Jason Dompok, aged 34, is a Malaysian tax resident

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Jason Dompok, aged 34, is a Malaysian tax resident. He provided the following details regarding his income for the basis year 2017:

Income from non-business sources:

i. Jason owns a house in Johore Bahru. He provides the following information for the

year ended 31 December 2017:

Income

January 2017 to May 2017 (RM3,000 per month)

June 2017 to August 2017 (vacant)

September 2017 to December 2017 (RM3,200 per month) Expenses

Refund of one month deposit to previous tenant

Commission to real estate agent for finding replacement tenant Interest on loan (January 2017 to December 2017)

Quit rent and assessment

Repainting of the house

Porch extension

Fire insurance premium

RM

15,000 Nil 12,800

3,200

3,200 18,400 1,600 13,400 18,500 1,600

             ii. Dividends

a) On 14 July 2017, Jason received RM12,000 as dividends from Sarawak

Chemicals Bhd.

b) He also received the equivalent of RM10,300 in dividends on 28 November 2017 from shares invested in Hong Kong. Of this amount, only RM 7,000 was remitted back to Malaysia as at 31 December 2017.

iii. Royalty

Royalty of RM62,000, was derived from Malaysia and was received during the year for writing a book on Malaysian gardening. During the year, he incurred typing and proof reading expenses of RM14,400.

Jason's wife, Eleanor a Malaysian tax resident, is a tailor and runs her business from home.

a) The net income from her business after deducting allowable expenses was RM19,600.

b) As a part time real estate agent, Eleanor received commission of RM22,000 on sale of properties in Malaysia.

c) She also received interest income of RM7,450 from Maybank in 2017 on her fixed deposit account.

Jason and Eleanor provided the following additional information f for the year ended 31 December 2017:

3

 

  Jason RM

Eleanor RM

1,000 -

980

-

-

4,000 -

4,500 -

registered under the the year.

  Donations to approved institution: ? Cash

? Computer and school supplies to orphanage Medical expenses incurred in respect of:

? complete medical examination (for Jason and Eleanor)

? Daughter Barbara Purchase of books and magazines Insurance premiums:

? Life policy (life of Jason and Eleanor)

? Medical and education policy Treadmill for family

Computer (replaced after 3 years)

The couple have three children:

5,000 2,400

570

26,600 1,400

7,000 5,100

4,500

         a) The first son, Harry, aged 5, is studying in a kindergarten Education Act 1996. Eleanor spent RM12,000 on his fees for

b) The second daughter, Barbara, aged 4 is disabled. She had a heart operation during the year due to a "serious disease".

c) Their youngest daughter, Diana is 1 year old and Eleanor spent RM1,200 on breast feeding equipment.

Eleanor's mother is 70 years old and has no income of her own. She lives with them. She was hospitalized during the year and Eleanor incurred medical expenses of RM9,300.

Required:

(a) Compute the income tax payable by Jason and Eleanor for the year of assessment 2017. Eleanor is not electing for joint assessment, and would be claiming all the child relief.

(24 marks)

(b) Based on the facts above, list three advantages to Jason and Eleanor in NOT electing for joint assessment.