Podcast
Questions and Answers
Which test is used to distinguish between personal and business expenditures for tax purposes?
Which test is used to distinguish between personal and business expenditures for tax purposes?
What is the primary criterion for an expense to qualify as deductible under Section 33(1)?
What is the primary criterion for an expense to qualify as deductible under Section 33(1)?
Which type of expense is typically considered non-deductible under Section 33(1)?
Which type of expense is typically considered non-deductible under Section 33(1)?
What distinguishes the 'Enduring Benefit' test from the 'Once and For All' test?
What distinguishes the 'Enduring Benefit' test from the 'Once and For All' test?
Signup and view all the answers
Which section of the tax code specifically allows for deductions against particular sources of income?
Which section of the tax code specifically allows for deductions against particular sources of income?
Signup and view all the answers
Which of the following expenses would typically qualify as a deduction when computing chargeable income?
Which of the following expenses would typically qualify as a deduction when computing chargeable income?
Signup and view all the answers
What must be established before calculating chargeable income from a business source?
What must be established before calculating chargeable income from a business source?
Signup and view all the answers
Which section covers the computation of statutory income from each source?
Which section covers the computation of statutory income from each source?
Signup and view all the answers
What is the first step in determining chargeable income?
What is the first step in determining chargeable income?
Signup and view all the answers
Which expense generally does not qualify for deductible treatment?
Which expense generally does not qualify for deductible treatment?
Signup and view all the answers
What section deals specifically with the treatment of trading stock?
What section deals specifically with the treatment of trading stock?
Signup and view all the answers
Which of the following would likely not be listed as an allowable expenditure?
Which of the following would likely not be listed as an allowable expenditure?
Signup and view all the answers
Which document would provide detailed insights into deductible expenditures?
Which document would provide detailed insights into deductible expenditures?
Signup and view all the answers
What is the purpose of computing adjusted income from each source?
What is the purpose of computing adjusted income from each source?
Signup and view all the answers
Which of the following expenses would likely meet the criteria for deductibility?
Which of the following expenses would likely meet the criteria for deductibility?
Signup and view all the answers
Which of the following is a criterion for the deductibility of expenses from gross income?
Which of the following is a criterion for the deductibility of expenses from gross income?
Signup and view all the answers
Which section of the tax code addresses the treatment of specific deductions disallowed?
Which section of the tax code addresses the treatment of specific deductions disallowed?
Signup and view all the answers
What happens to adjusted income if the value of stock at the end of the period exceeds that at the beginning?
What happens to adjusted income if the value of stock at the end of the period exceeds that at the beginning?
Signup and view all the answers
Which of the following is an example of allowable expenditure under double deductions?
Which of the following is an example of allowable expenditure under double deductions?
Signup and view all the answers
Which section covers double deductions in respect of cash contributions?
Which section covers double deductions in respect of cash contributions?
Signup and view all the answers
Which of the following would NOT be considered stock in trade?
Which of the following would NOT be considered stock in trade?
Signup and view all the answers
What type of expenses can be accounted for under PR No. 4/2006 regarding stock valuation?
What type of expenses can be accounted for under PR No. 4/2006 regarding stock valuation?
Signup and view all the answers
Which of the following expenditures is NOT mentioned as an example of deductions?
Which of the following expenditures is NOT mentioned as an example of deductions?
Signup and view all the answers
Study Notes
Personal Income Tax Deductible Expenses
- Deductible expenses are items subtracted from gross income to arrive at adjusted income.
- Items considered as gross income need to be ascertained.
- Deductions are essential to arrive at adjusted income.
Steps to Calculate Chargeable Income
- Ascertain the basis period for each source (sections 20 & 21).
- Ascertain gross income from each source for the basis period (sections 22 & 32).
- Compute adjusted income from each source/adjusted loss for business source (sections 33 to 41).
- Compute statutory income from each source (section 42).
- Compute aggregate income (section 43).
- Compute total income (section 44).
- Compute chargeable income (sections 45 & 51).
Sukaneka Sdn Bhd Tax Computation (2021)
- Provided data on business source deductions (slow-moving inventories, depreciation, interest, bad debts, tax filing fees, foreign exchange loss, and others).
- The adjusted income for Sukaneka Sdn Bhd in 2021 was RM1,511,000.
Legislative Provisions (Sections 33, 39, 34, and 35)
- Section 33: General rule for deductions from gross income.
- Section 39: Expenditure specifically disallowed.
- Section 34: Specific deductions (including those for revenue expenditure, double deduction for cash contributions, deduction of expenses on discount or premium, and expenditure on treasury shares).
- Section 35: Treatment of trading stock.
Tests for Granting Deductions
- Is the expenditure of a revenue or capital nature?
- Is the expenditure in relation to the taxpayer's business activities?
- Is the expenditure authorized or prohibited by the Act?
- Is the expenditure for the relevant year?
- Is the expenditure wholly and exclusively for the production of gross income?
Deductible Expenses: General Framework
- Expenditure has been made or is due.
- Is it disallowed by the Act?
- Is it specifically authorized by the Act?
- Is it of a revenue nature?
- Is it remotely connected with the source?
- Is it wholly and exclusively incurred in the production of income?
Capital and Revenue Expenditure
- Immaterial Considerations: Lump sum vs. periodic payments; reasonableness/magnitude of expenditure; character of receipt; payment from capital funds; accounting treatment.
- "Once and For All" Test: Recurring expense (revenue outlay) vs. one-time payment (capital outlay).
- "Enduring Benefit" Test: Expenditure to acquire a source of income/capital asset; bringing into existence for enduring benefit.
- Identifiable Asset Test: Whether an asset of a capital nature has been acquired.
- Fixed Versus Circulating Capital: Relates to fixed/circulating capital; purpose of maintaining capital assets; interest on loans for fixed assets.
- Business Entity Test: Distinction between business structure and business process; acquisition of means of production; establishment/expansion of business; sustained effort in business.
Other Deductions
- Listed various specific deductible expenses such as donations, training, promotion expenses, costs related to certain business activities, etc.
- Examples of deductions across a range of activities.
Stock in Trade
- Stock in trade includes raw materials, work-in-progress, and finished goods.
- Value of stock at the end of the period vs beginning. Excess value adjustment for determining adjusted income.
- Important for valuation of stock.
Double Deductions
- Detailed different types of double deductions.
Bad and Doubtful Debts
- Methods of handling bad and doubtful debts in the accounting entries.
- Detailed examples to illustrate the relevant adjustments.
Pre-Commencement and Other Expenses
- Examples of various pre-commencement expenses and other relevant expense types.
Lease Rentals
- Deductible expenses related to private motor vehicle rentals.
- Restrictions based on vehicle newness and cost.
- Excluded commercial vehicles.
- Examples provided for illustrative purposes.
Entertainment Expenses
- Entertainment provided to employees and in business activities are outlined.
- Specific expenses for sales promotions are detailed.
Interest Example
- Sample interest calculations for different months are shown
- Specific example calculations.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Related Documents
Description
Test your knowledge on personal income tax deductible expenses and the steps to calculate chargeable income. This quiz covers essential deductions and computation methods relevant to tax assessment. Perfect for students and professionals keen on mastering tax calculations.
