- 25 Marks
STP – Feb 2021 – L2 – Q3 – Taxation of Capital Transactions
Advise Tremor Ghana Ltd on tax implications of asset disposals and tax planning opportunities.
Question
Tremor Ghana Ltd is a trading company with its registered office located at North Legon. The basis period of the company ends on $31^{\text {st }}$ December of every year. In August 2018, the company acquired the following assets.
| ASSET | COST (GHc) |
|---|---|
| Computers | $50,000.00$ |
| Motor Vehicles | $150,000.00$ |
| Land | $350,000.00$ |
In November 2019, the company disposed of the assets for the following amounts:
| ASSET | COST (GHc) |
|---|---|
| Computers | $70,000.00$ |
| Motor Vehicles | $160,000.00$ |
| Land | $450,000.00$ |
In January 2020, the company acquired a new office building at the cost of GHc600,000.
Required: (i) Advise the company on the income tax implications of the realization of the assets in November 2019. 20 marks (ii) Identify the tax planning opportunities the company could have employed to mitigate its tax exposure on the realization of the assets.
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