- 20 Marks
PT – May 2021 – L2 – Q3 – Income Tax Liabilities
Discuss partnership taxation principles, compute the partnership taxable income, and explain the taxation rules for casual and temporary workers.
Question
Amna and Bean are brothers and equal partners in their partnership business, A&B General Wholesale Merchants Limited. The partnership is in its second year of trading and operates from an office premises owned by Amna. The cost of the premises as at 1 January, 2019 was GH¢200,000. Bean provided all the office furniture and equipment used by the partnership, valued at GH¢80,000 as at 1 January, 2019.
Amna and Bean use their own personally acquired motor vehicles for the partnership business and charge the partnership for the business mileage incurred for fuel and maintenance. The cost of the two motor vehicles as at 1 January, 2019 was GH¢120,000. The partnership has employed three staff in addition to the partners.
The partnership’s income statement for the year ended 31 December 2020 is detailed below:
3. Other expenses comprise penalties for late filing of tax returns and payment of taxes.
Amna and Bean are both married. Amna has two children, both in accredited senior high schools in Ghana. Bean has one child who is currently attending university in the United Kingdom. Amna takes full care of her aged mother. Bean, who is currently undertaking a training course in Wholesaling Risks, is certified as handicapped in one of his legs through an accident. Bean paid GH¢3,300 for the training course.
Required:
- Explain the principles governing partnership taxation.
- Calculate the joint partnership taxable income for the year ended 31 December, 2020. You are required to include capital allowance where necessary.
- Calculate the taxable income of Amna and Bean for the year ended 31 December, 2020.
- What are the taxation rules on payment to casual and temporary staff?
Find Related Questions by Tags, levels, etc.