- 20 Marks
ATP – Aug 2020 – L2 – Q3 – Income Tax Computation
Compute Dr Kodwo Kusi-Appiah’s tax liability for 2017, including salary and consultancy income.
Question
Dr Kodwo Kusi-Appiah, a physically challenged, is a lecturer at University of Ghana, School of Veterinary Medicine. He dedicates most of his free time providing consultancy services in animal health biosecurity to his clients and Animal Husbandry services in his piggery. He is also a member of team of consultants who provides consultancy services to the Ministry of Food and Agriculture, Animal Production Directorate. In terms of his service contract with Animal Production Directorate, he is required to participate in all anthrax out breaks for cattle and swine fever for pigs. His service contract is for a year, subject to renewal as and when donor funds are available. All the consultancy team members of which Dr Kusi Appiah was one, were paid a predetermined monthly salary GH¢ 4,000 each and an all – inclusive field attendance allowance of GH¢ 1,000.00 each, per day at any disease outbreak site in any part of the country. During the year under review, there was no outbreak of any of the diseases that warranted their field visit.
Dr Kusi-Appiah’s private consultancy practice to Cattle, Pigs and Poultry farmers is strictly by appointment and his clientele base has been growing steadily due to his dedication to work and experience. He earned a total of GH¢12,000 during the year ended 31st December, 2017.
Dr Kusi-Appiah’s earnings and deductions from his employment at the University of Ghana for the year ended 31 December 2017 were:
| Item | GH¢ |
|---|---|
| Basic Salary | 60,000.00 |
| Transport allowance | 3,000.00 |
| M Phil Supervision | 2,500.00 |
10% of Basic Salary in lieu of leave
Other benefits from his Employment with the University include:
a) 5.5% of Basic Salary contributions to SSNIT and the 1st Tier Pension Fund. He also contributes 10% of his salary to Staff Savings Scheme to which his employer does not contribute.
b) Soft Furnished Accommodation at the University of Ghana.
c) He was granted two months’ salary advance on 1st February, 2017 to meet the medical treatment of his wife Mrs Rhoda Kusi-Appiah in London. The loan is repayable within one year at an interest rate 10%.
The following additional information are available on the other earnings of Dr Kusi Appiah. He started a piggery project, trading as Kusi-Appiah Farms on 1st January, 2012. The net income from the operations of the piggery for the year ended 31st December, 2017 was GH¢10,500.00
He earned GH¢24,000.00 in respect of his private consultancy services during the year ended 31st December, 2017. With the exception of a total tax of GH¢13,500.00 paid at source from his earnings as a lecturer and GH¢3,600.00 withheld by the Ministry of Agriculture, no other taxes were paid.
You are required to compute the tax liability of Mr Kodwo Kusi –Appiah for the 2017 Year of Assessment.
Find Related Questions by Tags, levels, etc.
- Tags: Consultancy Income, Disability Allowance, Employment Income, Tax
- Level: Level 2
- Topic: Income Tax Computation
- Series: AUGUST 2020
