- 10 Marks
Question
Amasa Architecture and Building LTD has been in business for the past seven years. The following information relates to the company’s operations for the years ending 31 December 2022 and 2023.
| DETAILS | 2022 (GH¢) | 2023 (GH¢) |
|---|---|---|
| Profit before tax | 795,000 | 2,110,000 |
| Provision for Depreciation | 230,000 | 115,000 |
| Donation to Manhyia Children Home (Approved by Social Welfare Department) | 350,000 | 210,000 |
| Donation towards 2023 Adae Kese Festival | 105,000 | 150,000 |
| Capital allowance agreed with the Ghana Revenue Authority | 1,500,000 | 1,700,000 |
| Withholding tax paid as contained in certificates received | 10,000 | 25,000 |
Required:
Using the information provided above, compute the chargeable income and tax payable by Amasa Architecture and Building LTD for the years of assessment 2022 and 2023.
Answer
Amasa Architecture and Building LTD
Computation of Chargeable Income for 2022 Year of Assessment
| Details | Amount (GH¢) |
|---|---|
| Profit before tax | 795,000 |
| Add back: | |
| – Depreciation | 230,000 |
| – Donation towards Adae Kese | 105,000 |
| Total Additions | 335,000 |
| Assessable Income | 1,130,000 |
| Less: Capital Allowance | (1,500,000) |
| Unrelieved Loss Carried Forward | (370,000) |
| Tax Computation for 2022 | Amount (GH¢) |
|---|---|
| Tax Charged | 0 |
| Tax Paid | (10,000) |
Computation of Chargeable Income for 2023 Year of Assessment
| Details | Amount (GH¢) |
|---|---|
| Profit before tax | 2,110,000 |
| Add back: | |
| – Depreciation | 115,000 |
| – Donation towards Adae Kese | 150,000 |
| Total Additions | 265,000 |
| Assessable Income | 2,375,000 |
| Less: Capital Allowance | (1,700,000) |
| Less: Loss Brought Forward from 2022 | (370,000) |
| Chargeable Income | 305,000 |
| Tax Computation for 2023 | Amount (GH¢) |
|---|---|
| Tax Charged (25% on GH¢305,000) | 76,250 |
| Less: Tax Paid | |
| – Overpayment in 2022 | (10,000) |
| – Withholding Tax Paid | (25,000) |
| Tax Payable | 41,250 |
- Topic: Corporate Tax Liabilities
- Series: Nov 2024
- Uploader: Salamat Hamid