Question Tag: Dividend tax

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ATP – Aug 2020 – L2 – Q2 – Income Tax Computation

Compute Mr Paa Kwesi Arthur’s tax liability for 2019, including salary and dividend income.

Question

Mr Paa Kwesi Arthur returned to Ghana after staying in the Netherlands for over 20 years and took up an appointment with Amanfro Limited as Investment Analyst effective 1st January 2019. His gross monthly basic salary for 2019 year of assessment was GH¢12,000.00. He contributed 5.5% and 10% of his monthly basic salary to Social Security and National Insurance Trust (SSNIT) and Goodwill Pension Trust respectively.
Mr Paa Kwesi Arthur, is a widow and all his children are schooling in the Netherlands. He is only responsible for the up keep of his biological parents, who are above seventy years of age.

Mr Paa Kwesi Arthur has investments in Germany, from which he earned a gross dividend of 12,000 Euros in 2019, from which 720 Euros was withheld as dividend tax and the balance remitted to him in Ghana. There is a Double Taxation Agreement between Ghana and Germany.

The rate of Exchange is GH¢6.2 to 1.00 Euro.

Required:

a) Compute the tax liability of Mr Paa Kwesi Arthur for 2019 Year of assessment.

b) Explain the basis of your computation.

Answer

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Tags: Dividend tax, Double Taxation Agreement, Tax Basis
Level: Level 2

Topic: Income Tax Liabilities
Series: AUGUST 2020

ATP – Aug 2017 – L2 – Q4 – Income Tax Computation

Compute tax credit relief for Mr Brefo Nimo based on dividend income from the Netherlands.

Question

Mr Brefo Nimo returned to Ghana after staying in the Netherlands for over 20 years and took up an appointment with Amanfro Limited as the Director of Finance. His gross monthly basic salary for 2016 year of assessment was GH¢10,000.00. He contributed 5.5% to Social Security and National Insurance Trust (SSNIT). Mr Brefo Nimo has investments in the Netherlands, from which he earned a gross dividend of 2,000 Euros in 2016, from which 350 Euros was withheld as dividend tax and the balance remitted to him in Ghana. A double taxation Agreement exists between Ghana and the Netherlands.
The rate of Exchange is GH¢5.2 to 1.00 Euro.

Required:
a) Compute the Tax Credit Relief that will be granted to Mr Brefo Nimo.

b) Compute the tax liability of Mr Brefo Nimo for 2016 Year of assessment.

Answer

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Tags: Dividend tax, Effective Tax Rate, Income Tax, SSNIT Contribution, Tax Liability
Level: Level 2

Topic: Income Tax Computation
Series: AUG 2017

ATP – Aug 2017 – L2 – Q2 – Indirect Taxes and Capital Taxes

Determine direct and indirect tax liabilities, including penalties, for Tosese Limited for 2015.

Question

Tosese Limited is a company registered in Ghana under the Companies Act 1963, Act 179 and has been in operation for several years. The company has been noted by the Tax Authorities for being non tax compliant and no returns were submitted and paid for direct taxes in the 2015 year of assessment. However, after much Tax Education with the support of his Tax Practitioner, the Finance Manager presented the financial statement to the GRA.

The summarised Income Statement for the year ended 31st December 2015 showed the following.

Tosese Limited Income Statement

Description	GH¢
Turnover	5,640,000.00
Direct Costs	4,840,000.00
Gross Profit	800,000.00
Administration and General Expenses	560,000.00
Profit before Tax	240,000.00
Taxation	60,000.00
Profit after Tax	180,000.00
Net Profit Transferred to Income Surplus	180,000.00

Income Surplus Account

Description	GH¢
Balance brought forward	1,575,000.00
Add Profit for the year	180,000.00
Balance carried forward	1,755,000.00

The details of the notes are shown below. Note 1. The company is registered for VAT and has not been submitting its returns regularly. The turnover per the VAT Returns submitted to the Commissioner-General during the period under review was GH¢5,080,000.00

Note 2. Direct Costs

Description	GH¢
Imports	3,684,000.00
Freight and Insurance	368,400.00
Import Duties	736,800.00
Transport	50,800.00
Total	4,840,000.00

Note 3. Administration and General Expenses included

Description	GH¢
Consultancy Fees	25,000.00
Printing and Stationery	84,000.00
Rent (Commercial Property)	61,280.00
Equipment Rentals	15,000.00
Directors Fees	60,000.00

Note 4. The Company since incorporation has never declared and paid any dividend to its four shareholders even though the company has consistently been declaring profit. The Commissioner-General has therefore decided to invoke Section 59 (8) of the Income Tax Act, 2015 Act 896 by notice in writing to apply 40% of the balance on the Income Surplus Account to Dividend Tax.

Required: You are to determine the tax liability due from the company in respect of direct and Indirect Taxes for 2015 year of assessment, including any relevant penalties that are applicable. Ignore Corporate Tax. Total 20 Marks.

Answer

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Tags: Dividend tax, Income Surplus, Penalty, VAT, Withholding Tax
Level: Level 2

Topic: Indirect Taxes
Series: AUG 2017

ATAX – May 2019 – L3 – Q7b – Corporate Tax Compliance and Reporting

Compute the total tax liabilities for Alaba Trading Limited for the 2018 assessment year, considering its assessable profit, capital allowances, and dividend payable.

Question

For the assessment year 2018, below are the extracts from the tax computations of Alaba Trading Limited:

Item	Amount (₦)
Assessable profit	8,200,000
Capital allowances	5,400,000
Dividend payable	6,000,000

Required:
Determine the total tax liabilities of Alaba Trading Limited for the assessment year.

Answer

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Tags: Capital allowances, Corporate Tax, Dividend tax, Tax computation, Tax liabilities
Level: Level 3

Topic: Corporate Tax Compliance and Reporting

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.

Question

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)

Answer

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Tags: chargeable income, Dividend tax, Mining Support Services, Tax computation, Tax Losses
Level: Level 3

Topic: Business income - Corporate income tax
Series: NOV 2018

AT – Nov 2015 – L3 – Q4d – Business income – Corporate income tax

Discussing the tax implications of a bonus issue in the retained earnings of a company.

Question

The following is a statement of retained earnings:

Required:
What is the tax implication, if any, on the above income statement?

Answer

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Tags: Bonus issue, Dividend tax, Retained Earnings, Withholding Tax
Level: Level 3

Topic: Business income - Corporate income tax
Series: NOV 2015

AT – Nov 2017 – L3 – Q3c – Business income – Corporate income tax

Identifying tax exposure on transfer from income surplus to stated capital.

Question

In order to increase its stated capital, XYZ Ltd transferred an amount from its income surplus account. As a tax advisor, identify the types of taxes XYZ Ltd is exposed to on the above arrangement.

(4 marks)

Answer

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Tags: Corporate Tax, Dividend tax, Stamp Duty
Level: Level 3

Topic: Business income - Corporate income tax
Series: NOV 2017

AT – May 2017 – L3 – Q3a – Mergers, amalgamation, and reorganization

Discuss the tax implications of acquiring either 15% or 25% of shares in another resident company and recommend the best option for tax benefits.

Question

a) CJA Ltd is a resident company engaged in Real Estate Business. As part of efforts to diversify its operations, it plans to acquire interest in Don-bill Ltd, another resident company. At the last AGM held on 4th March 2017, some Shareholders were of the view that CJA should acquire 15% of the shares of Don-bill Ltd.

The Managing Director of CJA was of the view that the Company should rather invest and acquire 25% shares to give it enormous influence in Don-bill Ltd.

Your firm has been identified to give a professional advice on the two proposals to help in decision making.

Required:
What is the tax implication on the two proposals and which proposal will you advise CJA Ltd to adopt to leverage on the tax benefits.
(10 marks)

Answer

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Tags: Corporate Taxation, Dividend tax, Investment decisions, Resident companies, Share Acquisition, Tax Benefits
Level: Level 3

Series: MAY 2017

ATP – Aug 2020 – L2 – Q2 – Income Tax Computation

Compute Mr Paa Kwesi Arthur’s tax liability for 2019, including salary and dividend income.

Question

The rate of Exchange is GH¢6.2 to 1.00 Euro.

Required:

a) Compute the tax liability of Mr Paa Kwesi Arthur for 2019 Year of assessment.

b) Explain the basis of your computation.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Dividend tax, Double Taxation Agreement, Tax Basis
Level: Level 2

Topic: Income Tax Liabilities
Series: AUGUST 2020

ATP – Aug 2017 – L2 – Q4 – Income Tax Computation

Compute tax credit relief for Mr Brefo Nimo based on dividend income from the Netherlands.

Question

Required:
a) Compute the Tax Credit Relief that will be granted to Mr Brefo Nimo.

b) Compute the tax liability of Mr Brefo Nimo for 2016 Year of assessment.

Answer

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Tags: Dividend tax, Effective Tax Rate, Income Tax, SSNIT Contribution, Tax Liability
Level: Level 2

Topic: Income Tax Computation
Series: AUG 2017

ATP – Aug 2017 – L2 – Q2 – Indirect Taxes and Capital Taxes

Determine direct and indirect tax liabilities, including penalties, for Tosese Limited for 2015.

Question

The summarised Income Statement for the year ended 31st December 2015 showed the following.

Tosese Limited Income Statement

Description	GH¢
Turnover	5,640,000.00
Direct Costs	4,840,000.00
Gross Profit	800,000.00
Administration and General Expenses	560,000.00
Profit before Tax	240,000.00
Taxation	60,000.00
Profit after Tax	180,000.00
Net Profit Transferred to Income Surplus	180,000.00

Income Surplus Account

Description	GH¢
Balance brought forward	1,575,000.00
Add Profit for the year	180,000.00
Balance carried forward	1,755,000.00

Note 2. Direct Costs

Description	GH¢
Imports	3,684,000.00
Freight and Insurance	368,400.00
Import Duties	736,800.00
Transport	50,800.00
Total	4,840,000.00

Note 3. Administration and General Expenses included

Description	GH¢
Consultancy Fees	25,000.00
Printing and Stationery	84,000.00
Rent (Commercial Property)	61,280.00
Equipment Rentals	15,000.00
Directors Fees	60,000.00

Answer

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Tags: Dividend tax, Income Surplus, Penalty, VAT, Withholding Tax
Level: Level 2

Topic: Indirect Taxes
Series: AUG 2017

ATAX – May 2019 – L3 – Q7b – Corporate Tax Compliance and Reporting

Compute the total tax liabilities for Alaba Trading Limited for the 2018 assessment year, considering its assessable profit, capital allowances, and dividend payable.

Question

For the assessment year 2018, below are the extracts from the tax computations of Alaba Trading Limited:

Item	Amount (₦)
Assessable profit	8,200,000
Capital allowances	5,400,000
Dividend payable	6,000,000

Required:
Determine the total tax liabilities of Alaba Trading Limited for the assessment year.

Answer

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Tags: Capital allowances, Corporate Tax, Dividend tax, Tax computation, Tax liabilities
Level: Level 3

Topic: Corporate Tax Compliance and Reporting

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.

Question

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)

Answer

Find Related Questions by Tags, levels, etc.

Tags: chargeable income, Dividend tax, Mining Support Services, Tax computation, Tax Losses
Level: Level 3

Topic: Business income - Corporate income tax
Series: NOV 2018

AT – Nov 2015 – L3 – Q4d – Business income – Corporate income tax

Discussing the tax implications of a bonus issue in the retained earnings of a company.

Question

The following is a statement of retained earnings:

Required:
What is the tax implication, if any, on the above income statement?

Answer

Find Related Questions by Tags, levels, etc.

Tags: Bonus issue, Dividend tax, Retained Earnings, Withholding Tax
Level: Level 3

Topic: Business income - Corporate income tax
Series: NOV 2015

AT – Nov 2017 – L3 – Q3c – Business income – Corporate income tax

Identifying tax exposure on transfer from income surplus to stated capital.

Question

In order to increase its stated capital, XYZ Ltd transferred an amount from its income surplus account. As a tax advisor, identify the types of taxes XYZ Ltd is exposed to on the above arrangement.

(4 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate Tax, Dividend tax, Stamp Duty
Level: Level 3

Topic: Business income - Corporate income tax
Series: NOV 2017

AT – May 2017 – L3 – Q3a – Mergers, amalgamation, and reorganization

Discuss the tax implications of acquiring either 15% or 25% of shares in another resident company and recommend the best option for tax benefits.

Question

The Managing Director of CJA was of the view that the Company should rather invest and acquire 25% shares to give it enormous influence in Don-bill Ltd.

Your firm has been identified to give a professional advice on the two proposals to help in decision making.

Required:
What is the tax implication on the two proposals and which proposal will you advise CJA Ltd to adopt to leverage on the tax benefits.
(10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate Taxation, Dividend tax, Investment decisions, Resident companies, Share Acquisition, Tax Benefits
Level: Level 3

Series: MAY 2017

Question Tag: Dividend tax

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ATP – Aug 2020 – L2 – Q2 – Income Tax Computation

Compute Mr Paa Kwesi Arthur’s tax liability for 2019, including salary and dividend income.

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ATP – Aug 2017 – L2 – Q4 – Income Tax Computation

Compute tax credit relief for Mr Brefo Nimo based on dividend income from the Netherlands.

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ATP – Aug 2017 – L2 – Q2 – Indirect Taxes and Capital Taxes

Determine direct and indirect tax liabilities, including penalties, for Tosese Limited for 2015.

You're reporting an error for "ATP – Aug 2017 – L2 – Q2 – Indirect Taxes and Capital Taxes"

ATAX – May 2019 – L3 – Q7b – Corporate Tax Compliance and Reporting

Compute the total tax liabilities for Alaba Trading Limited for the 2018 assessment year, considering its assessable profit, capital allowances, and dividend payable.

You're reporting an error for "ATAX – May 2019 – L3 – Q7b – Corporate Tax Compliance and Reporting"

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.

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

AT – Nov 2015 – L3 – Q4d – Business income – Corporate income tax

Discussing the tax implications of a bonus issue in the retained earnings of a company.

You're reporting an error for "AT – Nov 2015 – L3 – Q4d – Business income – Corporate income tax"

AT – Nov 2017 – L3 – Q3c – Business income – Corporate income tax

Identifying tax exposure on transfer from income surplus to stated capital.

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AT – May 2017 – L3 – Q3a – Mergers, amalgamation, and reorganization

Discuss the tax implications of acquiring either 15% or 25% of shares in another resident company and recommend the best option for tax benefits.

You're reporting an error for "AT – May 2017 – L3 – Q3a – Mergers, amalgamation, and reorganization"

ATP – Aug 2020 – L2 – Q2 – Income Tax Computation

Compute Mr Paa Kwesi Arthur’s tax liability for 2019, including salary and dividend income.

You're reporting an error for "ATP – Aug 2020 – L2 – Q2 – Income Tax Computation"

ATP – Aug 2017 – L2 – Q4 – Income Tax Computation

Compute tax credit relief for Mr Brefo Nimo based on dividend income from the Netherlands.

You're reporting an error for "ATP – Aug 2017 – L2 – Q4 – Income Tax Computation"

ATP – Aug 2017 – L2 – Q2 – Indirect Taxes and Capital Taxes

Determine direct and indirect tax liabilities, including penalties, for Tosese Limited for 2015.

You're reporting an error for "ATP – Aug 2017 – L2 – Q2 – Indirect Taxes and Capital Taxes"

ATAX – May 2019 – L3 – Q7b – Corporate Tax Compliance and Reporting

Compute the total tax liabilities for Alaba Trading Limited for the 2018 assessment year, considering its assessable profit, capital allowances, and dividend payable.

You're reporting an error for "ATAX – May 2019 – L3 – Q7b – Corporate Tax Compliance and Reporting"

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.

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

AT – Nov 2015 – L3 – Q4d – Business income – Corporate income tax

Discussing the tax implications of a bonus issue in the retained earnings of a company.

You're reporting an error for "AT – Nov 2015 – L3 – Q4d – Business income – Corporate income tax"

AT – Nov 2017 – L3 – Q3c – Business income – Corporate income tax

Identifying tax exposure on transfer from income surplus to stated capital.

You're reporting an error for "AT – Nov 2017 – L3 – Q3c – Business income – Corporate income tax"

AT – May 2017 – L3 – Q3a – Mergers, amalgamation, and reorganization

Discuss the tax implications of acquiring either 15% or 25% of shares in another resident company and recommend the best option for tax benefits.

You're reporting an error for "AT – May 2017 – L3 – Q3a – Mergers, amalgamation, and reorganization"

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