Question Tag: Income Tax

Search 500 + past questions and counting.

  • Filter by Professional Bodies

  • Filter by Subject

  • Filter by Series

  • Filter by Topics

  • Filter by Levels

  • 20 Marks

STP – Feb 2018 – L2 – Q4- Taxation and Operating Strategies

Calculate Honson Plc's tax liability for Kumasi/Accra, advise on Nsawam, and discuss non-tax factors for facility location.

Honson Pic, a UK-based manufacturing company, is planning to build a new processing facility in Ghana. The Chief Executive Officer in a meeting with Management needs to decide whether to cite the facility in Accra or in Kumasi. Market intelligence has no preference for citing the facility either in Kumasi or Accra since information gathered indicate that business activities would largely be same in Kumasi and Accra for the next 10 years.

The following forecast information is relevant for the decision-making process being considered by management.

Kumasi Accra GH¢ GH¢

Required: i. Calculate Hamson Plc’s income tax liability for each proposed location for the first year. ii. Would you advise Hamson Plc to consider citing the facility in Nsawam, taking into consideration the close proximity of Nsawam to Accra? iii. Discuss three (3) non-tax factors that Hamson UK Plc may consider in the decision-making process to locate the facility either in Kumasi, Accra or elsewhere in the country.

b). With reference to the Income Tax Act, 2015 (Act 896) explain the following: i. Private Ruling issued by the Commissioner-General: (2 marks) ii. Conditions under which a Private Ruling will be binding on the Commissioner-General and on the person to whom the Private Ruling is issued.

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 "STP – Feb 2018 – L2 – Q4- Taxation and Operating Strategies"

  • 22 Marks

STP – Feb 2020 – L2 – Q4 – Business Entity Tax Implications

Advise on tax implications of establishing a company, partnership, or sole proprietorship and identify which offers the least tax exposure for an investor.

As a renowned tax consultant, a potential investor in the real estate sector in Ghana is seeking your expert opinion on the tax implications of establishing a company, a partnership or a sole proprietorship and which form of the business organisations gives the least tax exposure for an investor.

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 "STP – Feb 2020 – L2 – Q4 – Business Entity Tax Implications"

  • 25 Marks

STP – Feb 2020 – L2 – Q3 – Taxation of Capital Transactions

Advise Ravid Ghana Ltd on tax implications of selling land and office building for GHS200,000.

Ravid Ghana Ltd is a software development company with its registered office located at North Kaneshie in the Greater-Accra Region of Ghana. In March 2016 the company purchased a parcel of land at Oyarifa at a cost of GH¢25,000.00. The company spent GH¢5,000 to construct a fence wall around the property and to complete title registration processes at the Lands Commission. In May 2017, the company also purchased an office building at Madina valued at GH¢100,000.00 as well as a Toyota Hilux pick-up valued at GH¢100,000.00. In February 2018, the board of directors of the company decided to dispose of the parcel of land purchased in March 2016 and the office building in order to raise money to finance the purchase of strategic assets. The company engaged the services of a valuer to determine the market value of the land located at Oyarifa. The company paid the valuer GH¢5,000.00 for services rendered. In August 2019, the company sold the parcel of land and the office building in a single transaction for GH¢200,000.00. At the time of the sale, the market value of the land was GH¢50,000.00 and the office building was GH¢150,000.00. The written down value of the building was GH¢70,000.00 at the time of the sale.

Required: Advise the company on the income tax implications of the realization of the assets.

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 "STP – Feb 2020 – L2 – Q3 – Taxation of Capital Transactions"

  • 23 Marks

STP – Feb 2020 – L2 – Q1 – Agricultural Tax Incentives

Advise on income tax benefits of coconut farming and processing factory.

a) Mr. Kwame Berko graduated from the University of Ghana in 2017. In 2019, he secured a Government of Ghana scholarship to pursue a master’s program in Agricultural Science at the University of Alabama in the United States of America. During the course of the master’s program, he developed unique ideas on how to establish a commercial farm and also engage in the processing of the farm products. On his return to Ghana, he decided to implement the ideas developed during his time at the University of Alabama. His business plan shows that he intends to: i. establish a farm to grow coconut and as well as an associated factory to process the coconut into milk for domestic consumption. ii. establish a poultry farm to produce chicken and eggs for domestic consumption.

Mr. Berko has submitted his business plan to you for tax advice.

Required: As a tax advisor of high repute, advise Mr. Kwame Berko on the following: a. the income tax benefits of farming coconut and establishing a processing factory.

b. the income tax benefits of establishing a poultry farm.

c. the most suitable place in Ghana to establish the farms and the factory in order to derive maximum tax benefits.

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 "STP – Feb 2020 – L2 – Q1 – Agricultural Tax Incentives"

  • 12 Marks

STP – Feb 2021 – L2 – Q4 – Taxation and Operating Strategies

Explain three anti-avoidance provisions in Ghana's Income Tax laws and their impact on tax planning.

State and explain three (3) anti-avoidance provisions found in the Income Tax laws of Ghana and how these provisions place a limitation on the tax planning opportunities available to taxpayers.

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 "STP – Feb 2021 – L2 – Q4 – Taxation and Operating Strategies"

  • 25 Marks

STP – Feb 2021 – L2 – Q1 – Strategic Tax Planning

Advise on tax implications of AIG acquiring 55% stake in Fluid Logistics Ghana and providing a GH₵6.5M loan, plus tax planning options.

The President of America Is Great (AIG) Group, a US Corporation, is exploring the possibility of acquiring a fifty-five percent stake in Fluid Logistics Ghana Limited. The stated capital of Fluid Logistics Ghana Limited is GH₵1,500,000. AIG Corporation intends providing a loan of GH₵6,500,000 to Fluid Logistics Ghana Limited when the transaction for the acquisition of the fifty-five percent stake is completed. The President of AIG Corporation is seeking your advice on the tax implications of the proposed transactions.

Required: Advise the President on: i. The income tax implications of the acquisition of a fifty-five percent stake in Fluid Logistics Ghana Limited. 9 marks ii. The income tax implications of providing the loan of GH₵6,500,000. 9 marks iii. The tax planning options available to minimize the tax effects of the proposed transactions.

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 "STP – Feb 2021 – L2 – Q1 – Strategic Tax Planning"

  • 20 Marks

OGMT – Aug 2020 – L1 – Q5 – Petroleum Taxation

Compute capital allowances, crude oil distribution, income tax, and government revenue for Sapele Petroleum and Mahogany Production in 2019.

Sapele Petroleum Ghana Ltd and Mahogany Production Incorporated are joint venture partners who have 45% and 35% interest respectively in the Upstream Fields in Ghana. They commenced exploration in 2011 and discovered hydrocarbons in commercial quantities in 2013.

The fiscal terms of the agreement between the joint venture partners and the Government of Ghana include Bonus of US$ 150 million, Royalty of 5%, Initial (Carried) Interest of 15%, Additional Participating Interest of 5%, Corporate Tax rate of 35% and Capital Allowance on straight line basis at a rate of 20%. Mahogany Production is the operator of the Upstream Fields. Production commenced in the Upstream Fields in 2019. Information available on the oil and gas exploration and production operations in the Upstream Fields are as follows:

Up to 31/12/2017 US$
Exploration Costs 250,000,000.00
Development Costs 2,000,000,000.00
Bonus 150,000,000.00

As at 31/12/2018 US$
Exploration Costs 100,000,000.00
Development Costs 1,500,000,000.00
Interest on loan for installation of equipment & facilities 100,000,000.00

NB. The loan was contracted by the operator on behalf of the parties that hold interest in the Upstream Fields

As at 31/12/2019 US$
Exploration Costs 40,000,000.00
Development Costs 400,000,000.00
Average production cost per barrel 15.00
Average Price of crude oil per barrel 40.00
2019 Production 50,000,000 barrels

You are required to compute the following, and also state the assumptions underlying your computations:
i. Capital allowance entitlements of Sapele Petroleum Ghana Ltd and Mahogany Production Incorporated.
ii. Distribution of crude oil.
iii. 2019 income tax liability of Sapele Petroleum Ghana Ltd and Mahogany Production Incorporated in accordance with the provisions of the Income Tax Act, 2015 (Act 896).
iv. Total revenue that will accrue to Government of 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 "OGMT – Aug 2020 – L1 – Q5 – Petroleum Taxation"

  • 20 Marks

OGMT – Aug 2020 – L1 – Q4 – Taxation of Mining Entities

Compute tax liabilities for ABC Mines Ltd for 2019, including royalty, withholding, income, and capital gains taxes.

ABC Mines Ltd. is a mining company operating in the Underground Mine. Commercial production commenced in the Underground Mine in 2019. ABC Mines Ltd also has mineral rights in the Surface Mine which is yet to commence commercial production. In 2019, ABC Mines Ltd. disposed of its mineral rights in Surface Mine.

The highlights of 2019 revenue and expenditure disclosed in tax returns filed by ABC Mines Ltd. are as follows:

Revenue GHe
Gross income from its operations in 2019 450,000,000
Realised sum from disposal of mineral rights in Surface Mine 100,000,000
Hedging Income 40,000,000
Total Revenue 590,000,000

Expenses include but not limited to the following:

Expenses GHe
Reconnaissance & Prospecting Cost (Underground Mine) 100,000,000
Reconnaissance & Prospecting Cost (Surface Mine) 50,000,000
Depreciation 20,000,000
Expenses on Hedging transactions 10,000,000
Operating Expenses (Underground Mine) 80,000,000
General and Administration Expenses (Surface Mine) 20,000,000
Interest Expense (Underground Mine) 20,000,000
Profit before tax 200,000,000

You are required to compute the liability for each tax type that ABC Mines Ltd will pay in the 2019 year of assessment. State the underlying assumptions of your computations.

Additional Information:
Minerals produced in the Underground Mine worth GHS40,000,000 was destroyed in the leased area. An amount of GHS35,000,000 was paid as insurance claims to ABC Mines Ltd in respect of the minerals destroyed.

Tax Rates Rate
Income Tax Rate for Companies 25%
Mineral Income Tax Rate 35%
Mineral Royalty Rate 5%
Interest Withholding Tax Rate 8%
Capital Allowance Rate 20% on straight line basis
Capital Gains Tax Rate 15%

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 "OGMT – Aug 2020 – L1 – Q4 – Taxation of Mining Entities"

  • 20 Marks

ATP – Feb 2020 – L2 – Q2 – Employment Income Taxation

Compute tax liabilities for Mr. Tein Escoba for 2018 and 2019 based on income earned in US and Ghana.

Amanfro Plantations Company Limited was incorporated under the company’s Act 1963, Act 179 as a limited liability company on 1st October 2010. The objects of the company is to establish Rubber Plantations at Asempanaye in Western North Region. The company started operations on 1st January 2011. The company has not found its feet since it began operations due to managerial challenges. The board therefore approved the appointment of Mr Tein Escoba, an Agronomist and Rubber Production expert from Brazil as the company’s managing director.

The terms of Mr Tein Escoba’s engagement is that Firestone PLC USA shall be responsible for his salary of US$10,000.00 per month to be paid into his designated bank account in the USA. The Amanfro Plantations Company Limited would, in addition, pay him GH¢8,000.00 per month, with an annual increment of 20% on 1st January each year to meet his cost of stay in Ghana. He was paid a return air ticket costing GH¢9,600 at the end of his eighteen month duty tour to visit his family. He would be responsible for the payment of his taxes on his income due to the US Internal Revenue.

The company employed other management personnel in addition to Mr Tein Escoba. All the management staff of the company were provided with soft furnished accommodation at the project site in order to ensure an effective management of the company. In addition, all the management personnel were allocated chauffeur driven official vehicles with no limit for fuel usage. All other staff of the company were located outside the plantation concession at Asempanaye.

Mr Tein Escoba prior to his taking up the appointment in Ghana was paid US$10,000.00 to enable him relocate the wife and his two children in Mackiney, Texas USA. The cost of his transportation from Rio de Jenairo to the project site in Ghana was borne by him at a total cost of US$7,500.00. Mr Tein Escoba started work on 1st January, 2018 with the company. He paid a total tax liability of US$26,400.00 for each year on his income earned for the years 2018 and 2019 in the USA, for which he provided the relevant receipts to support the payment. He did not pay any other taxes in Ghana when a tax audit was carried out at the company. He realised the anomaly for his failure to pay tax on his earnings in Ghana and has approached you as a Tax Practitioner to help him file his returns, since assuming work in Ghana.

The average exchange rates of the cedi to the dollar for 2018 and 2019 respectively were GH¢4.8 and GH¢5.5.
There is no Double Taxation Agreement between Ghana and the USA.

Required:
Compute the tax liabilities of Mr Tein Escoba for the 2018 and 2019 years 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 "ATP – Feb 2020 – L2 – Q2 – Employment Income Taxation"

  • 20 Marks

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

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

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.

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 – Q4 – Income Tax Computation"

  • 20 Marks

STP – Feb 2018 – L2 – Q4- Taxation and Operating Strategies

Calculate Honson Plc's tax liability for Kumasi/Accra, advise on Nsawam, and discuss non-tax factors for facility location.

Honson Pic, a UK-based manufacturing company, is planning to build a new processing facility in Ghana. The Chief Executive Officer in a meeting with Management needs to decide whether to cite the facility in Accra or in Kumasi. Market intelligence has no preference for citing the facility either in Kumasi or Accra since information gathered indicate that business activities would largely be same in Kumasi and Accra for the next 10 years.

The following forecast information is relevant for the decision-making process being considered by management.

Kumasi Accra GH¢ GH¢

Required: i. Calculate Hamson Plc’s income tax liability for each proposed location for the first year. ii. Would you advise Hamson Plc to consider citing the facility in Nsawam, taking into consideration the close proximity of Nsawam to Accra? iii. Discuss three (3) non-tax factors that Hamson UK Plc may consider in the decision-making process to locate the facility either in Kumasi, Accra or elsewhere in the country.

b). With reference to the Income Tax Act, 2015 (Act 896) explain the following: i. Private Ruling issued by the Commissioner-General: (2 marks) ii. Conditions under which a Private Ruling will be binding on the Commissioner-General and on the person to whom the Private Ruling is issued.

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 "STP – Feb 2018 – L2 – Q4- Taxation and Operating Strategies"

  • 22 Marks

STP – Feb 2020 – L2 – Q4 – Business Entity Tax Implications

Advise on tax implications of establishing a company, partnership, or sole proprietorship and identify which offers the least tax exposure for an investor.

As a renowned tax consultant, a potential investor in the real estate sector in Ghana is seeking your expert opinion on the tax implications of establishing a company, a partnership or a sole proprietorship and which form of the business organisations gives the least tax exposure for an investor.

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 "STP – Feb 2020 – L2 – Q4 – Business Entity Tax Implications"

  • 25 Marks

STP – Feb 2020 – L2 – Q3 – Taxation of Capital Transactions

Advise Ravid Ghana Ltd on tax implications of selling land and office building for GHS200,000.

Ravid Ghana Ltd is a software development company with its registered office located at North Kaneshie in the Greater-Accra Region of Ghana. In March 2016 the company purchased a parcel of land at Oyarifa at a cost of GH¢25,000.00. The company spent GH¢5,000 to construct a fence wall around the property and to complete title registration processes at the Lands Commission. In May 2017, the company also purchased an office building at Madina valued at GH¢100,000.00 as well as a Toyota Hilux pick-up valued at GH¢100,000.00. In February 2018, the board of directors of the company decided to dispose of the parcel of land purchased in March 2016 and the office building in order to raise money to finance the purchase of strategic assets. The company engaged the services of a valuer to determine the market value of the land located at Oyarifa. The company paid the valuer GH¢5,000.00 for services rendered. In August 2019, the company sold the parcel of land and the office building in a single transaction for GH¢200,000.00. At the time of the sale, the market value of the land was GH¢50,000.00 and the office building was GH¢150,000.00. The written down value of the building was GH¢70,000.00 at the time of the sale.

Required: Advise the company on the income tax implications of the realization of the assets.

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 "STP – Feb 2020 – L2 – Q3 – Taxation of Capital Transactions"

  • 23 Marks

STP – Feb 2020 – L2 – Q1 – Agricultural Tax Incentives

Advise on income tax benefits of coconut farming and processing factory.

a) Mr. Kwame Berko graduated from the University of Ghana in 2017. In 2019, he secured a Government of Ghana scholarship to pursue a master’s program in Agricultural Science at the University of Alabama in the United States of America. During the course of the master’s program, he developed unique ideas on how to establish a commercial farm and also engage in the processing of the farm products. On his return to Ghana, he decided to implement the ideas developed during his time at the University of Alabama. His business plan shows that he intends to: i. establish a farm to grow coconut and as well as an associated factory to process the coconut into milk for domestic consumption. ii. establish a poultry farm to produce chicken and eggs for domestic consumption.

Mr. Berko has submitted his business plan to you for tax advice.

Required: As a tax advisor of high repute, advise Mr. Kwame Berko on the following: a. the income tax benefits of farming coconut and establishing a processing factory.

b. the income tax benefits of establishing a poultry farm.

c. the most suitable place in Ghana to establish the farms and the factory in order to derive maximum tax benefits.

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 "STP – Feb 2020 – L2 – Q1 – Agricultural Tax Incentives"

  • 12 Marks

STP – Feb 2021 – L2 – Q4 – Taxation and Operating Strategies

Explain three anti-avoidance provisions in Ghana's Income Tax laws and their impact on tax planning.

State and explain three (3) anti-avoidance provisions found in the Income Tax laws of Ghana and how these provisions place a limitation on the tax planning opportunities available to taxpayers.

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 "STP – Feb 2021 – L2 – Q4 – Taxation and Operating Strategies"

  • 25 Marks

STP – Feb 2021 – L2 – Q1 – Strategic Tax Planning

Advise on tax implications of AIG acquiring 55% stake in Fluid Logistics Ghana and providing a GH₵6.5M loan, plus tax planning options.

The President of America Is Great (AIG) Group, a US Corporation, is exploring the possibility of acquiring a fifty-five percent stake in Fluid Logistics Ghana Limited. The stated capital of Fluid Logistics Ghana Limited is GH₵1,500,000. AIG Corporation intends providing a loan of GH₵6,500,000 to Fluid Logistics Ghana Limited when the transaction for the acquisition of the fifty-five percent stake is completed. The President of AIG Corporation is seeking your advice on the tax implications of the proposed transactions.

Required: Advise the President on: i. The income tax implications of the acquisition of a fifty-five percent stake in Fluid Logistics Ghana Limited. 9 marks ii. The income tax implications of providing the loan of GH₵6,500,000. 9 marks iii. The tax planning options available to minimize the tax effects of the proposed transactions.

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 "STP – Feb 2021 – L2 – Q1 – Strategic Tax Planning"

  • 20 Marks

OGMT – Aug 2020 – L1 – Q5 – Petroleum Taxation

Compute capital allowances, crude oil distribution, income tax, and government revenue for Sapele Petroleum and Mahogany Production in 2019.

Sapele Petroleum Ghana Ltd and Mahogany Production Incorporated are joint venture partners who have 45% and 35% interest respectively in the Upstream Fields in Ghana. They commenced exploration in 2011 and discovered hydrocarbons in commercial quantities in 2013.

The fiscal terms of the agreement between the joint venture partners and the Government of Ghana include Bonus of US$ 150 million, Royalty of 5%, Initial (Carried) Interest of 15%, Additional Participating Interest of 5%, Corporate Tax rate of 35% and Capital Allowance on straight line basis at a rate of 20%. Mahogany Production is the operator of the Upstream Fields. Production commenced in the Upstream Fields in 2019. Information available on the oil and gas exploration and production operations in the Upstream Fields are as follows:

Up to 31/12/2017 US$
Exploration Costs 250,000,000.00
Development Costs 2,000,000,000.00
Bonus 150,000,000.00

As at 31/12/2018 US$
Exploration Costs 100,000,000.00
Development Costs 1,500,000,000.00
Interest on loan for installation of equipment & facilities 100,000,000.00

NB. The loan was contracted by the operator on behalf of the parties that hold interest in the Upstream Fields

As at 31/12/2019 US$
Exploration Costs 40,000,000.00
Development Costs 400,000,000.00
Average production cost per barrel 15.00
Average Price of crude oil per barrel 40.00
2019 Production 50,000,000 barrels

You are required to compute the following, and also state the assumptions underlying your computations:
i. Capital allowance entitlements of Sapele Petroleum Ghana Ltd and Mahogany Production Incorporated.
ii. Distribution of crude oil.
iii. 2019 income tax liability of Sapele Petroleum Ghana Ltd and Mahogany Production Incorporated in accordance with the provisions of the Income Tax Act, 2015 (Act 896).
iv. Total revenue that will accrue to Government of 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 "OGMT – Aug 2020 – L1 – Q5 – Petroleum Taxation"

  • 20 Marks

OGMT – Aug 2020 – L1 – Q4 – Taxation of Mining Entities

Compute tax liabilities for ABC Mines Ltd for 2019, including royalty, withholding, income, and capital gains taxes.

ABC Mines Ltd. is a mining company operating in the Underground Mine. Commercial production commenced in the Underground Mine in 2019. ABC Mines Ltd also has mineral rights in the Surface Mine which is yet to commence commercial production. In 2019, ABC Mines Ltd. disposed of its mineral rights in Surface Mine.

The highlights of 2019 revenue and expenditure disclosed in tax returns filed by ABC Mines Ltd. are as follows:

Revenue GHe
Gross income from its operations in 2019 450,000,000
Realised sum from disposal of mineral rights in Surface Mine 100,000,000
Hedging Income 40,000,000
Total Revenue 590,000,000

Expenses include but not limited to the following:

Expenses GHe
Reconnaissance & Prospecting Cost (Underground Mine) 100,000,000
Reconnaissance & Prospecting Cost (Surface Mine) 50,000,000
Depreciation 20,000,000
Expenses on Hedging transactions 10,000,000
Operating Expenses (Underground Mine) 80,000,000
General and Administration Expenses (Surface Mine) 20,000,000
Interest Expense (Underground Mine) 20,000,000
Profit before tax 200,000,000

You are required to compute the liability for each tax type that ABC Mines Ltd will pay in the 2019 year of assessment. State the underlying assumptions of your computations.

Additional Information:
Minerals produced in the Underground Mine worth GHS40,000,000 was destroyed in the leased area. An amount of GHS35,000,000 was paid as insurance claims to ABC Mines Ltd in respect of the minerals destroyed.

Tax Rates Rate
Income Tax Rate for Companies 25%
Mineral Income Tax Rate 35%
Mineral Royalty Rate 5%
Interest Withholding Tax Rate 8%
Capital Allowance Rate 20% on straight line basis
Capital Gains Tax Rate 15%

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 "OGMT – Aug 2020 – L1 – Q4 – Taxation of Mining Entities"

  • 20 Marks

ATP – Feb 2020 – L2 – Q2 – Employment Income Taxation

Compute tax liabilities for Mr. Tein Escoba for 2018 and 2019 based on income earned in US and Ghana.

Amanfro Plantations Company Limited was incorporated under the company’s Act 1963, Act 179 as a limited liability company on 1st October 2010. The objects of the company is to establish Rubber Plantations at Asempanaye in Western North Region. The company started operations on 1st January 2011. The company has not found its feet since it began operations due to managerial challenges. The board therefore approved the appointment of Mr Tein Escoba, an Agronomist and Rubber Production expert from Brazil as the company’s managing director.

The terms of Mr Tein Escoba’s engagement is that Firestone PLC USA shall be responsible for his salary of US$10,000.00 per month to be paid into his designated bank account in the USA. The Amanfro Plantations Company Limited would, in addition, pay him GH¢8,000.00 per month, with an annual increment of 20% on 1st January each year to meet his cost of stay in Ghana. He was paid a return air ticket costing GH¢9,600 at the end of his eighteen month duty tour to visit his family. He would be responsible for the payment of his taxes on his income due to the US Internal Revenue.

The company employed other management personnel in addition to Mr Tein Escoba. All the management staff of the company were provided with soft furnished accommodation at the project site in order to ensure an effective management of the company. In addition, all the management personnel were allocated chauffeur driven official vehicles with no limit for fuel usage. All other staff of the company were located outside the plantation concession at Asempanaye.

Mr Tein Escoba prior to his taking up the appointment in Ghana was paid US$10,000.00 to enable him relocate the wife and his two children in Mackiney, Texas USA. The cost of his transportation from Rio de Jenairo to the project site in Ghana was borne by him at a total cost of US$7,500.00. Mr Tein Escoba started work on 1st January, 2018 with the company. He paid a total tax liability of US$26,400.00 for each year on his income earned for the years 2018 and 2019 in the USA, for which he provided the relevant receipts to support the payment. He did not pay any other taxes in Ghana when a tax audit was carried out at the company. He realised the anomaly for his failure to pay tax on his earnings in Ghana and has approached you as a Tax Practitioner to help him file his returns, since assuming work in Ghana.

The average exchange rates of the cedi to the dollar for 2018 and 2019 respectively were GH¢4.8 and GH¢5.5.
There is no Double Taxation Agreement between Ghana and the USA.

Required:
Compute the tax liabilities of Mr Tein Escoba for the 2018 and 2019 years 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 "ATP – Feb 2020 – L2 – Q2 – Employment Income Taxation"

  • 20 Marks

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

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

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.

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 – Q4 – Income Tax Computation"

knowsia

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

Our offerings

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