Question Tag: chargeable income

Search 500 + past questions and counting.

  • Filter by Professional Bodies

  • Filter by Subject

  • Filter by Series

  • Filter by Topics

  • Filter by Levels

  • 30 Marks

CBLP – APRIL 2024 – L4 – Q5 – Assessable vs Chargeable Income, Letter of Comfort, and Forum Non-Conveniens

Differentiate between assessable and chargeable income, explain a Letter of Comfort in third-party security, and discuss the doctrine of Forum Non-Conveniens in international banking transactions.

a). Differentiate between Assessable Income and Chargeable Income. (5 Marks)

b). Within the context of third-party security, what is a Letter of Comfort? (5 Marks)

c. What is the doctrine of ‘Forum Non-Conveniens’ and what is its utility in conflicts that may arise in International Banking transactions? (10 Marks)

[Total = 20 Marks]

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "CBLP – APRIL 2024 – L4 – Q5 – Assessable vs Chargeable Income, Letter of Comfort, and Forum Non-Conveniens"

  • 20 Marks

ATP – Feb 2017 – L3 – Q5 – Corporate Tax Computation

Compute chargeable income and tax liability for Ashie Mart Limited for 2015.

The Income Statement of Ashie Mart Limited, a supermarket in Accra for the year ended 31st December submitted to Commissioner of Domestic Tax Revenue Division of Ghana Revenue Authority on 30th April 2016.

GH¢ GH¢
Gross Operation Profit
Profit on Sale of Assets
Less General Administration Expenses
Salaries and Wages 540,000
Rent 30,000
Insurance 34,000
Acquisition 16,000
Painting of Premise 36,000
Loans to Staff written off 18,000
Advertisement (Note 1) 24,000
Staff Welfare (Note 2) 52,000
Travelling and Transport 40,000
Donations and Subscription (Note 3) 32,000
Bad Debts (Note 4) 19,000
Depreciation 42,000
(885,300)
Net Profit

The following notes relate to the Accounts:

Note 1 Advertisement GH¢
a. Cost of Neon Sign 10,200
b. Media Advert 14,300
24,500

Note 2 Staff Welfare GH¢
a. Refund of Staff Medical Bills 25,000
b. Safety Wear Acquired for staff 8,600
c. Canteen Equipment 16,900
50,500

Note 3 Donations and Subscriptions GH¢
a. Donation to the Ghana Heart Foundation 20,000
b. Goods given gratis to Customs Officials 6,000
c. Subscription to Ghana Manufactures Association 6,000
32,000

Note 4 Bad Debts GH¢
a. General Provision 12,000
b. Specific Provision 7,500
19,500

Note 5: The Capital Allowance as agreed with the Ghana Revenue Authority for the year is GH¢ 6,500.
Note 6: The company had during the year paid a total of GH¢ 2,600.

Required:
Compute the Chargeable income and Tax liability of Ashie Mart Limited for the 2014 Year of Assessment. (20 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "ATP – Feb 2017 – L3 – Q5 – Corporate Tax Computation"

  • 20 Marks

ATP – Aug 2017 – L2 – Q1 – Indirect Taxes

Compute input tax claimable and VAT payable for The Mall Limited for August 2016.

a) The Mall Limited is a company registered under the Companies Act 1963, Act 179 and has been dealing in both taxable and non-taxable supplies. The company has been registered to operate as a VAT registered company. The company’s operations for August 2016 were as follows.

Description GH¢
Total value of taxable supplies 1,451,125
Input Tax on Taxable Supplies 102,000
Input Tax which cannot be attributable directly to Supplies 45,000
Value of Exempt Supplies 300,000
Value of Relief Supplies 65,400

Required: Compute the input tax claimable by The Mall Limited for August 2016 and VAT payable, if any, for the same period.

b). NIMBOLA Limited is a company gazetted by the Commissioner-General of the Ghana Revenue Authority to be under self-assessment tax payment. During the 2016 year of assessment, the estimated Chargeable Income declared by the company was GH¢50,000. However, the actual Chargeable Income declared for the year per the Returns submitted to the Commissioner-General was GH¢80,000.

Required: Calculate (if any) the penalty for underestimation. Assume a statutory Bank of Ghana Discount rate of 25% for the year 2016. 14 marks.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "ATP – Aug 2017 – L2 – Q1 – Indirect Taxes"

  • 20 Marks

ATP – Aug 2015 – L2 – Q4 – Income Tax Computation

Compute chargeable income for partners of Zee & Associates for 2012-2014, including capital allowances.

Ace, Brace and Crate have been in partnership since 2006 trading as Zee & Associates dealing in cement and preparing accounts to December 31 each year. Their Partnership Agreement showed that they share profits in the ratio 5:4:3 respectively.

The written-down values of the assets used in their operations as at 31st December, 2011 were as follows:

GH¢
Office Equipment 148,000.00
Pick–up vehicles 95,000.00
Saloon vehicles 80,000.00

Brace resigned from Zee & Associates on 2nd January 2013 and on his exit, Ace and Crate continued the business agreeing to share profits in the ratio 2:1 respectively.

The partnership Firm acquired the following additional assets:

a) A building for office annex costing GH¢430,000.00 on 4th October, 2013.

b) One Toyota Camry for GH¢85,000.00 on 26th March 2012

c) One Toyota Land Cruiser Prado at a cost of GH¢188,000.00 on 3rd July, 2013

Some of the office equipment were sold on 15th June, 2013 for GH¢35,000.00.

The Firm’s adjusted profits for tax purposes but before grant of capital allowance were as follows:

Year to 31/12/2012 GH¢315,000.00
Year to 31/12/2013 GH¢298,000.00
Year to 31/12/2014 GH¢328,000.00

You are required to compute the chargeable income, if any, of each partner for the relevant years of assessment on the assumption that no other incomes accrued to any of the partners.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "ATP – Aug 2015 – L2 – Q4 – Income Tax Computation"

  • 20 Marks

POT – Mar 2025 – L2 – Q4- Partnership Taxation

Compute Nmani Pharmacy’s chargeable income for 2023.

a) Three pharmacy students, Abanga, Banzey and Chambas who completed the Tamale Technical University have teamed up to undertake a business venture in the pharmaceutical sector under a Trading Name Nmani Pharmacy. They agreed to share profit and losses in the ratio 3:2:1 for Abanga, Banzey and Chambas respectively. The details provided below relate to the business financial performance for the year 2023.

 

Details GH¢
Sales 663,400
Cost of goods sold:
Opening inventory 150,000
Purchases 300,000
450,000
Closing inventory (120,000)
330,000
Gross profit 333,400
Less expenses:
Staff cost 102,000
Business promotions 58,100
Depreciation 98,200
Electricity and water 53,000
Expired drugs 12,100
Donation 78,000
Rent and rates 15,000
Sundry expenses 50,000
Vehicle running cost 63,000
(529,400)
Net profit 134,000
Tax paid (15,200)
Net profit after tax 118,800

Additional Information:

  1. Staff cost includes monthly stipend allocations to the aged parents of the partners totaling GH¢18,000.
  2. All three Partners are taking care of their aged parents who are more than 60 years.
  3. Business promotions include lunch expenses of the partners amounting to GH¢21,200.
  4. Donations include funeral donation made during the funeral of the mother of the Vice Chancellor of the Tamale Technical University amounting to GH¢20,000.
  5. Sundry expenses include fine amounting to GH¢32,000 imposed by the Food and Drugs Authority for failure to remove some expired drugs from shelves.
  6. The Partners received Withholding Tax Certificates indicating an amount of GH¢15,200 from the Binabaani European Hospital for medical consumables supplied to the hospital.
  7. Capital allowance has been agreed with the Ghana Revenue Authority at GH¢104,200.

Required: i) Compute the chargeable income for Nmani Pharmacy for the 2023 Year of Assessment.

(ii) Compute the net tax payable by each partner for the year 2023.

(b) In line with the provisions of the Income Tax Act, 2015 (Act 896), partnership and limited liability companies in Ghana are taxed in accordance with their residency status in a year of assessment.

Required: State the criteria for the determination of the residency status of partnership and limited liability companies.

(c) All over the world, countries have introduced policies to guarantee income for their hard-working workforce who may go on retirement to enable them to live meaningful lives after retirement. Ghana’s pension system aims to provide personal financial security for employees in their retirement years.

Required: Describe the current pension system in Ghana.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "POT – Mar 2025 – L2 – Q4- Partnership Taxation"

  • 20 Marks

POT – Mar 2025 – L2 – Q3 – Taxation of Individuals

Determine Selassi Afolabi’s chargeable income for 2023.

a) Selassi Afolabi was employed as the Personnel Manager of Tano North District Assembly on 1 March 2021 on salary scale of GH¢72,000, which is expected to increase by GH¢4,000 annually to a maximum of GH¢84,000. As part of his conditions of employment, he is entitled to the following: i) He has a fully furnished accommodation. ii) He has a vehicle, fuel and driver for official use only. iii) Risk allowance of GH¢2,000 a month. iv) Inconvenience allowance of GH¢1,500 a month. v) Professional allowance of GH¢2,500 a month. vi) He was paid a bonus of GH¢16,000. vii) He had the services of a gardener who receives monthly salary of GH¢800, paid by the employer. viii) He is divorced with three children who are schooling in government approved schools in Ghana. ix) He contributes 5.5% of his salary to the Social Security Scheme. x) He contributes 8% of his salary to an approved Provident Fund and his employers also contributes 10% on his behalf to the Provident Fund. xi) He received a net dividend of GH¢12,800 in 2023 from shares owned in a resident company. xii) He received a director’s fee of GH¢16,000 net of 20% WHT in 2023 from being a Board member in a private company.

Required: Determine his chargeable income for the 2023 year of assessment.

b) Adwoa Ntowbea is an investor in several companies in Ghana and abroad. Below are details of ordinary share dealing of Adwoa Ntowbea in Amaraaba LTD, a limited liability company in Ghana which is not listed on the Ghana Stock Exchange.

 

Date Details
1 Jan 2023 Bought 500 shares at GH¢11 each
18 Sept 2023 Bought 1500 shares at GH¢12 each
30 Dec 2023 Bought 800 shares at GH¢10 each
19 Nov 2024 Sold 500 shares for GH¢12 each

Required: i) Determine the gains on the shares sold

ii) Determine the tax, if any, on the shares sold.

iii) Explain the withholding tax regime on realization of capital assets.

iv) What are the tax return requirements on realization of capital gains?

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "POT – Mar 2025 – L2 – Q3 – Taxation of Individuals"

  • 20 Marks

AT – Mar 2025 – L3 – Q2 – Taxation of Specialized Businesses

Compute tax payable for Kanto Mining Company for 2023, including adjustments for financial costs, royalties, and other income.

a) The following relates to the Kanto Mining Company (KMC) for the 2023 year of assessment.

GHe’ million
Operating Margin 1,700
Tax paid against 2023 year of assessment 100
Royalty paid 1.64

The following forms part of the tax returns of the company: i) The gross production was 2 million ounces of gold. ii) Revenue from the sale of the gold was GH¢6.8 billion. iii) Financial cost incurred from derivative which was included in the determination of the margin above was GH¢12 million. iv) The company made income from tailings amounting to GH¢14 million. The tailings value was not used in the determination of the margin above. v) The company received a machinery worth GH¢250 million in return for gold sold to affiliate, the market value of the machinery was GH¢270 million. This was not used in the computation of the margin above. vi) Research and development expenditure of GH¢0.7 million was used in arriving at the margin above. vii) Revenue received from the sale of fertilizer was GH¢45 million. This was a one-off transaction with an associated cost of GH¢23 million. These details have been included by the accountant in arriving at the margin above as part of gross revenue and production cost respectively. viii) Loan of GH¢120 million was received with interest of GH¢30 million each year to be liquidated in the next 4 years from an uncontrolled company. Part of the gold was used to pay for the interest repayment through a hedged programme. The quantity of gold was valued at GH¢38 million at the time of exchange and has not been accounted for in the books of account. ix) Shaft sinking and overburdening stripping cost incurred in the development of another field was GH¢67 million and added to production cost. x) Contribution towards community development programme of GH¢46.5 million was added to cost of production. The company provided proof with pictures of the donation with paper headlines on the ceremony. xi) Dividend received from three sources: a mining company at Obuasi, a petroleum upstream company in Takoradi and ceramics company at Datok (Upper East) all in Ghana amounting to GH¢20,000, GH¢30,000 and GH¢40,000 respectively. The total amount has been captured as part of revenue in note (ii) above. xii) Written Down Value carried forward of mining assets was GH¢140 million agreed with the Ghana Revenue Authority. They have granted capital allowance three times.

Required: Compute the tax payable.

b) Maanikuur Company LTD, a self-assessed taxpayer of the Ghana Revenue Authority (GRA), estimated its chargeable income for the assessment year, 2023 to be GH¢30 million.

The company commissioned a new Plant in April 2023 and realised that its production capacity has improved hence revised its estimated chargeable income to GH¢50 million in May 2023 and notified the GRA accordingly. Withholding taxes of GH¢150,000 was paid in May 2023.

In November 2023, the Directors were advised by the company’s External Auditors to adjust their chargeable income to avoid an imposition of a penalty by GRA. This was adhered to and subsequently the estimate was further revised to GH¢75 million and notified GRA. Withholding taxes of GH¢260,000 was paid in November 2023.

The company submitted its 2023 annual tax returns on the due date of 30 April 2024 and posted actual chargeable income of GH¢93.750 million.

The company tax rate is 25% and the Bank of Ghana statutory rate is 20%.

Required: i) Compute the instalment payments for the four quarters in the 2023 year of assessment. (6 marks) ii) Compute penalty payable by Maanikuur Company LTD, if any for 2023. (2 marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "AT – Mar 2025 – L3 – Q2 – Taxation of Specialized Businesses"

  • 15 Marks

AT – Nov 2024 – L3 – Q1a – Computation of Partnership Chargeable Income

Compute the partnership's chargeable income for the 2023 year of assessment.

Takyi and Kuro commenced a retail business in Goaso, Ghana on 1 January 2020, under the partnership name Ntaafo LTD, sharing profits and losses equally. On 1 January 2023, Tawia was admitted as a new partner. Takyi, Kuro, and Tawia then shared profits and losses in the ratio of 3:2:1 respectively. The partnership prepares its accounts to 31 December annually.

The partnership’s profit and loss account for the year ended 31 December 2023 is as follows:

Note GH¢ GH¢
Gross Trading Profit 4,365,000
Compensation (1) 50,000
Total Revenue 4,415,000
Less: Operating Expenses
Audit Fees 25,000
Rent and Rates (2) 348,000
Wages and Salaries (3) 1,410,000
Interest on Capital (4) 205,000
Contribution towards National Insurance Scheme 111,000
Trade Debts Written Off (Bad Debts) 92,000
Legal Fees (5) 43,000
Entertainment (6) 270,000
Motor Expenses (7) 87,000
Repairs and Maintenance (8) 190,000
Commission (9) 310,000
Printing and Stationery 82,000
Electricity and Telephone 51,000
Depreciation 123,000
Sundry Expenses 270,000
Total Expenses 3,617,000
Net Profit 798,000

Notes:

  1. Compensation:

    • Compensation received from suppliers for delays in supplies: GH¢70,000
    • Court fines paid to client for negligence: (GH¢20,000)

  2. Rent and Rates:

    • Rent for business premises: GH¢180,000
    • Rent for Takyi’s private residence: GH¢156,000 (Disallowed)
    • Business operating permit paid to Goaso Municipal Assembly: GH¢12,000

  3. Wages and Salaries:

    • Takyi: GH¢180,000
    • Kuro: GH¢240,000
    • Tawia: GH¢66,000
    • Mrs. Takyi (staff): GH¢120,000
    • Mrs. Tawia (staff): GH¢144,000
    • Other staff: GH¢660,000

  4. Interest on Capital:

    • Takyi: GH¢30,000
    • Kuro: GH¢40,000
    • Tawia: GH¢10,000
    • Bank interest: GH¢125,000

  5. Legal Fees:

    • Renewal of annual tenancy agreements: GH¢8,000
    • Collection of trade debts: GH¢10,000
    • Preparing contract documents (suppliers and contractors): GH¢5,000
    • Preparing contract documents to acquire a new company: GH¢20,000 (Disallowed)

  6. Entertainment:

    • The entertainment expenses relate to the partners’ private enjoyment (Disallowed).

  7. Motor Car Expenses:

    • Petrol: GH¢52,000
    • Repairs: GH¢30,000
    • Fines for late renewal of vehicle license: GH¢5,000 (Disallowed)

  8. Repairs and Maintenance:

    • Replacement of bolts and nuts on Plant and Machinery: GH¢10,000
    • Major expenditure on Landscaping and Renovation: GH¢180,000 (Capitalized)

  9. Commission:

    • Takyi (for introducing a new customer to the business): GH¢20,000 (Disallowed)
    • Salesmen and Saleswomen: GH¢230,000
    • Unidentified recipient: GH¢60,000 (Disallowed)

Other Information:

  • Capital allowance agreed with the Ghana Revenue Authority (GRA) was GH¢234,000 for the 2023 year of assessment.

Required:
Compute the partnership’s chargeable income for the 2023 year of assessment.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "AT – Nov 2024 – L3 – Q1a – Computation of Partnership Chargeable Income"

  • 10 Marks

PT – Nov 2024 – L2 – Q4a – Chargeable Income Computation

Compute the chargeable income and tax payable for Amasa Architecture and Building LTD for the 2022 and 2023 years of assessment.

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.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "PT – Nov 2024 – L2 – Q4a – Chargeable Income Computation"

  • 20 Marks

TAX – May 2015 – L2 – SB – Q4 – Taxation of Partnerships and Sole Proprietorships

Calculate the chargeable income of each partner before and after the admission of a new partner and determine the basis period.

The Managing Partner of Aarinola Sunkanmi & Co., a firm of Estate Surveyors and Valuers based in Lagos, has invited you to calculate the Chargeable income of each of the firm’s partners after the admission of Mariam in 2014.

The information relating to the Partnership are as follows:

(a) The firm makes up its accounts up to 31 December of each year.

(b) Extracts from the books of account for the year ended 31 December 2014, are listed below:

Description Amount (₦)
Net profit for the year 1,380,000
Depreciation 450,000
Capital Allowances for the year 366,300
Balancing Allowance 72,500
Balancing Charge 75,480
Profit on sale of fixed assets 77,500
Legal expenses for successfully defending one of the partners for professional misconduct 14,000

(c) Other information:

(i) The THREE partners are Aarinola, Olasunkanmi and Murphiefe.

(ii) Profit sharing ratio is as follows:

  • Aarinola: 2
  • Olasunkanmi: 1
  • Murphiefe: 1

(iii) Aarinola and Murphiefe received ₦15,000 each as interest on loan per annum.

(iv) Salaries paid to each partner are as follows:

  • Aarinola: ₦140,000 per annum
  • Olasunkanmi: ₦60,000 per annum
  • Murphiefe: ₦60,000 per annum

(v) Olasunkanmi ceased to be a partner on 30 June 2014. Mariam was admitted on 1 July 2014. Mariam’s salary was fixed at ₦60,000 per annum. She also received interest on capital of ₦10,000 per annum.

(vi) Included in travelling expenses is the sum of ₦12,000 paid towards the annual vacation of Aarinola, the Principal Partner.

(vii) On Mariam’s admission in July 2014, the profit sharing ratio was changed to:

  • Aarinola: 10
  • Murphiefe: 7
  • Mariam: 3

Required:

a. Compute the Chargeable Income of each partner: i. Prior to admission of Mariam (9 Marks)
ii. Post-admission of Mariam (9 Marks)

b. State the basis period for the existing partners. (2 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "TAX – May 2015 – L2 – SB – Q4 – Taxation of Partnerships and Sole Proprietorships"

  • 10 Marks

PT – Aug 2022 – L2 – Q1c – Income Tax Liabilities

Calculate interest for underestimation of tax for Vito Ltd for the 2019 year of assessment.

The estimated chargeable income for Vito Ltd for the 2019 year of assessment was GH¢50,000,000, but its actual chargeable income declared at the end of the year was GH¢80,000,000. The company prepares accounts to 31 December each year. The company submitted its returns on 30 April, 2020. The BOG prevailing discount rate is 25%.

Required:
Calculate the interest for underestimation of tax.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "PT – Aug 2022 – L2 – Q1c – Income Tax Liabilities"

  • 8 Marks

AT – Nov 2018 – L3 – Q5b – Business income – Corporate income tax

Computation of taxes payable by a mining support services company, including adjustments for dividends, tax losses, and investment deductions.

Manla Ltd, since its incorporation, has been providing Mining Support Services (MSS) in line with its mandate, and the following is relevant to its operations for the 2017 year of assessment:

Details GH¢
Chargeable income 240,000,000
Loss from investment deducted in arriving at the chargeable income 700,000
Dividend (gross) received from A Ltd (a mining company) where Manla Ltd has 26% voting power 20,000
Provision for bad debts written off 400,000
Tax loss from 2014 deducted 20,000
Net dividend received from a US-based company after 5% withholding tax 9,500
Items worth GH¢ 60,000 granted to a powerful shareholder were adjusted in arriving at chargeable income 60,000

(Note: Manla Ltd has a basis period from January to December.)

Required:
i) Compute the taxes payable by Manla Ltd. (6 marks)
ii) Comment on the treatment of the investment loss of GH¢700,000. (2 marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "AT – Nov 2018 – L3 – Q5b – Business income – Corporate income tax"

  • 20 Marks

AT – April 2022 – L3 – Q5 – Business income – Corporate income tax | Tax planning

A trainee accountant is tasked with correcting errors in the tax computation of Prime Shea Ltd. The tasks include determining allowable financial costs, preparing a revised tax computation, calculating the tax payable, and recommending a process for appeal against a tax audit assessment.

a) You are a Trainee Accountant, and your manager has asked you to correct a company tax
computation which has been prepared by the Managing Director of Prime Shea Ltd, a
manufacturing company located in Batanyili, a suburb of Tamale in the Northern Region.
The company commenced business on 1 January 2014. The company tax computation is
for the year ended 31 March 2020 and contains a significant number of errors:

Required:
i) Determine the allowable financial cost for the year ended 31 December 2020. (4 marks)
ii) Prepare a revised tax computation to determine the chargeable income for the year ended
31 December 2020. (4 marks)
iii) Calculate the tax payable by Prime Shea Ltd under the Income Tax Act 2015 (Act 896) as
amended. (2 marks)

 

b) You are a final level CA student who has been helping Naagode Ltd on tax issues. Naagode Ltd has been doing business in the international space, importing and exporting products. You have been told that when you qualify, you would manage their Tax Department.

What has baffled the company lately is an audit outcome by the Ghana Revenue Authority. The audit was done in two-folds. One by the Post Clearance Audit Department of the Customs Division and the other by Tax Audit and Quality Assurance (TAQA) Department of Domestic Tax Revenue Division.

The audit findings are as follows:

Post Clearance Audit Department of the Custom Division:
Import Duties GH¢10,000,000
Value Added Tax (VAT) GH¢12,000,000
National Health Insurance Levy (NHIL) GH¢4,000,000
Ghana Education Trust Fund (GET/Fund) GH¢4,000,000

TAQA Department of Domestic Tax Revenue Division:
Corporate Tax GH¢230,000,000
VAT GH¢29,000,000
NHIL GH¢29,000,000
Withholding Tax (WHT) GH¢105,000,000

The management of Naagode Ltd has asked you to assess the chances of the Company if an objection to the assessment is raised as it considers the assessment quite excessive.

Required:
Recommend the process that the management should adopt to ensure success in its appeal.

 

 

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "AT – April 2022 – L3 – Q5 – Business income – Corporate income tax | Tax planning"

  • 14 Marks

TF – May 2018 – L3 – Q2a – Capital Allowance

Calculate the capital allowances and chargeable income of Sekyiwaa Annam Industries Ltd for the year 2017.

Sekyiwaa Annam Industries Limited manufactures personal hygiene soaps and related products at their factory in Takoradi. The company commenced business operations on 1 April 2016 and had an assessed loss of GH¢150,200 for the period ended 31 December 2016.

The company recorded a net profit of GH¢762,800 for the year ended 31 December 2017 after taking into account the following transactions in the income statement:

Gross rental income of GH¢180,000 received from the leasing of one wing of the office building. The rental income portion constitutes 10% of the office building.
Net interest received on bank deposits from Ghana Commercial Bank of GH¢10,028. Withholding tax of 8% has been deducted.
The registration of Trademarks at a total cost of GH¢75,000 in respect of the Company’s personal hygiene soaps that is to last for 10 years. The research and development expenses incurred in connection with these soaps amounted to GH¢15,000 and the company intends to expense it. The legal costs incurred to complete the registration of the Trademark was GH¢5,000.
A donation of GH¢120,000 worth of furniture was made to a local government-assisted school as part of the Company’s corporate social responsibility program, which was duly acknowledged by Ghana Education Service (GES).
Depreciation of fixed assets of GH¢57,000.
Replacement of two motor vehicle engines costing GH¢51,000.
Exceptional costs amounting to GH¢150,000 as a result of the production manager sustaining an injury while working on one of the production lines in the factory. GH¢35,000 of the costs relate to a payment made to the production manager as severance pay. GH¢110,000 was used to acquire additional computers. The remaining GH¢5,000 of the costs represent fines imposed by the Factory Inspectorate Department of the government following the incident.
Purchases of a Computer Server for accounting and human resource needs at a cost of GH¢20,000.
Additional Information:
Details of the Company’s other fixed assets, at cost, are provided below. These were all acquired/constructed during the year to 31 December 2016:

Asset Cost (GH¢)
Factory Building 800,000
Plant and Machinery 510,000
Office Building 420,000
Furniture and Office Equipment 60,000
Motor vehicles (Goods Vans) 130,000
Computers 30,000

Required:
i) Calculate the capital allowances claimable by Sekyiwaa Annam Industries Limited for the year ended 31 December 2017 using all the available information.
(8 marks)

ii) Calculate the chargeable income of Sekyiwaa Annam Industries Limited for the year ended 31 December 2017 and the tax payable.
(6 marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "TF – May 2018 – L3 – Q2a – Capital Allowance"

  • 20 Marks

AT – April 2022 – L3 – Q4 – Capital allowance | Business income – Corporate income tax

Calculate capital allowance and chargeable income for Joefel Company Ltd. Explain sources of revenue from upstream petroleum operations in Ghana.

a) Joefel Company Ltd, manufacturer of fruit juice for local consumption commenced business on 1 October 2019, with accounting year-end at 31 December each year. The company submitted its accounts for 2019 and was assessed accordingly. The company submitted its tax returns for 2020 year of assessment to the Ghana Revenue Authority on 30 April 2021. Below are the details:

Additional information:
1) Advert and publicity
Radio and television 3,300
Newspaper advert 2,400
Permanent signboard at the company’s entrance in 2020 18,000

2) Installation of plant and others
Installation of plant 21,500
Heavy duty Generator bought in 2019 to support Plant and Machinery 20,500
General maintenance before the use of the plant 18,000

3) Staff Welfare
Staff medical bills 3,700
Safety wear for staff 10,500
Canteen Equipment purchased on 30 November 2020 12,000

4) Donation and Subscription
Goods given as gratis to customs officials 13,000
Donation of goods to SOS Children Village 10,000
Subscription to Association of Ghana Industries 5,000

5) Wages and Salaries
Old staff 120,000
Fresh graduates employed by Joefel Company Ltd. (Fresh graduates
constitute 1% of total workforce) 26,000

6) Other Income
Compensation from a customer for cancellation of a sale order 8,000
Compensation for loss of trading stock of the company 10,000
Compensation for cancellation of purchase order by supplier 5,000

Note 2) above has not been included in the plant and machinery acquired.

Required:

a
i) Compute the appropriate capital allowance for 2019 and 2020 years of assessment.
(8 marks)
ii) Calculate the chargeable income of the company for the 2020 year of assessment.
(6 marks)
b) Explain of the following sources of revenue accruing to the Government of Ghana from the upstream petroleum operations in Ghana:
i) Royalty.
ii) Carried Interest.
iii) Additional Interest.
iv) Additional Oil Entitlement.
(6 marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "AT – April 2022 – L3 – Q4 – Capital allowance | Business income – Corporate income tax"

  • 20 Marks

AT – May 2021 – L3 – Q4 – Minerals and mining

Compute the capital allowance and chargeable income for Kanawu Mine Resources Ltd for 2020.

Kanawu Mine Resources Limited was incorporated on 1 January 2017 to mine gold and diamonds at Prestea in the Western region of Ghana. Various reconnaissance and prospecting activities took place from 2017 to 2019. Actual production started on 1 January 2020.

The following were the cost and revenue relative to reconnaissance and prospecting activities and costs from 2017 to 2019:

Activities 2017 (GH¢) 2018 (GH¢) 2019 (GH¢)
Analyzing historical exploration data 250,000 – –
Purchase of motor vehicles 1,000,000 – –
Exploratory drilling and sampling – 2,500,000 –
Purchase of surveying infrastructure 500,000 – –
Construction of office building – 3,700,000 –
Conducting market and finance studies – – 300,000
Renting of office space 400,000 – –
Sinking shafts and underground drifts – – 5,400,000
Purchase of land – 460,000 –
Permanent excavations – 400,000 3,000,000
Constructing roads and tunnels – 2,200,000 1,100,000
Purchase of drilling machines – 700,000 900,000
Purchase of office equipment 50,000 550,000 120,000
Legal fees for acquisition of lease – 130,000 –
Purchase of software – 230,000 –
Removal of overburden and waste rock – – 470,000
Acquisition of rights to explore 300,000 – –
Protocols to chiefs of Prestea 10,000 5,000 23,000
Topographical and geophysical studies 25,000 56,000 –
Geological and geochemical studies 35,000 300,000 –
Sale of surveying software – – (130,000)
Trenching and sampling expenses – 400,000 100,000
Sale of drilling equipment – – (50,000)
Revenue from pre-production gold – – (500,000)

The following transactions took place from 1 January 2020 to 31 December 2020:

  1. The company received compensation of GH¢3,500,000 from their insurers for destruction of some gold mined.
  2. Mining and processing cost, including wages and salaries incurred during the year, was GH¢120,345,000.
  3. Sales of gold and diamonds: GH¢378,532,900.
  4. Ground rent paid to the Administrator of Stool Lands: GH¢321,500.
  5. Further research and development studies at the cost of GH¢374,300.
  6. Royalties paid to the government: GH¢11,355,987.
  7. Acquisition of a new mineral right: GH¢5,000,000.
  8. Bonus payment for the new mineral right: GH¢300,000.
  9. Legal and other professional fees for the acquisition of the new mineral right: GH¢121,800.
  10. Stope preparation and development cost: GH¢1,021,700.
  11. Business operating permits: GH¢5,563,200 (includes GH¢400,000 provision for 2021).
  12. General and administrative expenses: GH¢190,467,100 (includes GH¢421,600 for a new iron gate).
  13. Selling and distribution costs: GH¢172,554,700.
  14. Finance charge, including interest on loans and bank charges: GH¢211,500,000.

Required:
a) Compute the capital allowance claimable in 2020.
b) Compute the chargeable income and tax payable for the 2020 year of assessment.
c) Comment on the tax treatment of royalty payments and the acquisition of new mineral rights.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "AT – May 2021 – L3 – Q4 – Minerals and mining"

  • 20 Marks

AT – Aug 2022 – L3 – Q4 – Capital Allowance

Calculation of capital allowances, provisional tax, chargeable income, company tax, and additional tax liability for Zimbo Ltd for the year ended 31 December 2021.

Zimbo Ltd (Zimbo) specialises in the manufacture of personal hygiene soaps and related
products at their factory in the industrial area of Accra. Zimbo commenced business operations
on 1 April 2020 and had an assessed loss of GH¢112,000 for the period ended 31 December
2020 attributable to large start-up costs in the first period of trading.
Turnover for the year ended 31 December 2021 amounted to GH¢1,980,000 of which
GH¢700,000 relates to export sales. Zimbo is trying to increase its turnover from export sales
through participation in foreign market trade fairs as well as other marketing campaigns. The
gross profit margin for the year ended 31 December 2021 was 60%.
Zimbo recorded a net profit of GH¢315,000 for the year ended 31 December 2021 after taking
into account the following transactions:

Additional information:
i) The gross rental income earned was from leasing one wing of the head office building. The
wing constitutes 10% of the entire building.
ii) The registration of three trademarks, ‘Cleanex’, ‘Perfect’ and ‘Alfresh’ at a total cost of
GH¢30,000 in respect of Zimbo’s personal hygiene soaps that is to last for fifteen years. The
market research expenses incurred in connection with the development of these soaps
amounted to GH¢65,000.
iii) The donation was made to a local government assisted school as part of Zimbo’s corporate
social responsibility programme.
iv) GH¢25,000 of the marketing cost was incurred when the export market Development Manager
attended two trade conventions and one trade mission as part of Zimbo’s efforts to increase its
export sales. The trade mission was duly approved. The remaining GH¢63,000 of costs were
incurred in marketing Zimbo’s soaps to foreign markets.
v) GH¢28,000 of the general costs was incurred in underpinning the office building to strengthen
its foundations against sinking.
vi) The compensation cost was as a result of the production manager incurring an injury while
working on one of the production lines in the factory. The Production Manager was rendered
incapacitated as a result of the incident. Zimbo settled out of court. GH¢250 000 of the costs
relate to a payment made to the Production Manager in full settlement of the case. GH¢50,000
of the GH¢250,000 out-of-court settlement was paid in order to prevent the Production
Manager from setting up a similar business in competition with Zimbo. The remaining
GH¢40,000 of costs represent fines imposed by the Factory Inspectorate Division following
the incident. The production line was also condemned as a result.
vii)The interest paid was incurred in respect of Zimbo’s GH¢200,000 overdraft facility.
GH¢100,000 of the facility was applied towards recurrent expenditure while the other
GH¢100,000 of the facility was applied towards the cost of a new showroom.
viii) Ghana Revenue Authority considers 40% of other expenses to be prohibited for tax purposes.
ix) Zimbo’s projected taxable income for the year ended 31 December 2021 was GH¢360,000.
The Accountant remitted the provisional tax for the three quarterly payment dates (QPDs) on
time but, due to the pressures of year-end work, forgot to submit the return for the final QPD.
The Accountant also omitted the brought forward assessed loss from his computations of the
provisional tax.
x) During the year, a showroom was constructed in close proximity to Zimbo’s factory building.
The showroom is used to display the soaps from the factory as well as for storage purposes
pending shipment to various destinations. The showroom was constructed at a total cost of
GH¢100,000 and was wholly funded by Zimbo’s overdraft facility. The showroom was
brought into use on 1 August 2021. Zimbo has made all tax appropriate elections in connection
with the showroom.
xi) Details of Zimbo’s other fixed assets are provided below. These were all acquired/constructed
during the year to 31 December 2020:

 

Required:
a) Calculate the capital allowances claimable by Zimbo for the year ended 31 December 2021,
assuming all favourable elections are made. (6 marks)
b) Calculate the provisional tax which should have been paid by Zimbo for the year ended 31
December 2021, clearly indicating the due dates and the respective tax amounts. (3 marks)
c) Calculate the chargeable income and company tax payable by Zimbo for the year ended 31
December 2021. (10 marks)
Note: Your calculations should assume that the provisional tax paid was as calculated in
part b) of the question.
d) Compute any other tax liability apart from the company tax. (1 mark)
(Total: 20 marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "AT – Aug 2022 – L3 – Q4 – Capital Allowance"

  • 12 Marks

AT – Aug 2022 – L3 – Q1b – Business income – Corporate income tax | Tax planning

Discuss tax implications of holding voting power and tax payments made abroad by resident companies.

The following relates to information of two companies, both resident in Ghana, for 2021 year of assessment with the basis period January to December each year:

Company A (GH¢) Company B (GH¢)
Income 10,000,000 12,000,000
Cost of Sales (4,200,000) (4,400,000)
Gross Profit 5,800,000 7,600,000
Less: Operating Costs (4,900,000) (3,000,000)
Chargeable Income 900,000 4,600,000

Additional information:

  1. Dividend paid to each company by Company C, another resident company in Ghana, is as follows:
    • Company A: GH¢200,000
    • Company B: GH¢230,000
      Both companies hold shares in Company C:
    • Company A holds 25%
    • Company B holds 30%
  2. Contribution towards Kanzo Football Club, a local football club, amounted to GH¢80,000 (Company A) and GH¢100,000 (Company B). Both companies could not show government approval for the contribution.
  3. Two vehicle engines, each costing GH¢80,000, were purchased by both companies. Pool 2 had a written down value of GH¢200,000.
  4. Company B paid foreign employees’ tax to the UK, as the employees were from the UK.

Required:
i) What is the tax implication of holding 25% or more of the voting power of another resident company? (1.5 marks)
ii) What is the position of the tax law on tax payment made by Company B to the UK? (1.5 marks)
iii) What is the total tax payable by both companies? (8 marks)
iv) What is the total tax expenditure? (1 mark)
(12 marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "AT – Aug 2022 – L3 – Q1b – Business income – Corporate income tax | Tax planning"

  • 20 Marks

AT – Nov 2021 – L3 – Q4 – Business income – Corporate income tax | Minerals and mining

Compute the chargeable income and tax payable for Akwatia Gold Mines for 2020 and identify tax optimization opportunities.

Akwatia Gold Mines was established ten years ago. For the year ended 31 December 2020, the following income statement was prepared and submitted to the Ghana Revenue Authority as part of its financial statement.

Akwatia Gold Mines
Income Statement for the Year Ended 31/12/2020

1.

2.

3.

4.

5.

6.

7.

The capital allowance agreed for the period was GH¢24,320,500.

Required:
a) Compute the chargeable income of the company and the tax payable. (15 marks)

b) Advise Akwatia Gold Mines on how to identify opportunities within the tax laws to optimise tax payable for the year ended 31 December 2020.  (5 marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "AT – Nov 2021 – L3 – Q4 – Business income – Corporate income tax | Minerals and mining"

  • 17 Marks

AT – May 2020 – L3 – Q4a – Business income – Corporate income tax

Compute the chargeable income for Mamavi, a retail business owner, for the year ended 31 December 2018 based on the provided profit and loss account.

Mamavi is a retail business woman with a chain of shops in Ghana. She commenced business on 1 March 2011, with the business name of Unity Enterprise. She sells health foods, fruits, vegetables and juices.

The Enterprise’ profit or loss account for the year ended 31 December 2018 as prepared by the Accountant are reproduced below:

NOTES

A business loan was taken out to finance the cost of improvements to the store, in particular
the juice bars. The interest element included in the loan repayment amounted to GH¢1,750.
A mortgage loan was taken out by Mamavi to buy the family a house in Hlefi, Volta Region.
The interest element in the loan repayment for the mortgage was GH¢2,670.

This court case was as a result of a car hitting Mamavi when she was walking her dog out
at night. The car owner claimed Mamavi stepped out in front of him and therefore it was
her fault. Mamavi’s Lawyer told her to respond to the allegation because she needed five
sessions of physiotherapy to help heal her leg. Mamavi is suing the car owner for her costs.

GH¢700 of the painting cost related to the painting of Mamavi’s private house. The balance
related to painting her shop. GH¢1,200 lease charges relate to the leasing of a car for the
business
Required:
Compute Mamavi’s chargeable income for the year ended 31 December 2018

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "AT – May 2020 – L3 – Q4a – Business income – Corporate income tax"

knowsia

Elevate your professional expertise across key business domains with our comprehensive training programs

Our offerings

Community

Contact Info

  • +233203701923
    +233543919232
  • info@knowsia.com

Customer

Get In Touch

Follow us on our social media and get daily updates.

Facebook-f Twitter Linkedin-in Envelope
Oops!

This feature is only available in selected plans.

Click here to view all plans

Click on the login button below to login if you’re already subscribed to a plan or click on the upgrade button below to upgrade your current plan.

Login
Upgrade Plan

If you’re not subscribed to a plan, click on the button below to choose a plan

Subscribe to a plan

Pick a Form

Professional Tutor Application Form
Academic Tutor Application Form
Student Tutor Application Form