BKAT3033 SPECIALISED TAX
A252
TUTORIAL AND PRESENTATION 2: TAXATION ON INSURANCE COMPANIES
(DUE DATE: 14 APRIL 2026)
QUESTION 1
Success Insurance Bhd, a mid-sized Malaysian insurer, was established in
2009. Success gained a significant customer base across motor, property, and life insurance
segments. The following data has been extracted from the company's financial statements related
to general insurance business for the year ended 31 December 2025:
Items Note RM’000
Gross premium 1 35,100
Rental received 2,200
Reserve on unexpired risk (opening balance) 2,900
Claims (by policy holders) 10,000
Payment to agents 3,000
Management expenses 1,300
Premium payable (reinsurance) 1 7,500
Reserve for unexpired risks (closing balance) 11,000
Note to the accounts:
1. Details of premiums are as follows:
Marine, aviation & Fire, motor & other
transit policies policies
RM’000 RM’000
Gross premium 15,100 20,000
Premium payable (reinsurance)
(Local insurers) 2,000 2,300
Premium payable (reinsurance)
(Foreign insurers) 1,800 1,400
Additional information:
i. The amount set by the regulating authority for reserve on unexpired risks as of 31
December 2025 for policies other than marine, aviation, and transit is RM2 million.
ii. The capital allowance (current year) amounted RM5 million.
1
REQUIRED:
a. Compute the income tax payable for general insurance business
of Success Insurance Bhd for the year of assessment 2025. Show all relevant
computations.
b. Briefly explain the difference between insurance and reinsurance business.
QUESTION 2
Since its establishment in the year 2012, Our Guardian Bhd (OGB) has been operating as an
insurance company based in Malaysia. OGB finalises its financial accounts on each 31 December
and holds the status of being a Malaysian tax resident. The company has experienced growth
following the COVID-19 pandemic, driven by a significant surge in awareness regarding the
importance of insurance coverage. The subsequent data has been derived from the company's
financial statements for the fiscal year ended on 31 December 2025:
Life Insurance
General
Items Life Fund Shareholder’s
Insurance
Fund
RM’000 RM’000 RM’000
Gross premium 54,600 - 24,000
Dividend (Malaysia) 12,480 900 8,800
Interest received 1,560 - 936
Rental income 1,248 - 156
Gross proceeds from sale of shares 14,040 1,680 5,800
Net claims incurred 8,200 - 3,950
Payment to insurance agents 4,250 - 1,872
Management expenses 3,600 - 1,092
Cost of shares sold 6,240 630 780
Reserve for unexpired risks as of 31
December 2023 - - 3,744
Surplus transferred from life fund to
shareholders’ fund 10,920 - -
Additional information:
i. Premiums for general insurance business are as follows:
Marine, aviation & Fire, motor & other
transit policies policies
RM’000 RM’000
Gross premium 14,400 9,600
Reinsurance premium
(Malaysian insurers) 720 2,160
Reinsurance premium
(Non-Malaysian insurers) 1,920 -
2
ii. The reserve for unexpired risks as of 31 December 2025 for general policies (other than
marine, aviation, and transit policies) as determined by the relevant authority is
RM3 million.
iii. Capital allowances for the year of assessment 2025 are RM936,000 dan RM1.1 million for
life insurance and general insurance, respectively.
REQUIRED:
a. Briefly explain any THREE (3) differences of tax treatment between life insurance and
general insurance business.
b. Calculate the income tax payable for the life insurance business of Our Guardian Bhd for
the year of assessment 2025. (Show all relevant computations)
c. Calculate the income tax payable for the general insurance business of Our
Guardian Bhd for the year of assessment 2025. (Show all relevant computations)
QUESTION 3
Gratitude Insurance (M) Bhd is one of the leading insurance companies residents in Malaysia.
The company has consistently shown strong financial performance over the years. The
following information has been extracted from the company’s accounts for the year ended 31
December 2025:
General Life Insurance
Insurance
Life Fund Shareholder’s
Fund
Items RM’000 RM’000 RM’000
Gross premium 45,000 55,500 -
Commission receivable 10,000 - -
Interest income 1,500 2,100 1,300
Rental income 850 940 -
Gross proceeds from sale of shares 3,900 11,700 4,400
Claims incurred 13,000 16,400 -
Agents Commission 4,610 5,850 -
Management expenses 1,090 2,800 500
Cost of shares sold 1,650 4,100 1,200
Balance of reserve for unexpired risks as of 31
December 2025 5,800 - -
Surplus transferred from life fund to
shareholders’ fund - - 10,300
Additional information:
i. Details of premiums for general insurance business are as follows:
3
Fire, motor & other Marine, aviation & transit
policies policies
RM’000 RM’000
Gross premium 30,000 15,000
Reinsurance premium payable:
Malaysian insurers 5,700 3,500
Non-Malaysian insurers 3,300 4,100
ii. The amount set by the regulating authority for reserve of unexpired risks as of 31
December 2025 for general policies other than marine, aviation, and transit policies is
RM2.1 million.
iii. The balance of reserve for unexpired risks brought forward is RM5.45 million.
iv. The current year capital allowances for general and life insurance business are
RM900,000 and RM590,000 respectively.
REQUIRED:
Compute the income tax payable by Gratitude Insurance (M) Berhad for the year of assessment
2025.
QUESTION 4
SOS Insurance Bhd is a Malaysian insurance provider and a tax resident in Malaysia, specialising
in comprehensive insurance solutions for individuals and businesses. Operating under Malaysia's
regulatory framework, the company is committed to delivering financial protection and risk
management services tailored to meet diverse client needs. The following data has been
extracted from the company's financial statements related to general insurance business for the
year ended on 31 December 2025:
Items Note RM’000
Gross premium 1 55,000
Reinsurance premium payable 1 10,000
Commission receivable 15,000
Gross proceeds from sale of shares 4,500
Claims from customers 16,000
Payment to agents 7,000
Administrative expenses 2,300
Cost of shares sold 3,000
Reserve for unexpired risks (closing balance) 11,000
4
Notes to the accounts:
1. Details of premiums are as follows:
Fire, motor & other Marine, aviation &
policies transit policies
RM’000 RM’000
Gross premium 30,000 25,000
Reinsurance premium payable 6,000 4,000
Additional information:
i. All reinsurance policies are taken from foreign reinsurers.
ii. The amount specified by the regulating authority for reserve of unexpired risks as of 31
December 2025 for general policies other than marine, aviation, and transit policies is
RM3 million.
iii. The opening balance of reserve for unexpired risks is RM5.1 million.
iv. The current year capital allowance amounted RM11 million.
REQUIRED:
Compute the income tax payable for general insurance business of SOS Insurance Bhd for the
year of assessment 2025. Show all relevant computations.
END OF QUESTIONS