Mining – Knowsia

ATP – Feb 2020 – L2 – Q4 – Income Tax Computation

Explain unrelieved losses and rights for Mancheri Company under Income Tax Act for 2019 loss.

Question

Mancheri Company Limited was incorporated under the Companies Act, 1963, (Act 179) on 1st April, 2018 to prospect for diamonds in the Oti River in Mancheri in the Oti Region of Ghana. The Managing Director was presented a draft management report on the operations of the company. A review of the Comprehensive Income Statement for the year ended 31st March, 2019 showed a loss of GH¢3,663,000. He was not happy with the loss declared. He remembered a radio discussion, while on duty to Accra, where a Ghana Revenue Authority (GRA) official being interviewed talked on “Unrelieved Losses” in his presentation. He therefore approached you to explain and advise him on the implications of the loss on future tax liabilities of the company.

A summary of the Income Statement was as follows:

Description	GH¢	GH¢
Income from Operations		108,000
Operational Cost	2,240,000
Administration and General Expenses	1,395,000
Finance Charges	136,000
		3,771,000
Net Loss		3,663,000

Required:
Explain in a report to the Managing Director what are “Unrelieved Losses” and the rights available to the company for the loss declared at the end of its first year of operations under the Income Tax Act, 2015 (Act 896).

Answer

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Tags: Income Tax Act, Mining, Unrelieved losses
Level: Level 2

Topic: Income Tax Computation
Series: FEB 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

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

Topic: Petroleum operations
Series: MAY 2019

AT – May 2017 – L3 – Q5b – Business income – Corporate income tax

Calculate the royalty payable and compute the corporate tax payable by a mining company based on provided financial data.

Question

b) AB Ltd is a mining company and has the following set of data relating to the 2016 year of assessment:

Item	Amount (GH¢)
Revenue	5,000,000
Cost of operation	3,000,000
Chargeable income	2,000,000

From the above, the following came to light:

Capital allowance of GH¢500,000 was added to the cost.
Penalty of GH¢100,000 was imposed by the Minerals Commission for failure to follow standard operating guidelines.
Loss from operation amounting to GH¢50,000 recorded in 2010 was added to the cost above.
According to the accountant, the company is entitled to carryover its losses.

Required:

i) Calculate the Royalty payable, if any. (2.5 marks)

ii) Compute the corporate tax payable by AB Ltd. (2.5 marks)
(Total: 5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Allowance, Corporate Tax, Mining, Royalty, Tax computations
Level: Level 3

Topic: Business income - Corporate income tax
Series: MAY 2017

AT – Nov 2023 – L3 – Q5a – Minerals and mining

Advise on what constitutes the cost of an asset at the commencement of commercial production in mineral operations.

Question

ACM Mining Ltd has commenced mining operations in Ghana. It procured heavy-duty machinery and equipment for use in its operations.

Required:
Advise ACM Mining Ltd on what constitutes the cost of an asset at the commencement of commercial production in respect of mineral operations. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Allowance, Cost of Asset, Mineral Operations, Mining, Taxation
Level: Level 3

Topic: Minerals and mining
Series: NOV 2023

ATP – Feb 2020 – L2 – Q4 – Income Tax Computation

Explain unrelieved losses and rights for Mancheri Company under Income Tax Act for 2019 loss.

Question

A summary of the Income Statement was as follows:

Description	GH¢	GH¢
Income from Operations		108,000
Operational Cost	2,240,000
Administration and General Expenses	1,395,000
Finance Charges	136,000
		3,771,000
Net Loss		3,663,000

Answer

Find Related Questions by Tags, levels, etc.

Tags: Income Tax Act, Mining, Unrelieved losses
Level: Level 2

Topic: Income Tax Computation
Series: FEB 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

AT – May 2017 – L3 – Q5b – Business income – Corporate income tax

Calculate the royalty payable and compute the corporate tax payable by a mining company based on provided financial data.

Question

b) AB Ltd is a mining company and has the following set of data relating to the 2016 year of assessment:

Item	Amount (GH¢)
Revenue	5,000,000
Cost of operation	3,000,000
Chargeable income	2,000,000

From the above, the following came to light:

Capital allowance of GH¢500,000 was added to the cost.
Penalty of GH¢100,000 was imposed by the Minerals Commission for failure to follow standard operating guidelines.
Loss from operation amounting to GH¢50,000 recorded in 2010 was added to the cost above.
According to the accountant, the company is entitled to carryover its losses.

Required:

i) Calculate the Royalty payable, if any. (2.5 marks)

ii) Compute the corporate tax payable by AB Ltd. (2.5 marks)
(Total: 5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Allowance, Corporate Tax, Mining, Royalty, Tax computations
Level: Level 3

Topic: Business income - Corporate income tax
Series: MAY 2017

AT – Nov 2023 – L3 – Q5a – Minerals and mining

Advise on what constitutes the cost of an asset at the commencement of commercial production in mineral operations.

Question

ACM Mining Ltd has commenced mining operations in Ghana. It procured heavy-duty machinery and equipment for use in its operations.

Required:
Advise ACM Mining Ltd on what constitutes the cost of an asset at the commencement of commercial production in respect of mineral operations. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Allowance, Cost of Asset, Mineral Operations, Mining, Taxation
Level: Level 3

Topic: Minerals and mining
Series: NOV 2023

Question Tag: Mining

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ATP – Feb 2020 – L2 – Q4 – Income Tax Computation

Explain unrelieved losses and rights for Mancheri Company under Income Tax Act for 2019 loss.

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.

AT – May 2017 – L3 – Q5b – Business income – Corporate income tax

Calculate the royalty payable and compute the corporate tax payable by a mining company based on provided financial data.

AT – Nov 2023 – L3 – Q5a – Minerals and mining

Advise on what constitutes the cost of an asset at the commencement of commercial production in mineral operations.

ATP – Feb 2020 – L2 – Q4 – Income Tax Computation

Explain unrelieved losses and rights for Mancheri Company under Income Tax Act for 2019 loss.

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.

AT – May 2017 – L3 – Q5b – Business income – Corporate income tax

Calculate the royalty payable and compute the corporate tax payable by a mining company based on provided financial data.

AT – Nov 2023 – L3 – Q5a – Minerals and mining

Advise on what constitutes the cost of an asset at the commencement of commercial production in mineral operations.

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ATP – Feb 2020 – L2 – Q4 – Income Tax Computation

Explain unrelieved losses and rights for Mancheri Company under Income Tax Act for 2019 loss.

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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"

AT – May 2017 – L3 – Q5b – Business income – Corporate income tax

Calculate the royalty payable and compute the corporate tax payable by a mining company based on provided financial data.

You're reporting an error for "AT – May 2017 – L3 – Q5b – Business income – Corporate income tax"

AT – Nov 2023 – L3 – Q5a – Minerals and mining

Advise on what constitutes the cost of an asset at the commencement of commercial production in mineral operations.

You're reporting an error for "AT – Nov 2023 – L3 – Q5a – Minerals and mining"

ATP – Feb 2020 – L2 – Q4 – Income Tax Computation

Explain unrelieved losses and rights for Mancheri Company under Income Tax Act for 2019 loss.

You're reporting an error for "ATP – Feb 2020 – L2 – Q4 – Income Tax Computation"

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"

AT – May 2017 – L3 – Q5b – Business income – Corporate income tax

Calculate the royalty payable and compute the corporate tax payable by a mining company based on provided financial data.

You're reporting an error for "AT – May 2017 – L3 – Q5b – Business income – Corporate income tax"

AT – Nov 2023 – L3 – Q5a – Minerals and mining

Advise on what constitutes the cost of an asset at the commencement of commercial production in mineral operations.

You're reporting an error for "AT – Nov 2023 – L3 – Q5a – Minerals and mining"

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