- 20 Marks
Question
a) Nyameaye Limited is a company registered under the Companies Act 1963, Act 179 and has been in consultancy business over the years. The company has been registered to operate as a Value Added Tax (VAT) registered company, since it deals in both taxable and non-taxable supplies.
The company’s operations for January, 2019 were as follows:
| GH¢ | |
|---|---|
| Total value of taxable supplies invoiced (VAT inclusive) | 4,353,372 |
| Input Tax on Taxable Supplies | 460,317 |
| Value of Exempt Supplies | 360,000 |
| Purchase of double cabin Toyota Pick Up (VAT exclusive) | 240,000 |
| Value of relief Supplies | 108,400 |
Your review of the invoices showed that VAT and other levies on the Toyota pick-up and hotel bills of GH¢1,880.00 were included in the Input Tax on Taxable supplies.
Required:
Compute the GET Fund Levy, National Health Insurance Levy (NHIL) and VAT payable for the month of January, 2019.
b)i. State and explain the treatments of transactions and filing of returns in respect of the following legislations: Value Added Tax Act, (Act 870); GET Fund levy Act, 2000 (Act 581) and National Health Insurance Levy Act, 2003 (Act 650).
ii. Concisely, outline how taxes are computed and filed under the following Amendment Acts: VAT (Amendment) Acts, 2018 (Act 970), and National Health Insurance Levy (Amendment) Act, 2018 (Act 971); GET Fund (Amendment) Act, 2018 (Act 972).
Answer
a). Computation of GET Fund Levy, NHIL, and VAT Payable for January 2019
| Description | GH¢ | GH¢ |
|---|---|---|
| Total value of taxable supplies invoiced (VAT inclusive) | 4,353,372 | |
| Cost of Value of Supplies | ||
| 4,353,372 x 100 / 118.125 | 3,685,394.28 | |
| GET FUND @ 2.5% | ||
| 3,685,394.28 x 2.5% | 92,134.85 | |
| NHIL @ 2.5% | ||
| 3,685,394.28 x 2.5% | 92,134.85 | |
| VAT | ||
| Value of Supplies | 3,685,394.28 | |
| Add: | ||
| GET Fund Levy | 92,134.85 | |
| NHIL Levy | 92,134.85 | |
| Value of Supplies | 3,896,663.98 | |
| VAT on Supplies | 483,707.99 | |
| Less: | ||
| Input VAT | 460,317 | |
| Less: VAT on Pick Up = (240,000 x 105%) = 252,000 | ||
| 240,000 – (252,000 x 112.5%) = | 43,500 | |
| Add: VAT on Hotel Bills | 1,880 | |
| 45,380 | ||
| Deductible Input Tax | 414,937.00 | |
| VAT Payable / Due | GH¢ 68,770.99 |
(b). Treatment of Transactions and Filing of Returns
a) Under the VAT Act, ACT 870
i) The GET Fund and NHIL taxes are all claimable input tax against the output tax.
ii) Only one return is submitted at the end of each accounting period.
iii) The VAT is computed at the Rate of 17.5% and the input taxes are set off against the output tax and the difference is tax due or over paid.
iv) VAT Tax invoices are issued without analysing the taxes into the three tax types.
Under the GET Fund (Amendment) Act, and National Health Insurance Levy (Amendment) Act 2018
i) The GET Fund and NHIL are levies and are not claimable input tax against the output tax.
ii) Separate returns are submitted for both VAT and GET Fund and NHIL.
iii) The three tax types have different tax rates to apply.
iv) VAT Tax invoices issued are analysed into the three tax types.
- Tags: Amendments, GET Fund, NHIL, Tax Returns, VAT Act
- Level: Level 2
- Topic: Indirect Taxes
- Series: FEB 2020
- Uploader: Samuel Duah