Question Tag: Income Tax Act

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STP – Feb 2020 – L2 – Q5 – Anti-Avoidance Provisions

Identify and discuss three anti-avoidance provisions in the Income Tax Act, 2015 (Act 896) and their limitations on tax planning.

Question

Although tax planners have the liberty to devise schemes which reduce the tax liability of their clients, the Income Tax Act, 2015 (Act 896) contains provisions which limit tax planning schemes.

Required:
Identify any three (3) anti-avoidance provisions in Act 896 and discuss how each of these provisions places a limitation on the ability of a person to engage in tax planning.

Answer

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Tags: Accounting Year, Anti-Avoidance, Arm's Length, General Anti-Avoidance Rule, Income Splitting, Income Tax Act, Indirect Payments, Tax Planning, Thin Capitalization
Level: Level 2

Topic: Taxation and Operating Strategies in Business
Series: FEB 2020

STP – Aug 2020 – L2 – Q5 – Tax Incentives for Manufacturing

Discuss tax incentives for a chocolate manufacturing plant in Ghana and the impact of factory location on these incentives.

Question

The Swiss-Ghanaian Chamber of Commerce is organising a fair for some Swiss investors who intend to establish a chocolate manufacturing plant in Ghana. The investors intend to manufacture chocolates for the domestic and international markets.

Required
As an expert in strategic tax planning, the Chamber has invited you to speak on the tax incentives available for such investments and whether the location of the factory would have an impact on the tax incentives the investors can enjoy.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Agro Processing, Free Zone, Ghana Investment Promotion Centre, Income Tax Act, Location-Based Incentives, Manufacturing, Tax Incentives
Level: Level 2

Topic: Strategic Indirect Tax Management
Series: AUGUST 2020

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 – Q3 – Ownership Change Tax Implications

Discuss income tax implications for Obibini Ghana Limited if an investor acquires 51% of its shares.

Question

Obibini Ghana Limited is a wholly owned Ghanaian real estate company. The basis period of the company ends on 31st December each year. In order to raise additional capital to expand its activities, the company is looking for an investor who would acquire at least 51% of the shares of the company. The managers of the company are engaged in negotiations with a potential investor and the parties expect the transaction to be completed on 31st January 2020. The financial statements of the company revealed that the company made a loss of GH₵2,500,000 for the period ended 31st December 2019. The company also had financial cost of GH₵100,000.00
The company also has a parcel of land located at Abokobi which the company purchased three years ago at the cost of GH₵100,000.00. The current value of the land is GH₵500,000.00

Required
The managers of the Obibini Ghana are seeking your opinion on the following:
i. the income tax implications for the company if an investor acquires 51% of the company’s shares.

ii. The tax planning opportunities available which could reduce the income tax exposure of company if an investor acquires 51% of the company’s shares.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Income Tax Act, Ownership Change, Share Acquisition, Tax Mitigation, Tax Planning
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 – Aug 2020 – L2 – Q1 – Tax Planning vs. Tax Avoidance

Discuss distinction between tax planning and tax avoidance under Ghanaian tax law with examples and references.

Question

The Council of the Chartered Institute of Taxation, Ghana (CITG) has invited you to speak at a Continuous Development Program (CPD) on the topic “The distinction between tax planning schemes and tax avoidance arrangements under Ghanaian tax laws”.
In the letter of invitation, the Council indicated that you are to submit a detailed write-up of your presentation.

Required
With the aid of appropriate examples and specific references to Ghanaian tax law provisions, write in sufficient detail, the content of your presentation.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Ghanaian Tax Law, Income Splitting, Income Tax Act, Revenue Administration Act, Tax avoidance, Tax Exemptions, Tax Planning, Thin Capitalization, Transfer Pricing
Level: Level 2

Topic: Foundations of Strategic Tax Planning
Series: AUGUST 2020

STP – Aug 2018 – L2 – Q3 – Tax Strategies for New Business Formation

State and explain four non-tax factors influencing an entrepreneur's decision on business location.

Question

(a). State and explain four (4) non-tax factors which influence the decision of an entrepreneur as to where to establish a business.

(b). A Ghanaian entrepreneur is looking for an ideal location to establish an orange juice processing facility. The initial feasibility studies conducted by consultants for the entrepreneur indicate that Tema, Takoradi and Nsawam have comparable economic conditions which will make an investment in any of these cities financially prudent. With reference to the provisions of the Income Tax Act, 2015 (Act 896) discuss the tax implications of establishing a manufacturing entity in Tema, Takoradi and Nsawam and advise the entrepreneur on the most tax efficient location to establish the entity.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Income Tax Act, Location Incentives, Manufacturing, Tax Incentives
Level: Level 2

Topic: Tax Incentives
Series: AUG 2018

STP – Aug 2018 – L2 – Q1 – Taxation of Capital Transactions

Advise Welmount Ghana Ltd on tax implications of selling land and shares, and measures to mitigate tax exposure.

Question

Welmount Ghana Ltd is a construction company with its registered office located at Cantoments in Accra. In February 2007 it purchased a parcel of land at Achimota at the cost of GH₵75,000. The company spent GH₵25,000 to construct a fence wall around the property and to complete title registration processes at the Lands Commission. In March 2008, the company also purchased shares in Barclays bank of Ghana for GH₵20,000. In April 2017, the board of directors of the company decided to purchase another parcel of land at Tse Addo near the Trade Fair at La. The board further resolved to sell off the parcel of land purchased in February 2007 and the shares the company held in Barclays bank to finance the purchase of the parcel of land at Tse Addo. The company engaged the services of a valuer to determine the market value of the land located at Achimota and the shares the company held in Barclays bank. The company paid the valuer GH₵30,000 for his services. A marketing firm was contracted to advertise the sale of the parcel of land and the shares and the firm submitted a bill of GH₵35,000 to the company. In June 2017, the company sold the parcel of land and the shares in a single transaction for GH₵500,000. At the time of the sale, the market value of the parcel of land was GH₵400,000 and that of the shares was GH₵100,000. The company paid GH₵40,000 to a law firm to conduct due diligence on the parcel of land the company intended to purchase. In February 2018, the Managing Director of the company signed the purchase agreement and an amount of GH₵600,000 was paid to the owners of the property.

Required:

I. Advise on the company on the income tax implications of the realization of the assets. (20 marks) II. Advise on measures the company could have adopted to mitigate its tax exposure (if any) on the realization of the assets.

Answer

Find Related Questions by Tags, levels, etc.

Tags: apportionment, Asset Realization, Capital Gains, Income Tax Act, Roll-Over Relief, Tax Planning
Level: Level 2

Topic: Taxation of Capital Transactions
Series: AUG 2018

OGMT – Feb 2020 – L1 – Q4 – Assignment of Petroleum Rights

Explain the tax treatment of assignment or disposal of petroleum rights under the Income Tax Act, 2015 (Act 896).

Question

a) Explain the tax treatment of assignment of or disposal of petroleum rights as provided under the Income Tax Act 2016 (Act 896).

b) Deep Sea Ventures and Coastal Explorations are joint venture partners who have 45% and 40% interest respectively in the Atlantic Oil Fields in Ghana. They commenced exploration in 2010 and discovered hydrocarbons in commercial quantities in 2015. A plan of development was subsequently approved for the development of the Atlantic Oil Fields.

The fiscal terms of the agreement between the joint venture partners and the Government of Ghana include Bonus of US$ 100 million, Royalty of 10%, Initial (Carried) Interest of 10% Additional Participating Interest of 5%, Corporate Tax rate of 35% and Capital Allowance on straight line basis at a rate of 20%. Commercial production commenced in the Atlantic Oil Fields in 2019. Information available on the oil and gas production operations in the Atlantic Oil Fields are as follows:

Up to 31/12/2017	US$
Exploration Costs	250,000,000.00
Development Costs	2,000,000,000.00
Bonus	100,000,000.00

As at 31/12/2018	US$
Exploration Costs	15,000,000.00
Development Costs	1,500,000,000.00
Interest on loan for installations & infrastructure	100,000,000.00

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

As at 31/12/2019	US$
Exploration Costs	5,000,000.00
Development Costs	430,000,000.00

Required: Compute the capital allowance entitlements of Deep Sea Ventures and Coastal Explorations and state the underlying assumptions for your computations.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Allowance, Development Costs, Exploration Costs, Income Tax Act, Petroleum Agreement
Level: Level 1

Topic: Taxation of Revenue and Cost Streams
Series: FEB 2020

OGMT – Feb 2020 – L1 – Q2 – Finance Lease

Explain the concept of a finance lease and its tax treatment under the Income Tax Act, 2015 (Act 896).

Question

Explain the following concepts and their tax treatment:

a) Finance Lease;

b) Operating Lease;

c) Ring Fencing and state how it is provided for in respect of Petroleum Operations under the Income Tax Act, 2015 (Act 896).

Answer

Find Related Questions by Tags, levels, etc.

Tags: Contract Level, Field Level, Income Tax Act, Ring Fencing, Separate Petroleum Operation
Level: Level 1

Topic: Fiscal Regime of Oil and Gas
Series: FEB 2020

STP – Feb 2020 – L2 – Q5 – Anti-Avoidance Provisions

Identify and discuss three anti-avoidance provisions in the Income Tax Act, 2015 (Act 896) and their limitations on tax planning.

Question

Although tax planners have the liberty to devise schemes which reduce the tax liability of their clients, the Income Tax Act, 2015 (Act 896) contains provisions which limit tax planning schemes.

Required:
Identify any three (3) anti-avoidance provisions in Act 896 and discuss how each of these provisions places a limitation on the ability of a person to engage in tax planning.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accounting Year, Anti-Avoidance, Arm's Length, General Anti-Avoidance Rule, Income Splitting, Income Tax Act, Indirect Payments, Tax Planning, Thin Capitalization
Level: Level 2

Topic: Taxation and Operating Strategies in Business
Series: FEB 2020

STP – Aug 2020 – L2 – Q5 – Tax Incentives for Manufacturing

Discuss tax incentives for a chocolate manufacturing plant in Ghana and the impact of factory location on these incentives.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Agro Processing, Free Zone, Ghana Investment Promotion Centre, Income Tax Act, Location-Based Incentives, Manufacturing, Tax Incentives
Level: Level 2

Topic: Strategic Indirect Tax Management
Series: AUGUST 2020

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 – Q3 – Ownership Change Tax Implications

Discuss income tax implications for Obibini Ghana Limited if an investor acquires 51% of its shares.

Question

Required
The managers of the Obibini Ghana are seeking your opinion on the following:
i. the income tax implications for the company if an investor acquires 51% of the company’s shares.

ii. The tax planning opportunities available which could reduce the income tax exposure of company if an investor acquires 51% of the company’s shares.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Income Tax Act, Ownership Change, Share Acquisition, Tax Mitigation, Tax Planning
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 – Aug 2020 – L2 – Q1 – Tax Planning vs. Tax Avoidance

Discuss distinction between tax planning and tax avoidance under Ghanaian tax law with examples and references.

Question

Required
With the aid of appropriate examples and specific references to Ghanaian tax law provisions, write in sufficient detail, the content of your presentation.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Ghanaian Tax Law, Income Splitting, Income Tax Act, Revenue Administration Act, Tax avoidance, Tax Exemptions, Tax Planning, Thin Capitalization, Transfer Pricing
Level: Level 2

Topic: Foundations of Strategic Tax Planning
Series: AUGUST 2020

STP – Aug 2018 – L2 – Q3 – Tax Strategies for New Business Formation

State and explain four non-tax factors influencing an entrepreneur's decision on business location.

Question

(a). State and explain four (4) non-tax factors which influence the decision of an entrepreneur as to where to establish a business.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Income Tax Act, Location Incentives, Manufacturing, Tax Incentives
Level: Level 2

Topic: Tax Incentives
Series: AUG 2018

STP – Aug 2018 – L2 – Q1 – Taxation of Capital Transactions

Advise Welmount Ghana Ltd on tax implications of selling land and shares, and measures to mitigate tax exposure.

Question

Required:

Answer

Find Related Questions by Tags, levels, etc.

Tags: apportionment, Asset Realization, Capital Gains, Income Tax Act, Roll-Over Relief, Tax Planning
Level: Level 2

Topic: Taxation of Capital Transactions
Series: AUG 2018

OGMT – Feb 2020 – L1 – Q4 – Assignment of Petroleum Rights

Explain the tax treatment of assignment or disposal of petroleum rights under the Income Tax Act, 2015 (Act 896).

Question

a) Explain the tax treatment of assignment of or disposal of petroleum rights as provided under the Income Tax Act 2016 (Act 896).

Up to 31/12/2017	US$
Exploration Costs	250,000,000.00
Development Costs	2,000,000,000.00
Bonus	100,000,000.00

As at 31/12/2018	US$
Exploration Costs	15,000,000.00
Development Costs	1,500,000,000.00
Interest on loan for installations & infrastructure	100,000,000.00

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

As at 31/12/2019	US$
Exploration Costs	5,000,000.00
Development Costs	430,000,000.00

Required: Compute the capital allowance entitlements of Deep Sea Ventures and Coastal Explorations and state the underlying assumptions for your computations.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Allowance, Development Costs, Exploration Costs, Income Tax Act, Petroleum Agreement
Level: Level 1

Topic: Taxation of Revenue and Cost Streams
Series: FEB 2020

OGMT – Feb 2020 – L1 – Q2 – Finance Lease

Explain the concept of a finance lease and its tax treatment under the Income Tax Act, 2015 (Act 896).

Question

Explain the following concepts and their tax treatment:

a) Finance Lease;

b) Operating Lease;

c) Ring Fencing and state how it is provided for in respect of Petroleum Operations under the Income Tax Act, 2015 (Act 896).

Answer

Find Related Questions by Tags, levels, etc.

Tags: Contract Level, Field Level, Income Tax Act, Ring Fencing, Separate Petroleum Operation
Level: Level 1

Topic: Fiscal Regime of Oil and Gas
Series: FEB 2020

Question Tag: Income Tax Act

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STP – Feb 2020 – L2 – Q5 – Anti-Avoidance Provisions

Identify and discuss three anti-avoidance provisions in the Income Tax Act, 2015 (Act 896) and their limitations on tax planning.

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STP – Aug 2020 – L2 – Q5 – Tax Incentives for Manufacturing

Discuss tax incentives for a chocolate manufacturing plant in Ghana and the impact of factory location on these incentives.

You're reporting an error for "STP – Aug 2020 – L2 – Q5 – Tax Incentives for Manufacturing"

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 – Q3 – Ownership Change Tax Implications

Discuss income tax implications for Obibini Ghana Limited if an investor acquires 51% of its shares.

You're reporting an error for "STP – Aug 2020 – L2 – Q3 – Ownership Change Tax Implications"

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 – Aug 2020 – L2 – Q1 – Tax Planning vs. Tax Avoidance

Discuss distinction between tax planning and tax avoidance under Ghanaian tax law with examples and references.

You're reporting an error for "STP – Aug 2020 – L2 – Q1 – Tax Planning vs. Tax Avoidance"

STP – Aug 2018 – L2 – Q3 – Tax Strategies for New Business Formation

State and explain four non-tax factors influencing an entrepreneur's decision on business location.

You're reporting an error for "STP – Aug 2018 – L2 – Q3 – Tax Strategies for New Business Formation"

STP – Aug 2018 – L2 – Q1 – Taxation of Capital Transactions

Advise Welmount Ghana Ltd on tax implications of selling land and shares, and measures to mitigate tax exposure.

You're reporting an error for "STP – Aug 2018 – L2 – Q1 – Taxation of Capital Transactions"

OGMT – Feb 2020 – L1 – Q4 – Assignment of Petroleum Rights

Explain the tax treatment of assignment or disposal of petroleum rights under the Income Tax Act, 2015 (Act 896).

You're reporting an error for "OGMT – Feb 2020 – L1 – Q4 – Assignment of Petroleum Rights"

OGMT – Feb 2020 – L1 – Q2 – Finance Lease

Explain the concept of a finance lease and its tax treatment under the Income Tax Act, 2015 (Act 896).

You're reporting an error for "OGMT – Feb 2020 – L1 – Q2 – Finance Lease"

STP – Feb 2020 – L2 – Q5 – Anti-Avoidance Provisions

Identify and discuss three anti-avoidance provisions in the Income Tax Act, 2015 (Act 896) and their limitations on tax planning.

You're reporting an error for "STP – Feb 2020 – L2 – Q5 – Anti-Avoidance Provisions"

STP – Aug 2020 – L2 – Q5 – Tax Incentives for Manufacturing

Discuss tax incentives for a chocolate manufacturing plant in Ghana and the impact of factory location on these incentives.

You're reporting an error for "STP – Aug 2020 – L2 – Q5 – Tax Incentives for Manufacturing"

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 – Q3 – Ownership Change Tax Implications

Discuss income tax implications for Obibini Ghana Limited if an investor acquires 51% of its shares.

You're reporting an error for "STP – Aug 2020 – L2 – Q3 – Ownership Change Tax Implications"

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 – Aug 2020 – L2 – Q1 – Tax Planning vs. Tax Avoidance

Discuss distinction between tax planning and tax avoidance under Ghanaian tax law with examples and references.

You're reporting an error for "STP – Aug 2020 – L2 – Q1 – Tax Planning vs. Tax Avoidance"

STP – Aug 2018 – L2 – Q3 – Tax Strategies for New Business Formation

State and explain four non-tax factors influencing an entrepreneur's decision on business location.

You're reporting an error for "STP – Aug 2018 – L2 – Q3 – Tax Strategies for New Business Formation"

STP – Aug 2018 – L2 – Q1 – Taxation of Capital Transactions

Advise Welmount Ghana Ltd on tax implications of selling land and shares, and measures to mitigate tax exposure.

You're reporting an error for "STP – Aug 2018 – L2 – Q1 – Taxation of Capital Transactions"

OGMT – Feb 2020 – L1 – Q4 – Assignment of Petroleum Rights

Explain the tax treatment of assignment or disposal of petroleum rights under the Income Tax Act, 2015 (Act 896).

You're reporting an error for "OGMT – Feb 2020 – L1 – Q4 – Assignment of Petroleum Rights"

OGMT – Feb 2020 – L1 – Q2 – Finance Lease

Explain the concept of a finance lease and its tax treatment under the Income Tax Act, 2015 (Act 896).

You're reporting an error for "OGMT – Feb 2020 – L1 – Q2 – Finance Lease"

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