Tutorial 6 Employment (Part 1)

Tax Planning/BFN 3114

Question 1
Explain why is it important for tax purposes to determine whether a person is exercising an
employment or is carrying on a profession or is self-employed?
Question 2
Nancy , from Australia first arrived in Malaysia in June 20015. She served as a consultant to
Power Engineering Sdn. Bhd. in Kuala Lumpur. Her stay in Malaysia in 2015 is as follows:

1/6/15-15/6/15
4/7/15-13/7/15
1/8/15-10/8/15
11/8/15-21/8/15
1/9/15-29/9/15
Total days

Days
15
10
10
11
29
75

employment
employment
holiday
employment
holiday

State with reason whether the employment income from Nancy is exempted from tax.
Question 3
Ms. Abhirami is a graduate in accounting from a local university. She applied for a job with a local
company, Accentashi Nakamura Corporation Bhd (the company), a company with global
operations. She was offered the post of an auditor in the companys Tokyo branch. She reported
for duty in Tokyo on 1 January 2011.
Required:
a) Determine the liability to Malaysian tax of Ms. Abhiramis income from her employment.
b) If Ms. Abhirami was employed in the Kuala Lumpur office, but was sent to Tokyo to audit
the companys branch books there for three months and she returned to Kuala Lumpur after
completing the audit, what is the implication for Malaysian income tax purposes

Question 4
Coco Sdn. Bhd. , a company resident in Malaysia, paid directors fees of RM50,000 to Masaki, a
non-resident director who carried out his duties in Tokyo. State with explanation, whether or not
Masaki is liable to Malaysian income tax.

Question 5- Presentation
Ms. Lakshmi and Ms. Mala are good friends who graduated with a Bachelor of Accounting degree
from the Multimedia University in 2010. Upon graduation, Ms. Lakshmi joined the accounting
firm of PWTS in Penang (her home town) as a tax manager with a salary of RM3,000 per month.
Ms. Mala joined her father who is running an accounting and consultancy firm, CMA Consultancy
in Seremban, as a partner. The firm is now known as CMA Associates. She is entitled to a salary of
RM5,000 per month, a car, travelling allowances and a 50 percent share of the profits of the firm.
Required:
Determine whether Ms. Lakshmi and Ms. Mala are exercising an employment. If not state your
reason, including the tests that you would apply in determining the status.
Question 6 - Presentation
Dr. Ramani is an expert in digital communications. He is a professor at the Chennai University, a
private university in South India. The Media University, a local private university, offered him a
two years contract (1.1.2014-31.12.2015) to work in the Putrajaya Campus, lecturing in digital
communications as well as set a communication laboratory and train the local staff on its
operations. He will not be involved in any research.
The contract of employment provided a monthly salary of RM10,000 per month, a bonus of two
months at the end of the contract, and vacation leave of two months, which can be taken at any
time.
Dr. Ramani commenced his employment on 1.1.2014. Into the second year of his contract, he took
his leave on 1 November 2015 and left for Chennai. His bonus (RM20,000) and leave pay
(RM20,000) was credited to his bank account in Chennai on 31 December 2015.
Required:
a. Determine whether Dr. Ramani was exercising an employment in Malaysia
b. Is the employment derived from Malaysia?
c. How would the bonus and leave pay be taxed and what is your basis for doing so?
d. Would it make any difference if the bonus and the leave pay were credited to his account in
Chennai on 5 January 2016?