechanics of the incentives. Compute the allowance for increased exports claimable by the company for the years of assessment 2006 and 2007. Explain whether the Company is eligible for a more favourable exemption in respect of export sales from the years of assessment 2008 to 2010, briefly stating the pre-requisites for qualifying and identifying the appropriate rates of exemptions. Compute the chargeable income and the exemption(s) available to the Company for the years of assessement 2008 to 2010. State whether the Company can claim a deduction for the acquisition of shares in Silhoutte GmbH and if so, briefly explain why it qualifies (i.e., the conidtions to be fulfilled), the mechanics of the incentive and any circumstances where the incentive can be withdrawn. Explain, with reasons, the incentive(s) which the Company should claim.
[6 points]
b)
[8 points]
c)
[5 points]
d)
[12 points]
e)
[12 points]
f)
[7 points] 50 points