Mineral Royalty – Knowsia

OGMT – Feb 2020 – L1 – Q5 – Tax Liability Computation

Compute Gold Resources Ltd.'s tax liabilities for 2018, including mineral royalty, income tax, and withholding tax.

Question

Gold Resources Ltd. is a mining company operating in the Sparrows Mine and Dove Mines in Ghana. Sparrows Mine shares a processing plant with Dove Mines, and both mines commenced commercial production in 2018. At the close of business on December 31, 2018, Gold Resources Ltd. acquired 20% exploration and production rights in the Eagle Mine which is a production mine for GH₵25,000,000.

The highlights of 2018 revenue and expenditure disclosed in tax returns filed by Gold Resources Ltd. include the following:

Revenue	GH₵
Gross income from its operations in 2018	300,000,000
Hedging Income	3,000,000
Interest Income	1,000,000
Consideration realised from the sale of assets	800,000
Gross Dividend from a resident company in which it has 30% voting rights	200,000
Total Revenue	305,000,000

Expenses include the following:

Expenses	GH₵
Reconnaissance & Prospecting Cost (Sparrows Mine)	45,000,000
Reconnaissance & Prospecting Cost (Dove Mines)	35,000,000
Depreciation	12,000,000
Exploration & Production Rights (Eagle Mine)	25,000,000
Expenses on Hedging transactions	5,000,000
Cost of the assets sold	300,000
Administrative Expenses	10,000,000
Profit before tax	120,000,000

Required: Compute the tax liability for each tax type that Gold Resources Ltd will be liable to pay in 2018.

Additional Information:

Item	Rate
Income Tax Rate for companies	25%
Mineral Income Tax Rate	35%
Mineral Royalty Rate	5%
Capital Allowance Rate	20% on straight line basis
Dividend Withholding Tax Rate	8%
Interest Withholding Tax Rate	8%

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Allowance, Hedging Income, Interest Withholding Tax, Mineral Income Tax, Mineral Royalty
Level: Level 1

Topic: Taxation of Mining Entities
Series: FEB 2020

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.

Question

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%

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Allowance, Capital gains tax, Income Tax, Mineral Royalty, Mining operations, Withholding Tax
Level: Level 1

Topic: Mineral Royalties vs. Resource Rent Tax
Series: AUGUST 2020

TX – May 2019 – L3 – Q5a – Minerals and mining

Tax computation for a mining company including the treatment of financial costs, depreciation, and mineral royalty, followed by the tax implications.

Question

a) Kaato Mining Company Ltd (Kaato) has been operating in the mining sector for some time now. The following data is relevant to the company’s operations for the 2017 year of assessment:

GH¢

Adjusted profit: 100,000,000
The following additional information is relevant:

Financial cost of GH¢900,000 inclusive of interest on working capital loan of GH¢20,000 was adjusted in arriving at the adjusted profit.
Financial gain from derivatives of GH¢600,000 was adjusted in arriving at the adjusted profit above.
Depreciation of GH¢125,000 was adjusted to the profit above.
Written down value brought forward from 2016 after 1-year capital allowance was granted stood at GH¢1,000,000. This was accordingly certified by the Audit Unit of the Ghana Revenue Authority.
Revenue of GH¢1,200,000,000 was realized on a quantity of gold production of 80,000,000 ounces. A review of the tax returns of Kaato Ltd revealed that Mineral Royalty was not calculated for 2017. Kaato applied for a waiver of penalty and interest on the mineral royalty to which GRA obliged.
Required: i) Compute the taxes payable. (6 marks)

ii) What is the tax treatment of financial cost under mineral operations? (2 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Allowance, Depreciation, Financial cost, Financial Gain, Mineral Royalty, Mining, Tax computation
Level: Level 3

Topic: Petroleum operations
Series: MAY 2019

OGMT – Feb 2020 – L1 – Q5 – Tax Liability Computation

Compute Gold Resources Ltd.'s tax liabilities for 2018, including mineral royalty, income tax, and withholding tax.

Question

The highlights of 2018 revenue and expenditure disclosed in tax returns filed by Gold Resources Ltd. include the following:

Revenue	GH₵
Gross income from its operations in 2018	300,000,000
Hedging Income	3,000,000
Interest Income	1,000,000
Consideration realised from the sale of assets	800,000
Gross Dividend from a resident company in which it has 30% voting rights	200,000
Total Revenue	305,000,000

Expenses include the following:

Expenses	GH₵
Reconnaissance & Prospecting Cost (Sparrows Mine)	45,000,000
Reconnaissance & Prospecting Cost (Dove Mines)	35,000,000
Depreciation	12,000,000
Exploration & Production Rights (Eagle Mine)	25,000,000
Expenses on Hedging transactions	5,000,000
Cost of the assets sold	300,000
Administrative Expenses	10,000,000
Profit before tax	120,000,000

Required: Compute the tax liability for each tax type that Gold Resources Ltd will be liable to pay in 2018.

Additional Information:

Item	Rate
Income Tax Rate for companies	25%
Mineral Income Tax Rate	35%
Mineral Royalty Rate	5%
Capital Allowance Rate	20% on straight line basis
Dividend Withholding Tax Rate	8%
Interest Withholding Tax Rate	8%

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Allowance, Hedging Income, Interest Withholding Tax, Mineral Income Tax, Mineral Royalty
Level: Level 1

Topic: Taxation of Mining Entities
Series: FEB 2020

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.

Question

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.

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%

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Allowance, Capital gains tax, Income Tax, Mineral Royalty, Mining operations, Withholding Tax
Level: Level 1

Topic: Mineral Royalties vs. Resource Rent Tax
Series: AUGUST 2020

TX – May 2019 – L3 – Q5a – Minerals and mining

Tax computation for a mining company including the treatment of financial costs, depreciation, and mineral royalty, followed by the tax implications.

Question

a) Kaato Mining Company Ltd (Kaato) has been operating in the mining sector for some time now. The following data is relevant to the company’s operations for the 2017 year of assessment:

GH¢

Adjusted profit: 100,000,000
The following additional information is relevant:

ii) What is the tax treatment of financial cost under mineral operations? (2 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Allowance, Depreciation, Financial cost, Financial Gain, Mineral Royalty, Mining, Tax computation
Level: Level 3

Topic: Petroleum operations
Series: MAY 2019

Question Tag: Mineral Royalty

Filter by Professional Bodies

Filter by Subject

Filter by Series

Filter by Topics

Filter by Levels

OGMT – Feb 2020 – L1 – Q5 – Tax Liability Computation

Compute Gold Resources Ltd.'s tax liabilities for 2018, including mineral royalty, income tax, and withholding tax.

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.

TX – May 2019 – L3 – Q5a – Minerals and mining

Tax computation for a mining company including the treatment of financial costs, depreciation, and mineral royalty, followed by the tax implications.

OGMT – Feb 2020 – L1 – Q5 – Tax Liability Computation

Compute Gold Resources Ltd.'s tax liabilities for 2018, including mineral royalty, income tax, and withholding tax.

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.

TX – May 2019 – L3 – Q5a – Minerals and mining

Tax computation for a mining company including the treatment of financial costs, depreciation, and mineral royalty, followed by the tax implications.

Our offerings

Contact Info

Customer

Get In Touch

Question Tag: Mineral Royalty

Filter by Professional Bodies

Filter by Subject

Filter by Series

Filter by Topics

Filter by Levels

OGMT – Feb 2020 – L1 – Q5 – Tax Liability Computation

Compute Gold Resources Ltd.'s tax liabilities for 2018, including mineral royalty, income tax, and withholding tax.

You're reporting an error for "OGMT – Feb 2020 – L1 – Q5 – Tax Liability Computation"

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.

You're reporting an error for "OGMT – Aug 2020 – L1 – Q4 – Taxation of Mining Entities"

TX – May 2019 – L3 – Q5a – Minerals and mining

Tax computation for a mining company including the treatment of financial costs, depreciation, and mineral royalty, followed by the tax implications.

You're reporting an error for "TX – May 2019 – L3 – Q5a – Minerals and mining"

OGMT – Feb 2020 – L1 – Q5 – Tax Liability Computation

Compute Gold Resources Ltd.'s tax liabilities for 2018, including mineral royalty, income tax, and withholding tax.

You're reporting an error for "OGMT – Feb 2020 – L1 – Q5 – Tax Liability Computation"

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.

You're reporting an error for "OGMT – Aug 2020 – L1 – Q4 – Taxation of Mining Entities"

TX – May 2019 – L3 – Q5a – Minerals and mining

Tax computation for a mining company including the treatment of financial costs, depreciation, and mineral royalty, followed by the tax implications.

You're reporting an error for "TX – May 2019 – L3 – Q5a – Minerals and mining"

Our offerings

Contact Info

Customer

Get In Touch

admin