STP – Aug 2012 – L3 – Q1 – Tax Computation

Compute tax liability for Jamaa Mining Company for 2008 and 2009 based on provided financials.

Question

The profit and loss account of Jamaa Mining Company Ltd for the years ended December 2008 and 2009 are as tabled below:

	Year Ended 31 December (all amounts in ‘000)
	2009 GHC	2008 GHC
Turnover	309,000	430,000
Cost of Sales	(164,000)
Gross Profit	145,000
General and Admin Exp	(100,000)
Operating Profit	45,000
Other Income	5,300
Net Profit before tax	50,300
Income Tax provision	12,575
Transfer to Income Surplus	37,725
Income Surplus Account
Balance brought forward	46,945
Transfer from profit and loss account	9,220
Surplus carried forward	46,945

Notes:
2. Turnover is made up as follows
For year

	2009	2008
Collected for year but included in prior year a/c	291,000
Interest income received for 18 months	0	18,000
	309,000

4a. Gen and Admin expenses includes

	2009	2008
Rent prepaid of	3,000
Rent outstanding	500	500

4b. Includes unrealized foreign exchange gain of but realized in 2009

	2009	2008
	2,000	2,000

The GRA has agreed a capital allowance of GHC20,000 for year 2009 and GHC15,000 for year 2008.

Required:
Please advise management of Jamaa Mining Company Ltd on the tax due to the GRA for the years 2009 and 2008.

Answer

Jamaa Mining Company Ltd
Tax Computation for the years 2009 and 2008
Basis period 1/1/2009 and 1/1/2008