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The Association of Chartered Certified Accountants
The Malta Institute of Accountants
Fundamentals Level โ Skills Module
This is not a full specimen paper, it is a selection of
specimen questions to give an indication of the style of the
questions. It includes three multiple choice questions and
one long question.
The full exam will consist of the following:
Section A โ 15 multiple choice questions for 2 marks each
Section B โ Four 10 mark questions and two 15 mark
questions
All questions are compulsory.
To see an example of the full specimen exam, please refer
to the F6 (UK) Specimen Paper.
Taxation
(Malta)
Specimen questions for June 2015
Paper F6 (MLA)
SUPPLEMENTARY INSTRUCTIONS
- Calculations and workings need only be made to the nearest โฌ
- All apportionments should be made to the nearest month unless stated otherwise
- All workings should be shown when answering Section B
TAX RATES AND ALLOWANCES
The following tax rates and allowances for the year of assessment 2015 are to be used in answering the questions.
Individual income tax Resident individual tax rates Married couples โ joint computation Other individuals โฌ โฌ Rate โฌ โฌ Rate 0 to 11,900 0% 0 to 8,500 0% 11,901 to 21,200 15% 8,501 to 14,500 15% 21,201 to 28,700 25% 14,501 to 19,500 25% 28,701 to 60,000 29% 19,501 to 60,000 29% 60,001 and over 35% 60,001 and over 35% Parents maintaining a child/paying maintenance โฌ โฌ Rate 0 to 9,300 0% 9,301 to 15,800 15% 15,801 to 21,200 25% 21,201 to 60,000 29% 60,001 and over 35% Non-resident individuals โฌ โฌ Rate 0 to 700 0% 701 to 3,100 20% 3,101 to 7,800 30% 7,801 and over 35%
Corporate income tax Standard rate 35%
Value added tax (VAT) Standard rate 18% Reduced rate โ general 5% Reduced rate โ accommodation in premises required to be licensed in virtue of the Malta Travel and Tourism Services Act 7%
Applicability of increase for inflation
Cost of acquisition/improvements x
index(yd) โ index(ya) โโโโโโโโโโโโโโโโโโโโโโโโโโโโ โโโโโโโโโโโโโโโโโโ 1 index(ya)
Where: index(yd) is the index for the year immediately preceding that in which the transfer is made; index(ya) is the index for the year immediately preceding that in which the property in question had been acquired or completed, whichever is the later, or, when it relates to improvements, for the year immediately preceding that in which the cost of carrying out the improvements was incurred.
Annual market rent (tax accounting)
The annual market rent of immovable property situated in Malta owned and used by a company for the purpose of its activities (excluding property which is rented by the said company to other parties) is calculated by multiplying the aggregate surface area in square metres of all floors of such premises so owned and used by โฌ250 per annum.
Car fringe benefit rates
Vehicle use Percentage of vehicle value Vehicle not more than six years old 17% Vehicle more than six years old 10%
Fuel value Vehicle value not exceeding โฌ28,000 3% Vehicle value exceeding โฌ28,000 5%
Maintenance value Vehicle value not exceeding โฌ28,000 3% Vehicle value exceeding โฌ28,000 5%
Private use percentages
Car value From To โฌ โฌ 0 16,310 30% 16,311 21,000 40% 21,001 32,620 50% 32,621 46,600 55% 46,601 and over 60%
Section A โ ALL 15 questions are compulsory and MUST be attempted
Note: Only three specimen questions provided. For full specimen exam, see F6 (UK) Specimen paper
Please use the grid provided on page two of the Candidate Answer Booklet to record your answers to each multiple choice question. Do not write out the answers to the MCQs on the lined pages of the answer booklet. Each question is worth 2 marks.
1 In respect of the financial year ended 31 December 2013, Gustuz Ltd had a settlement tax liability of โฌ15,000, which it did not pay until 15 March 2015. Its tax return in respect of the year of assessment 2014 was filed on time.
How much will Gustuz Ltd be charged by the Inland Revenue Department as interest in respect of the late payment of its tax liability for the year of assessment 2014? A โฌ 900 B โฌ 675 C โฌ 825 D โฌ 619
2 During 2014, Charles Borg sold a holiday residence in Malta for a consideration of โฌ125,000. He had bought this property during 2005 for โฌ90,000. During 2011, he spent โฌ10,000 on improvements to the property. Charles incurred brokerage fees of โฌ3,000 in connection with the sale of this property.
What is the tax payable by Charles Borg in respect of this capital transaction? A โฌ15, B โฌ7, C โฌ14, D โฌ 0
3 Melita Health Limited (MHL), which is established and registered for VAT in Malta, operates a small private hospital in Malta. MHL purchases pharmaceuticals for the purpose of its economic activity from a supplier established in the UK. The purchase price of the pharmaceuticals (exclusive of VAT) is โฌ35,000. The supplier arranges for the despatch of the pharmaceuticals from the UK to Malta on behalf of MHL.
Which of the following statements are true for Melita Health Limited? (1) The operation constitutes an intra-EU acquisition of goods in Malta by MHL (2) The supply is deemed to take place in Malta (3) The person liable to account for and pay VAT is the UK supplier (4) No VAT is payable as pharmaceutical goods constitute an exempt with credit supply for Maltese VAT purposes A (1) and (4) only B (1), (2) and (3) C (2), (3) and (4) D (1), (2) and (4)
5 [P.T.O.
- A tertiary education fee of โฌ1,500 to a recognised tertiary education institution.
- A tuition fee of โฌ1,000 paid to the tutor who is teaching Anja Maltese.
Required:
Calculate Paul and Anjaโs chargeable income for the year of assessment 2015.
Note: You should list all of the items of income and gains referred to in the question, indicating by the use of โ0โ any items which are exempt from tax or otherwise not taxable in Malta.
(15 marks)
Answers
Section B Marks
1 Chargeable income and tax payable for the year of assessment 2015
Paul Anja โฌ โฌ Taxable income Salary from the University of Malta (25,000 โ 5,000) 20,000 1ยท Cash allowance 2,000 1 Reimbursement for professional subscriptions (exempt fringe benefit) 0 0ยท Subsistence allowance (exempt fringe benefit) 0 0ยท Work related travel (exempt fringe benefit) 0 0ยท Salary from the University of Malta subsidiary 1,500 1ยท Foreign source investment income 20,000 1 Dividend from Muska Ltd 40,000 1 Foreign bank interest 1,500 1 Royalty income 0 1 Less: allowable expenditure Maintenance of yacht (disallowed) 0 0ยท Maintenance of house of character (disallowed) 0 0ยท Homes for the elderly fees (capped) (2,500) 1 School fees โ Berta (capped) (2,300) 1 Tertiary education fee (1,500) 1 Language tuition fee (disallowed) 0 1 โโโโโโโโ โโโโโโโโ Total income 17,200 61, โโโโโโโโ โโโโโโโโ Total chargeable income 78,700 0ยท โโโ 15 โโโ
Tutorial notes:
_1. Anja and Paul are subject to tax in Malta on their worldwide income and chargeable capital gains.
- The part-time rules may not be applied to Paulโs salary from the wholly owned subsidiary of the University_ _of Malta, because the subsidiary is considered to be the same employer as the University of Malta.
- Royalties from qualifying patents are exempt in terms of 12 (1) (v) ITA.
- Private expenditure is allowed as a deduction where it is expressly allowable in terms of Article 14B, 14D_ and 14F.
