TUTORIAL

CHAPTER 2: CATEGORY OF INCOME

QUESTION 1

Farid was employed as a Marketing Director in Kuala Lumpur for the year ended 31 December
2025. His employer provided him with the following remuneration package and benefits during
the year:

1. Monetary Income:
• Basic Salary: RM 120,000
• Entertainment Allowance: RM 12,000
• Annual Performance Bonus: RM 18,000

2. Employer-Provided Amenities & Benefits:

• Private Driver (wages paid by employer): RM 7,500
• Domestic Servant (wages paid by employer): RM 4,800

3. Living Accommodation:
• Unfurnished residential house in Kuala Lumpur provided by the employer.
• The defined value of the house for the year ended 31 December 2025 was RM
36,000.

Task: Compute the gross employment income for Farid for the Year of Assessment 2025.

Gross employment income for Farid for the year assessment 2025
RM RM
Section 13 (1) (a)
Basic Salary 120,000
Entertainment Allowance 12,000
Bonus 18,000
150,000

Section 13 (1) (b)

Private Driver ( prescribed value RM 7,200/year) 7,200
Domestic Servant 4,800
12,000
Section 13 (1) (c)
House defined value 36,000
30% of section 13 (1) (a) 45,000
36,000
Total Gross Employment Income 198,000
QUESTION 2

Sheila was forced to cease employment on 30 September 2025 due to severe ill health, after
serving her company continuously for 4 completed years. Her employer released the following
payments to her for the year ended 31 December 2025:

1. Employment Remuneration (1 January 2025 – 30 September 2025):

• Salary: RM 90,000
• Travelling Allowance: RM 6,000

2. Fund Withdrawals:
• Refund from an Unapproved Pension Scheme (representing employer's past
contributions): RM 25,000

3 Termination Package:
• Compensation for Loss of Employment: RM 50,000

Task: Sheila approached you regarding her tax position for the Year of Assessment 2025.
Advise Sheila on her tax position and compute her gross income from employment, taking into
account any relevant exemptions under Schedule 6 of the Income Tax Act 1967.

Gross Income for Sheila for the year of Assessment 2025

RM RM
Section 13 1 (a)
Salary 90,000
Travelling Allowance 6,000
96,000
Section 13 (1) (d)
Withdrawals from Pension Scheme 25,000

Section 13 (1) (e)

Termination Employment due ill health 50,000
(-) Exemption under Schedule 6 of Income Tax Act (50,000) 0
1967
Total Gross Employment Income 121,000
QUESTION 3

Azman retired from his long-standing employment on 31 October 2025 upon reaching the
mandatory retirement age of 60, having served the company continuously for 15 years. For
the period up to 31 October 2025, he received the following from his employer:

1. Monetary Income:
• Salary: RM 80,000
• Performance Bonus: RM 15,000

2. Employer Benefits Provided:

• Gardener Benefit (wages paid by employer): RM 3,600
• Free Household Utilities (electricity & water bills paid directly by employer): RM
2,400

3. Lump-Sum Retirement Package:

• Retirement Gratuity: RM 60,000

Task: Compute the gross employment income for Azman for the Year of Assessment 2025,
clearly stating the statutory tax treatment for the retirement gratuity under Schedule 6.

Gross Income for Azman for the year of assessment 2025

RM RM
Section 13 (1) (a)
Salary 80,000
Bonus 15,000
95,000
Section 13 (1) (b)
Gardener 3,600
Household Utilities 2,400
6,000
Section 13 (1) (d)
Retirement Gratuity ( mandatory retirement) 60,000 0
(60,000)
Total Gross Employment Income 101,000
QUESTION 4

1. Earnings:
• Salary (6 months): RM 60,000
• Sales Commission: RM 10,000

2. Accommodation Provided:
• During her 6-month posting in Penang, her employer accommodated her in a hotel
suite, paying a total room charge of RM 18,000 (RM 3,000 per month).

3. Termination Package:
• Compensation for Loss of Employment: RM 40,000

Task: Compute the gross employment income for Mei Ling for the Year of Assessment 2025,
incorporating the special statutory valuation rule for hotel accommodation.

Gross Income for Mei Ling for the year of assessment 2025
RM RM
Section 13 (1) (a)
Salary 60,000
Commission 10,000
70,000
Section 13 (1) (c)
Accommodation defined value 18,000
3% of Section 13 (1) (a) income 2,100
Value of accommodation is 6/12 x RM 18,000 = 9,000
2,100
Section 13 (1) (e)
Termination Package 40,000
(-) Exemption (18,000)
22,000
Total Gross Employment Income 94,100
QUESTION 5

Kamal was employed as a Senior Manager. On 31 August 2025, he was retrenched due to
company downsizing after completing 5 full years of service. His financial statements for the
year ended 31 December 2025 disclose the following items:

1. Direct Remuneration (1 January 2025 – 31 August 2025):

• Salary: RM 96,000
• Management Allowance: RM 8,000

2. Non-Monetary Benefits:
• Motorcar Benefit (Prescribed value for 8 months): RM 3,200
• Prescribed Value of Furniture in Apartment: RM 1,600

3. Accommodation Provided:
• Fully furnished company apartment for 8 months (Defined value unfurnished: RM
16,000).

4. Retrenchment Compensation:
• Lump-sum Retrenchment Payment: RM 70,000

Task: Compute the gross employment income for Kamal for the Year of Assessment 2025,
applying Paragraph 15, Schedule 6 retrenchment exemptions and the Section 13(1)(c)
accommodation comparison rule.

Gross Income for Kamal for the year of assessment 2025

RM RM
Section 13 (1) (a)
Salary 96,000
Allowance 8,000
104,000
Section 13 (1) (b)
Motorcar 3,200
Furniture 1,600
4,800
Section 13 (1) (c)
Accommodation defined value 16,000
30% of Section 13 (1) (a) income 31,200
16,000
Section 13 (1) (e)
Retrenchment Compensation 70,000
(-) Exemption under Schedule 6 of the Income Tax Act 1967 30,000
40,000
Total Gross Employment Income 164,800
QUESTION 6

Ms. Farah is a Marketing Director of a company in Johor Bahru. For the year ended 31
December 2025, she received a monthly salary of RM 10,500 and a yearly bonus of RM
18,000. Her employer also provided a petrol allowance of RM 6,000 and a travelling allowance
of RM 3,500 for official duties.

The company provided her with a driver whose monthly salary was RM 1,500 and a gardener
with a monthly salary of RM 700. She was also given a company car with a prescribed value
of RM 5,000. In addition, the employer rented a furnished condominium for her at RM 4,000
per month. She occupied the condominium for the entire year.

Apart from employment income, Ms. Farah owns a residential house that generated rental
income of RM 2,800 per month. Allowable expenses incurred for the property amounted to
RM 7,500. She also received compensation for loss of employment amounting to RM 36,000
after serving her previous employer for 4 completed years.

Required:
Compute the Total Gross Income for Ms. Farah for the Year of Assessment 2025.
(20 Marks)

Gross Income for Ms Farah for the year of assessment 2025

Gross Employment RM RM
Section 13 (1) (a)
Salary (10,500 x 12) 126,000
Bonus 18,000
Petrol Allowance 6,000
Travelling Allowance 3,500
153,500
Section 13 (1) (b)
Driver ( 600 x 12) – prescribed value 7,200
Gardener ( 300 x 12) – prescribed value 3,600
Company Car 5,000 15,800

Section 13 (1) (c)

Condominium (4000 x 12) 48,000
30% of Section 13 (1) (a) 46,050
46.050
Section 13 (1) (e)
Compensation 36,000
(-) Exemption under Schedule 6 of Income Tax Act 1967 24,000 12,000

Gross Rental
Section 4 (d)
Rental Income ( 2800 x 12 ) 33,600
(-) Expenses property 7,500 26,100

Total Gross Income 253,450

QUESTION 7

Mr. Lim is an Operations Manager in Penang. For the year ended 31 December 2025, he
received a monthly salary of RM 9,000 and a bonus of RM 10,000. His employer also paid
him an entertainment allowance of RM 4,500 and a travelling allowance of RM 5,500.

The company provided him with a domestic servant whose monthly salary was RM 900 and a
driver whose monthly salary was RM 1,200. He was also given a company car with a
prescribed value of RM 4,200.

For accommodation, the employer rented an apartment costing RM 3,000 per month, which
Mr. Lim occupied from 1 March 2025 until 31 December 2025.

Mr. Lim also owned a shop lot that generated rental income of RM 4,500 per month. Allowable
expenses incurred for the property amounted to RM 12,000. He also received compensation
for loss of employment amounting to RM 48,000 after serving his former employer for 6
completed years.

Required:
Compute the Total Gross Income for Mr. Lim for the Year of Assessment 2025.
(20 Marks)
Gross Income for Mr Lim for the year of assessment 2025
Gross Employment RM RM
Section 13 (1) (a)
Salary (9000 x 12) 108,000
Bonus 10,000
Entertainment Allowance 4,500
Travelling Allowance 5,500
128,000
Section 13 (1) (b)
Domestic servant (400 x12 ) 4,800
Driver (600 x 12 ) 7,200
Company car 4,200
16,200
Section 13 (1) (c)
Accommodation (3000 x 10) 30,000
30 % of Section 13 (1) (a) 38,400

Section 13 (1) (e)

Compensation 48,000
(-) Exemption under Schedule 6 of Income Tax Act 1967 36,000 12,000

Gross Rental
Section 4 (d)
Rental Income ( 4500 x 12 ) 54,000
(-) Expenses property 12,000 42,000

Total Gross Income 228,200

QUESTION 8

Ms. Aina is a Human Resource Manager working in Kuala Lumpur. For the year ended 31
December 2025, she received a monthly salary of RM 11,000 and a bonus of RM 12,500. Her
employer also provided an entertainment allowance of RM 6,500 and a travelling allowance
of RM 3,000.

The company employed a gardener for her with a monthly salary of RM 800 and provided a
company car with a prescribed value of RM 3,800. The employer also rented a terrace house
costing RM 2,800 per month, which she occupied from 1 July 2025 until 31 December 2025.

Besides employment income, Ms. Aina received rental income from a condominium
amounting to RM 3,200 per month. Allowable expenses for the property totalled RM 9,000.
She also received compensation for loss of employment amounting to RM 30,000 after serving
her previous employer for 3 completed years.
Required:
Compute the Total Gross Income for Ms. Aina for the Year of Assessment 2025.
(20 Marks)
Gross Income for Mrs Aina for the year of assessment 2025
RM RM
Section 13 (1) (a)
Salary ( 11,000 x 12) 132,000
Bonus 12,500
Entertainment allowance 6,500
Travelling allowance 3,000
154,000
Section 13 (1) (b)
Gardener ( 300 x 12) 3,600
Company car 3,800
7,400
Section 13 (1) (c)
Accommodation ( 2,800 x 6) 16,800
30% of Section 13 (1) (a) 46,200 16,800

Section 13 (1) (e)

Compensation loss employment 30,000
(-) Exemption under Schedule 6 of Income Tax Act 1967 18,000 12,000

Section 4 (d)
Rental Income ( 3,200 x 12) 38,400
(-) Expenses property 9,000 29,400

Total Gross Income 219,600