Dividend taxation

STP – Aug 2020 – L2 – Q4 – Debt vs Equity Financing

Discuss whether debt financing offers more tax benefits than equity financing for companies, with references to Ghanaian tax law.

Question

Some scholars argue that from a strategic tax planning perspective, debt financing provides more tax benefits to companies than equity financing for investors.

Required
With the aid of appropriate authorities, discuss the accuracy or otherwise of the above assertion.

Answer

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Tags: Debt Financing, Dividend taxation, Equity Financing, Income Tax Act, Interest Deduction, Tax Benefits, Thin Capitalization, Transfer Pricing
Level: Level 2

Topic: Foundations of Strategic Tax Planning
Series: AUGUST 2020

STP – Aug 2020 – L2 – Q2 – Corporate Restructuring

Restructure Mr. Kofi Opoku’s companies to reduce tax exposure and provide cheaper financing for Speed Transport Ghana Limited.

Question

Mr. Kofi Opoku is the direct shareholder of Unique Farms Ghana Limited and Speed Transport Ghana Limited. Unique Farms is engaged in tree crop farming and the company harvested the tree crops for the first time in 2019. In April, 2020, he received a copy of the audited financial statements of the two companies.
An analysis of the audited financial statements of the companies revealed the Unique Farms Ghana Limited is more profitable of the two companies. Speed Transport Ghana Limited however requires a lot of money for its operating activities and it mostly resorts to borrowing from financial institutions to meet its expenditure requirements. The high borrowing costs was affecting the profitability of the company.
Mr. Opoku also noticed that tax exposure on his investments is not ideal. Mr. Kofi Opoku has been informed that you are an expert in strategic tax planning.

Required
You are required to help Mr. Kofi Opoku restructure his companies in a manner that would provide a cheaper financing option for Speed Transport Ghana Limited and reduce his overall tax exposure on the investments.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Concessionary Tax Rates, Corporate Restructuring, Dividend taxation, Income Tax Act, Share Swap, Subsidiary Structure, Tax Planning
Level: Level 2

Topic: Tax Strategies for New Business Formation
Series: AUGUST 2020

STP – Feb 2020 – L2 – Q2 – Tax Implications of Financing Options

Advise on tax implications of financing a plant purchase as equity or loan for red flow Ghana Limited.

Question

Red flow Ghana Limited is a manufacturing entity in Ghana. Mr. Kurt Wildem, a citizen and resident of Germany owns 90% of the company’s shares. Mrs. Florence Wildem, a citizen and resident of Germany and wife of Mr. Wildem also owns 5% of the shares of the company. Mr. Jogen Wildem, the son of Mr. Kurt Wildem holds the remaining 5% of the shares in the company. As of 1st June 2019, the company had a stated capital of GH¢400,000.00. A report submitted by the management to the Board of Directors indicated that the company needs to acquire a plant valued at GH¢1,000,000.00 to enable the company to increase its production capacity. Mr. Kurt Wildem who is the majority shareholder has offered to finance the purchase of a plant for the company, but his challenge is whether to provide the asset to the company as a loan or as equity.

Required: Advise Mr. Kurt Wildem on i. the income tax treatment of providing the asset to the company as equity contribution. (7 marks) ii. the income tax treatment of providing the asset to the company as a loan. (7 marks) iii. the preferable option for providing the asset to the company in order to derive the maximum tax benefits.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate Tax, Dividend taxation, Equity contribution, Loan financing, Tax deductions, Withholding Tax
Level: Level 2

Topic: Tax Strategies for New Business Formation, Taxation and Operating Strategies in Business
Series: FEB 2020

IT – Aug 2020 – L1 – Q3 – Business Presence and Characterization

Analyze tax consequences of CPL Group’s technical experts’ activities in Ghana for Mavie Limited.

Question

Mavie Limited is resident entity in Ghana. Mavie Limited was established seven months ago when the Corona Virus 2019 (Covid-19) pandemic began. It sells personal protection equipment (PPE), including medical sanitizer, face and nose masks for self-protection against the infectious disease. The company was jointly owned by Eyra Foundation and Akusa S.A. on 40% and 60% shareholdings respectively. Eyra Foundation is resident in Ghana. Akusa S.A, is a company resident in South Africa and is 100% owned by CPL Group Plc., a multinational company resident in Netherland.

In the last six months, two technical experts from CPL visited Mavie Ltd on 3 months rotation to provide technical support to the staff of Mavie Ltd.

Last month Mavie Ltd declared an interim dividend and subsequently transferred Akusa’s share of the dividend.

The management of Mavie Ltd approached your firm, Emiraldo Consulting to advise them on the implication of the above transactions. You are a Chartered Tax Practitioner in the employment of Emiraldo Consulting and the Managing Partner requests you to draft the advice for Mavie Ltd.

Required Prepare a draft report setting out the tax consequences of

a. Dealings with CPL Group Ltd in Ghana.

b. Payment of dividend to Akusa S.A. by Mavie Limited.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Beneficial Ownership, Dividend taxation, Double Taxation Agreement, Permanent Establishment
Level: Level 1

Topic: Double Taxation and Relief
Series: AUGUST 2020

AT – Mar 2024 – L3 – Q3a – Business income – Corporate income tax

Discussing the tax implications of providing an asset to a company as capital or loan contribution.

Question

Agogo Ghana Ltd is a manufacturing entity in Ghana. Mr. Konto, a citizen and resident of Malaysia, owns 80% of the company’s shares. Mrs. Konto, a citizen and resident of Malaysia and wife of Mr. Konto, also owns 15% of the shares of the company. Mr. Bawa, the son of Mr. Konto, holds the remaining 5% of the shares in the company. As of 1st June 2023, the company had a share capital of GH¢400,000. A report submitted by the management to the Board of Directors indicated that the company needs to acquire a plant valued at GH¢1,000,000 to enable the company to increase its production capacity. Mr. Konto, who is the majority shareholder, has offered to finance the purchase of the plant for the company but is unsure whether to provide the plant as a loan or as capital.

Required:
Advise Mr. Konto on the income tax treatment of providing the asset to the company as capital or loan contribution.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital financing, Dividend taxation, Loan financing, Thin Capitalization
Level: Level 3

Topic: Business income - Corporate income tax
Series: MAR 2024

STP – Aug 2020 – L2 – Q4 – Debt vs Equity Financing

Discuss whether debt financing offers more tax benefits than equity financing for companies, with references to Ghanaian tax law.

Question

Some scholars argue that from a strategic tax planning perspective, debt financing provides more tax benefits to companies than equity financing for investors.

Required
With the aid of appropriate authorities, discuss the accuracy or otherwise of the above assertion.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Debt Financing, Dividend taxation, Equity Financing, Income Tax Act, Interest Deduction, Tax Benefits, Thin Capitalization, Transfer Pricing
Level: Level 2

Topic: Foundations of Strategic Tax Planning
Series: AUGUST 2020

STP – Aug 2020 – L2 – Q2 – Corporate Restructuring

Restructure Mr. Kofi Opoku’s companies to reduce tax exposure and provide cheaper financing for Speed Transport Ghana Limited.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Concessionary Tax Rates, Corporate Restructuring, Dividend taxation, Income Tax Act, Share Swap, Subsidiary Structure, Tax Planning
Level: Level 2

Topic: Tax Strategies for New Business Formation
Series: AUGUST 2020

STP – Feb 2020 – L2 – Q2 – Tax Implications of Financing Options

Advise on tax implications of financing a plant purchase as equity or loan for red flow Ghana Limited.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate Tax, Dividend taxation, Equity contribution, Loan financing, Tax deductions, Withholding Tax
Level: Level 2

Topic: Tax Strategies for New Business Formation, Taxation and Operating Strategies in Business
Series: FEB 2020

IT – Aug 2020 – L1 – Q3 – Business Presence and Characterization

Analyze tax consequences of CPL Group’s technical experts’ activities in Ghana for Mavie Limited.

Question

In the last six months, two technical experts from CPL visited Mavie Ltd on 3 months rotation to provide technical support to the staff of Mavie Ltd.

Last month Mavie Ltd declared an interim dividend and subsequently transferred Akusa’s share of the dividend.

Required Prepare a draft report setting out the tax consequences of

a. Dealings with CPL Group Ltd in Ghana.

b. Payment of dividend to Akusa S.A. by Mavie Limited.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Beneficial Ownership, Dividend taxation, Double Taxation Agreement, Permanent Establishment
Level: Level 1

Topic: Double Taxation and Relief
Series: AUGUST 2020

AT – Mar 2024 – L3 – Q3a – Business income – Corporate income tax

Discussing the tax implications of providing an asset to a company as capital or loan contribution.

Question

Required:
Advise Mr. Konto on the income tax treatment of providing the asset to the company as capital or loan contribution.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital financing, Dividend taxation, Loan financing, Thin Capitalization
Level: Level 3

Topic: Business income - Corporate income tax
Series: MAR 2024

Question Tag: Dividend taxation

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STP – Aug 2020 – L2 – Q4 – Debt vs Equity Financing

Discuss whether debt financing offers more tax benefits than equity financing for companies, with references to Ghanaian tax law.

STP – Aug 2020 – L2 – Q2 – Corporate Restructuring

Restructure Mr. Kofi Opoku’s companies to reduce tax exposure and provide cheaper financing for Speed Transport Ghana Limited.

STP – Feb 2020 – L2 – Q2 – Tax Implications of Financing Options

Advise on tax implications of financing a plant purchase as equity or loan for red flow Ghana Limited.

IT – Aug 2020 – L1 – Q3 – Business Presence and Characterization

Analyze tax consequences of CPL Group’s technical experts’ activities in Ghana for Mavie Limited.

AT – Mar 2024 – L3 – Q3a – Business income – Corporate income tax

Discussing the tax implications of providing an asset to a company as capital or loan contribution.

STP – Aug 2020 – L2 – Q4 – Debt vs Equity Financing

Discuss whether debt financing offers more tax benefits than equity financing for companies, with references to Ghanaian tax law.

STP – Aug 2020 – L2 – Q2 – Corporate Restructuring

Restructure Mr. Kofi Opoku’s companies to reduce tax exposure and provide cheaper financing for Speed Transport Ghana Limited.

STP – Feb 2020 – L2 – Q2 – Tax Implications of Financing Options

Advise on tax implications of financing a plant purchase as equity or loan for red flow Ghana Limited.

IT – Aug 2020 – L1 – Q3 – Business Presence and Characterization

Analyze tax consequences of CPL Group’s technical experts’ activities in Ghana for Mavie Limited.

AT – Mar 2024 – L3 – Q3a – Business income – Corporate income tax

Discussing the tax implications of providing an asset to a company as capital or loan contribution.

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STP – Aug 2020 – L2 – Q4 – Debt vs Equity Financing

Discuss whether debt financing offers more tax benefits than equity financing for companies, with references to Ghanaian tax law.

You're reporting an error for "STP – Aug 2020 – L2 – Q4 – Debt vs Equity Financing"

STP – Aug 2020 – L2 – Q2 – Corporate Restructuring

Restructure Mr. Kofi Opoku’s companies to reduce tax exposure and provide cheaper financing for Speed Transport Ghana Limited.

You're reporting an error for "STP – Aug 2020 – L2 – Q2 – Corporate Restructuring"

STP – Feb 2020 – L2 – Q2 – Tax Implications of Financing Options

Advise on tax implications of financing a plant purchase as equity or loan for red flow Ghana Limited.

You're reporting an error for "STP – Feb 2020 – L2 – Q2 – Tax Implications of Financing Options"

IT – Aug 2020 – L1 – Q3 – Business Presence and Characterization

Analyze tax consequences of CPL Group’s technical experts’ activities in Ghana for Mavie Limited.

You're reporting an error for "IT – Aug 2020 – L1 – Q3 – Business Presence and Characterization"

AT – Mar 2024 – L3 – Q3a – Business income – Corporate income tax

Discussing the tax implications of providing an asset to a company as capital or loan contribution.

You're reporting an error for "AT – Mar 2024 – L3 – Q3a – Business income – Corporate income tax"

STP – Aug 2020 – L2 – Q4 – Debt vs Equity Financing

Discuss whether debt financing offers more tax benefits than equity financing for companies, with references to Ghanaian tax law.

You're reporting an error for "STP – Aug 2020 – L2 – Q4 – Debt vs Equity Financing"

STP – Aug 2020 – L2 – Q2 – Corporate Restructuring

Restructure Mr. Kofi Opoku’s companies to reduce tax exposure and provide cheaper financing for Speed Transport Ghana Limited.

You're reporting an error for "STP – Aug 2020 – L2 – Q2 – Corporate Restructuring"

STP – Feb 2020 – L2 – Q2 – Tax Implications of Financing Options

Advise on tax implications of financing a plant purchase as equity or loan for red flow Ghana Limited.

You're reporting an error for "STP – Feb 2020 – L2 – Q2 – Tax Implications of Financing Options"

IT – Aug 2020 – L1 – Q3 – Business Presence and Characterization

Analyze tax consequences of CPL Group’s technical experts’ activities in Ghana for Mavie Limited.

You're reporting an error for "IT – Aug 2020 – L1 – Q3 – Business Presence and Characterization"

AT – Mar 2024 – L3 – Q3a – Business income – Corporate income tax

Discussing the tax implications of providing an asset to a company as capital or loan contribution.

You're reporting an error for "AT – Mar 2024 – L3 – Q3a – Business income – Corporate income tax"

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