As part of the post qualification requirements of The Chartered Institute of Taxation, you have been invited to do a presentation on the topic “Venture Capital Fund” to a select group of business men, tax professionals, financial institutions and students.
Invitation
Members of the Ghana Institute of Taxation and the Institute of Bankers wish to use this opportunity to strengthen the cordial relationship subsisting between them and have therefore invited you to do a presentation on the tax effects of Venture Capital Operators as compared with that of the traditional financial institutions.
Required:
Please prepare a presentation as required under Invitation above clearly distinguishing between Tax concessions granted to a Venture Capital as compared with the Bank.
Due to the aggressive stance of the GRA in recent times, the urgency and pace of submission of tax returns to the GRA has more than doubled. The Chief Finance Officer of SKABY BANK Ltd. requires to discuss Skaby’s Tax returns for year 2014 and 2015 by close of day today to enable him engage the Finance committee of the Board with the various tax liabilities arising from the two years’ banking activities and also access the Bank’s tax compliance level.
As Tax Consultant to SKABY BANK Ltd., extracts of the 2014 and 2015 financial statement which read as follows, has been deposited on your table for your necessary action.
SKABY COMMERCIAL BANK
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2015
Note
2015 GHC’000
2014 GHC’000
505,055.00
377,000.00
2
(82,200.00)
(51,300.00)
422,855.00
325,700.00
398,444.00
75,555.00
(10,424.00)
(8,200.00)
88,020.00
67,355.00
24,800.00
15,980.00
45,620.00
8,300.00
30,420.00
24,280.00
541,295.00
417,335.00
9,000.00
7,992.00
550,295.00
409,343.00
225,000.00
215,560.00
325,295.00
193,783.00
82,000.00
32,000.00
243,295.00
161,783.00
2015 GHC’000
2014 GHC’000
242,000.00
180,600.00
256,920.00
190,600.00
6,135.00
5,800.00
505,055.00
377,000.00
b) Necessary default certificates of GHC20,000.00 have been received on income included in investment return for year 2015.
Note 2: a) Interest Expense paid
2015 GHC’000
2014 GHC’000
Borrowings
9,900.00
8,900.00
Current and Savings A/c
45,650.00
20,500.00
Time and Other deposits
26,650.00
21,900.00
82,200.00
51,300.00
b) $20%$ of interest expense payments’ mandatory withholding tax deduction has not been made.
Note 3: Fees and Commission Income
2015 GHC’000
2014 GHC’000
Commission on letters of credit
3,200.00
2,650.00
Commission on Turnover
39,050.00
34,000.00
Processing fees
5,000.00
4,500.00
Commission of foreign services
2,200.00
3,060.00
Other fees and Commissions
48,994.00
31,345.00
98,444.00
75,555.00
Note 4: Other Income
2015 GHC’000
2014 GHC’000
Dividend Income
2,000.00
Bad Debt recovery
3,000.00
Profit on sale of property
2,200.00
Rental Income
2,470.00
2,200.00
Other Income
3,100.00
8,300.00
8,300.00
Note 5 a). Operating Expenses Include
2015 GHC’000
2014 GHC’000
Advertising
2,000.00
2,000.00
Rental of premises
45,000.00
40,450.00
Directors fees
2,100.00
3,000.00
Depreciation
16,000.00
15,000.00
Amortization
6,000.00
2,500.00
Donation to MD on death of mother
62,500.00
Purchase of computers
50,000.00
2,000.00
Goodwill paid
20,000.00
25,000.00
b). Tax on rental of premises has not been accrued or paid to the GRA.
Note 6: Income Tax
2015 GHC’000
2014 GHC’000
Balance b/f
200.00
Paid for year
65,000.00
20,000.00
Deferred Tax
17,000.00
10,000.00
Total
82,000.00
30,200.00
Note 7: Extracts from the Property, Plant and Equipment schedule is as below
2015
Land & Building GHC’000
Equipment Further GHC’000
Computers GHC’000
Motor Vehicles GHC’000
Total GHC’000
Cost as at 1 January 2015
50,000.00
53,000.00
32,000.00
57,000.00
192,000.00
Additions for year
2,500.00
12,200.00
7,500.00
2,550.00
24,750.00
Disposals
–
(250.00)
(350.00)
(2,300.00)
(2,900.00)
Write-off
–
(200.00)
(45.00)
–
(245.00)
At 31 December 2015
52,500.00
64,750.00
39,105.00
57,250.00
213,605.00
Note 8 Extracts from the Intangible Assets (GOODWILL) Register is as below
2015 GHC’000
2014 GHC’000
Cost as at 1 January 2015
7,500.00
Acquisition
10,500.00
7,500.00
Bal at year end 2015
18,000.00
7,500.00
Management policy for writing off goodwill is 10 years.
Required
Kindly present to the Chief Finance Office tax information on;
a) Corporate tax computation for year 2015 and 2014,
(10 marks)
b) Capital Allowance computation for year 2015 and 2014,
(8 marks)
c) Skabi’s Tax Position for year 2015 and 2014,
(2 marks)
d) Withholding taxes payable by Skabi to the GRA.
(2 marks)
You have been recently employed as the Tax Accountant for TecAxxes Bank Ltd. You have agreed with management to consult the Bank’s Tax Advisers on the 2012 financial statements with a view to submitting the tax returns by end of August 2013. The Bank’s auditors have put together TecAxxes draft financial statement from which you have made extracts as below: TecAxxes Bank Ltd Income Statement for the year ended December 2012 and 2011
Notes
2012 GH $\phi$
2011 GH $\phi$
Interest Income
1
1,522,000
1,834,000
Interest expense
(866,000)
(1,204,000)
Net Interest Income
656,000
630,000
Fee and Commission Income
342,000
282,000
Other Operating Income
2
69,520
59,630
Operating Income
1,067,520
971,630
Operating expenses
3
(514,200)
(482,420)
Charge for bad and doubtful debts
4
(29,000)
(41,000)
Operating Profit
524,320
448,210
Other Income
5
54,800
42,300
Profit before tax
579,120
490,510
Tax Paid
6
(202,420)
(280,520)
Transfer to Income Surplus
376,700
209,990
Notes
Interest Income includes income earned from: Loans granted fishermen Loans granted to pineapple growers
Other Operating Income Dividend income (Net) Govt. Bond Int. income (net) Bad Debts recovered
Operating Expenses includes Depreciation
Charge for Bad and doubtful debts Specific credit risk provision General Provision for credit risk
Other Income Disposal of used tires and depreciated Vehicles Profit on sale of shares
Tax paid is made up as follows: Deferred tax liability Corporate tax paid for year Total
GH $\phi$
GH $\phi$
Loans granted fishermen
28,000
24,050
Loans granted to pineapple growers
32,000
15,000
Dividend income (Net)
20,120
17,000
Govt. Bond Int. income (net)
17,000
28,500
Bad Debts recovered
32,400
14,130
69,520
59,630
Depreciation
80,200
65,600
Specific credit risk provision
9,010
20,600
General Provision for credit risk
19,990
20,400
29,000
41,000
Disposal of used tires and depreciated Vehicles
39,000
17,100
Profit on sale of shares
15,800
25,200
54,800
42,300
Deferred tax liability
102,200
121,000
Corporate tax paid for year
100,220
159,520
202,420
280,520
Agreed capital allowance for the year is GH $62,500 (2010: GH $75,000).
Required Please, as the newly appointed Tax Accountant for TecAxxes Bank Ltd, advice the Managing Director on the tax liabilities arising from this position statement presented to you for the two years.
Banks are important financial intermediaries because they:
A. Create new debt
B. Are the only source of debt finance
C. Are the only source of long-term finance
D. Operate between investors and borrowers
E. Take deposits from all their customers
Where an endorser signs the Bill and expressly states to whom or to whose order the Bill is now payable, the endorsement is referred to as …………………………………….
Which of the following circumstances will NOT terminate the banker’s authority to honor a customer’s cheque?
A. Notice of lunacy of the customer
B. Notice of presentation of a bankruptcy petition against the customer
C. Notice of an accident in which the customer is involved
D. Assignment of the balance in his account by the customer
E. Where the customer’s credit balance in the bank is insufficient to cover the cheque
The type of crossing by which a cheque can only be deposited and collected through the bank account of the person whose name is written on it is a ____________.
As part of the post qualification requirements of The Chartered Institute of Taxation, you have been invited to do a presentation on the topic “Venture Capital Fund” to a select group of business men, tax professionals, financial institutions and students.
Invitation
Members of the Ghana Institute of Taxation and the Institute of Bankers wish to use this opportunity to strengthen the cordial relationship subsisting between them and have therefore invited you to do a presentation on the tax effects of Venture Capital Operators as compared with that of the traditional financial institutions.
Required:
Please prepare a presentation as required under Invitation above clearly distinguishing between Tax concessions granted to a Venture Capital as compared with the Bank.
Due to the aggressive stance of the GRA in recent times, the urgency and pace of submission of tax returns to the GRA has more than doubled. The Chief Finance Officer of SKABY BANK Ltd. requires to discuss Skaby’s Tax returns for year 2014 and 2015 by close of day today to enable him engage the Finance committee of the Board with the various tax liabilities arising from the two years’ banking activities and also access the Bank’s tax compliance level.
As Tax Consultant to SKABY BANK Ltd., extracts of the 2014 and 2015 financial statement which read as follows, has been deposited on your table for your necessary action.
SKABY COMMERCIAL BANK
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2015
Note
2015 GHC’000
2014 GHC’000
505,055.00
377,000.00
2
(82,200.00)
(51,300.00)
422,855.00
325,700.00
398,444.00
75,555.00
(10,424.00)
(8,200.00)
88,020.00
67,355.00
24,800.00
15,980.00
45,620.00
8,300.00
30,420.00
24,280.00
541,295.00
417,335.00
9,000.00
7,992.00
550,295.00
409,343.00
225,000.00
215,560.00
325,295.00
193,783.00
82,000.00
32,000.00
243,295.00
161,783.00
2015 GHC’000
2014 GHC’000
242,000.00
180,600.00
256,920.00
190,600.00
6,135.00
5,800.00
505,055.00
377,000.00
b) Necessary default certificates of GHC20,000.00 have been received on income included in investment return for year 2015.
Note 2: a) Interest Expense paid
2015 GHC’000
2014 GHC’000
Borrowings
9,900.00
8,900.00
Current and Savings A/c
45,650.00
20,500.00
Time and Other deposits
26,650.00
21,900.00
82,200.00
51,300.00
b) $20%$ of interest expense payments’ mandatory withholding tax deduction has not been made.
Note 3: Fees and Commission Income
2015 GHC’000
2014 GHC’000
Commission on letters of credit
3,200.00
2,650.00
Commission on Turnover
39,050.00
34,000.00
Processing fees
5,000.00
4,500.00
Commission of foreign services
2,200.00
3,060.00
Other fees and Commissions
48,994.00
31,345.00
98,444.00
75,555.00
Note 4: Other Income
2015 GHC’000
2014 GHC’000
Dividend Income
2,000.00
Bad Debt recovery
3,000.00
Profit on sale of property
2,200.00
Rental Income
2,470.00
2,200.00
Other Income
3,100.00
8,300.00
8,300.00
Note 5 a). Operating Expenses Include
2015 GHC’000
2014 GHC’000
Advertising
2,000.00
2,000.00
Rental of premises
45,000.00
40,450.00
Directors fees
2,100.00
3,000.00
Depreciation
16,000.00
15,000.00
Amortization
6,000.00
2,500.00
Donation to MD on death of mother
62,500.00
Purchase of computers
50,000.00
2,000.00
Goodwill paid
20,000.00
25,000.00
b). Tax on rental of premises has not been accrued or paid to the GRA.
Note 6: Income Tax
2015 GHC’000
2014 GHC’000
Balance b/f
200.00
Paid for year
65,000.00
20,000.00
Deferred Tax
17,000.00
10,000.00
Total
82,000.00
30,200.00
Note 7: Extracts from the Property, Plant and Equipment schedule is as below
2015
Land & Building GHC’000
Equipment Further GHC’000
Computers GHC’000
Motor Vehicles GHC’000
Total GHC’000
Cost as at 1 January 2015
50,000.00
53,000.00
32,000.00
57,000.00
192,000.00
Additions for year
2,500.00
12,200.00
7,500.00
2,550.00
24,750.00
Disposals
–
(250.00)
(350.00)
(2,300.00)
(2,900.00)
Write-off
–
(200.00)
(45.00)
–
(245.00)
At 31 December 2015
52,500.00
64,750.00
39,105.00
57,250.00
213,605.00
Note 8 Extracts from the Intangible Assets (GOODWILL) Register is as below
2015 GHC’000
2014 GHC’000
Cost as at 1 January 2015
7,500.00
Acquisition
10,500.00
7,500.00
Bal at year end 2015
18,000.00
7,500.00
Management policy for writing off goodwill is 10 years.
Required
Kindly present to the Chief Finance Office tax information on;
a) Corporate tax computation for year 2015 and 2014,
(10 marks)
b) Capital Allowance computation for year 2015 and 2014,
(8 marks)
c) Skabi’s Tax Position for year 2015 and 2014,
(2 marks)
d) Withholding taxes payable by Skabi to the GRA.
(2 marks)
You have been recently employed as the Tax Accountant for TecAxxes Bank Ltd. You have agreed with management to consult the Bank’s Tax Advisers on the 2012 financial statements with a view to submitting the tax returns by end of August 2013. The Bank’s auditors have put together TecAxxes draft financial statement from which you have made extracts as below: TecAxxes Bank Ltd Income Statement for the year ended December 2012 and 2011
Notes
2012 GH $\phi$
2011 GH $\phi$
Interest Income
1
1,522,000
1,834,000
Interest expense
(866,000)
(1,204,000)
Net Interest Income
656,000
630,000
Fee and Commission Income
342,000
282,000
Other Operating Income
2
69,520
59,630
Operating Income
1,067,520
971,630
Operating expenses
3
(514,200)
(482,420)
Charge for bad and doubtful debts
4
(29,000)
(41,000)
Operating Profit
524,320
448,210
Other Income
5
54,800
42,300
Profit before tax
579,120
490,510
Tax Paid
6
(202,420)
(280,520)
Transfer to Income Surplus
376,700
209,990
Notes
Interest Income includes income earned from: Loans granted fishermen Loans granted to pineapple growers
Other Operating Income Dividend income (Net) Govt. Bond Int. income (net) Bad Debts recovered
Operating Expenses includes Depreciation
Charge for Bad and doubtful debts Specific credit risk provision General Provision for credit risk
Other Income Disposal of used tires and depreciated Vehicles Profit on sale of shares
Tax paid is made up as follows: Deferred tax liability Corporate tax paid for year Total
GH $\phi$
GH $\phi$
Loans granted fishermen
28,000
24,050
Loans granted to pineapple growers
32,000
15,000
Dividend income (Net)
20,120
17,000
Govt. Bond Int. income (net)
17,000
28,500
Bad Debts recovered
32,400
14,130
69,520
59,630
Depreciation
80,200
65,600
Specific credit risk provision
9,010
20,600
General Provision for credit risk
19,990
20,400
29,000
41,000
Disposal of used tires and depreciated Vehicles
39,000
17,100
Profit on sale of shares
15,800
25,200
54,800
42,300
Deferred tax liability
102,200
121,000
Corporate tax paid for year
100,220
159,520
202,420
280,520
Agreed capital allowance for the year is GH $62,500 (2010: GH $75,000).
Required Please, as the newly appointed Tax Accountant for TecAxxes Bank Ltd, advice the Managing Director on the tax liabilities arising from this position statement presented to you for the two years.
Banks are important financial intermediaries because they:
A. Create new debt
B. Are the only source of debt finance
C. Are the only source of long-term finance
D. Operate between investors and borrowers
E. Take deposits from all their customers
Where an endorser signs the Bill and expressly states to whom or to whose order the Bill is now payable, the endorsement is referred to as …………………………………….
Which of the following circumstances will NOT terminate the banker’s authority to honor a customer’s cheque?
A. Notice of lunacy of the customer
B. Notice of presentation of a bankruptcy petition against the customer
C. Notice of an accident in which the customer is involved
D. Assignment of the balance in his account by the customer
E. Where the customer’s credit balance in the bank is insufficient to cover the cheque
The type of crossing by which a cheque can only be deposited and collected through the bank account of the person whose name is written on it is a ____________.
