Penalty – Knowsia

ATP – Aug 2017 – L2 – Q2 – Indirect Taxes and Capital Taxes

Determine direct and indirect tax liabilities, including penalties, for Tosese Limited for 2015.

Question

Tosese Limited is a company registered in Ghana under the Companies Act 1963, Act 179 and has been in operation for several years. The company has been noted by the Tax Authorities for being non tax compliant and no returns were submitted and paid for direct taxes in the 2015 year of assessment. However, after much Tax Education with the support of his Tax Practitioner, the Finance Manager presented the financial statement to the GRA.

The summarised Income Statement for the year ended 31st December 2015 showed the following.

Tosese Limited Income Statement

Description	GH¢
Turnover	5,640,000.00
Direct Costs	4,840,000.00
Gross Profit	800,000.00
Administration and General Expenses	560,000.00
Profit before Tax	240,000.00
Taxation	60,000.00
Profit after Tax	180,000.00
Net Profit Transferred to Income Surplus	180,000.00

Income Surplus Account

Description	GH¢
Balance brought forward	1,575,000.00
Add Profit for the year	180,000.00
Balance carried forward	1,755,000.00

The details of the notes are shown below. Note 1. The company is registered for VAT and has not been submitting its returns regularly. The turnover per the VAT Returns submitted to the Commissioner-General during the period under review was GH¢5,080,000.00

Note 2. Direct Costs

Description	GH¢
Imports	3,684,000.00
Freight and Insurance	368,400.00
Import Duties	736,800.00
Transport	50,800.00
Total	4,840,000.00

Note 3. Administration and General Expenses included

Description	GH¢
Consultancy Fees	25,000.00
Printing and Stationery	84,000.00
Rent (Commercial Property)	61,280.00
Equipment Rentals	15,000.00
Directors Fees	60,000.00

Note 4. The Company since incorporation has never declared and paid any dividend to its four shareholders even though the company has consistently been declaring profit. The Commissioner-General has therefore decided to invoke Section 59 (8) of the Income Tax Act, 2015 Act 896 by notice in writing to apply 40% of the balance on the Income Surplus Account to Dividend Tax.

Required: You are to determine the tax liability due from the company in respect of direct and Indirect Taxes for 2015 year of assessment, including any relevant penalties that are applicable. Ignore Corporate Tax. Total 20 Marks.

Answer

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Tags: Dividend tax, Income Surplus, Penalty, VAT, Withholding Tax
Level: Level 2

Topic: Indirect Taxes
Series: AUG 2017

ATP – Aug 2017 – L2 – Q1 – Indirect Taxes

Compute input tax claimable and VAT payable for The Mall Limited for August 2016.

Question

a) The Mall Limited is a company registered under the Companies Act 1963, Act 179 and has been dealing in both taxable and non-taxable supplies. The company has been registered to operate as a VAT registered company. The company’s operations for August 2016 were as follows.

Description	GH¢
Total value of taxable supplies	1,451,125
Input Tax on Taxable Supplies	102,000
Input Tax which cannot be attributable directly to Supplies	45,000
Value of Exempt Supplies	300,000
Value of Relief Supplies	65,400

Required: Compute the input tax claimable by The Mall Limited for August 2016 and VAT payable, if any, for the same period.

b). NIMBOLA Limited is a company gazetted by the Commissioner-General of the Ghana Revenue Authority to be under self-assessment tax payment. During the 2016 year of assessment, the estimated Chargeable Income declared by the company was GH¢50,000. However, the actual Chargeable Income declared for the year per the Returns submitted to the Commissioner-General was GH¢80,000.

Required: Calculate (if any) the penalty for underestimation. Assume a statutory Bank of Ghana Discount rate of 25% for the year 2016. 14 marks.

Answer

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Tags: chargeable income, Penalty, Self Assessment., Underestimation
Level: Level 2

Topic: Tax Compliance Framework
Series: AUG 2017

PM – Nov 2021 – L2 – Q2 – Decision-Making Techniques

Determine whether to outsource production, calculate indifference price, and evaluate non-financial factors for internal production.

Question

Divine Grace (DG) Limited currently produces “Part-2011” internally but has received an offer from KK Plc to outsource the production. The offer is for 1,000 units at N100 per unit for the next five years. The cost accountant provides the following cost breakdown for internal production of 1,000 units:

Cost Components	Amount (₦)
Direct materials	44,000
Direct production labour	22,000
Variable production overhead	14,000
Depreciation on machine	20,000
Product and process engineering	8,000
Rent	4,000
General overheads	10,000
Total	122,000

Additional information:

The machine used exclusively for “Part 2011” was acquired last year for ₦120,000 and has a useful life of six years with no residual value.
The machine could be sold today for ₦30,000.
Product and process engineering costs will cease after one year if outsourced.
Rent savings from storage use if “Part-2011” production stops is ₦2,000.
General overheads are fixed and not allocated to “Part-2011” if outsourced.
Assume a required rate of return of 12%.

Required:
a. Should DG Limited outsource “Part 2011”? (10 Marks)
b. What maximum price should KK Plc quote for 1,000 units to make DG indifferent between outsourcing and internal production? (5 Marks)
c. What non-financial factors would favor internal production over outsourcing? (5 Marks)

Answer

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Tags: Fixed Costs, Make or buy decision, Non-Financial Factors, Outsourcing, Penalty, Pricing, Variable Costs
Level: Level 2

Topic: Decision-making techniques
Series: NOV 2021

BL – MAY 2016 – L1 – SA – Q10 – Introduction to Law

This question asks about the maximum term of imprisonment for an economic crime.

Question

The maximum term of imprisonment on conviction for an economic crime is
A. 10 years
B. 15 years
C. 18 years
D. 20 years
E. 25 years

Answer

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Tags: Economic Crime, Imprisonment, Penalty
Level: Level 1

Topic: Introduction to Law
Series: MAY 2016

ATP – Aug 2017 – L2 – Q2 – Indirect Taxes and Capital Taxes

Determine direct and indirect tax liabilities, including penalties, for Tosese Limited for 2015.

Question

The summarised Income Statement for the year ended 31st December 2015 showed the following.

Tosese Limited Income Statement

Description	GH¢
Turnover	5,640,000.00
Direct Costs	4,840,000.00
Gross Profit	800,000.00
Administration and General Expenses	560,000.00
Profit before Tax	240,000.00
Taxation	60,000.00
Profit after Tax	180,000.00
Net Profit Transferred to Income Surplus	180,000.00

Income Surplus Account

Description	GH¢
Balance brought forward	1,575,000.00
Add Profit for the year	180,000.00
Balance carried forward	1,755,000.00

Note 2. Direct Costs

Description	GH¢
Imports	3,684,000.00
Freight and Insurance	368,400.00
Import Duties	736,800.00
Transport	50,800.00
Total	4,840,000.00

Note 3. Administration and General Expenses included

Description	GH¢
Consultancy Fees	25,000.00
Printing and Stationery	84,000.00
Rent (Commercial Property)	61,280.00
Equipment Rentals	15,000.00
Directors Fees	60,000.00

Answer

Find Related Questions by Tags, levels, etc.

Tags: Dividend tax, Income Surplus, Penalty, VAT, Withholding Tax
Level: Level 2

Topic: Indirect Taxes
Series: AUG 2017

ATP – Aug 2017 – L2 – Q1 – Indirect Taxes

Compute input tax claimable and VAT payable for The Mall Limited for August 2016.

Question

Description	GH¢
Total value of taxable supplies	1,451,125
Input Tax on Taxable Supplies	102,000
Input Tax which cannot be attributable directly to Supplies	45,000
Value of Exempt Supplies	300,000
Value of Relief Supplies	65,400

Required: Compute the input tax claimable by The Mall Limited for August 2016 and VAT payable, if any, for the same period.

Required: Calculate (if any) the penalty for underestimation. Assume a statutory Bank of Ghana Discount rate of 25% for the year 2016. 14 marks.

Answer

Find Related Questions by Tags, levels, etc.

Tags: chargeable income, Penalty, Self Assessment., Underestimation
Level: Level 2

Topic: Tax Compliance Framework
Series: AUG 2017

PM – Nov 2021 – L2 – Q2 – Decision-Making Techniques

Determine whether to outsource production, calculate indifference price, and evaluate non-financial factors for internal production.

Question

Cost Components	Amount (₦)
Direct materials	44,000
Direct production labour	22,000
Variable production overhead	14,000
Depreciation on machine	20,000
Product and process engineering	8,000
Rent	4,000
General overheads	10,000
Total	122,000

Additional information:

The machine used exclusively for “Part 2011” was acquired last year for ₦120,000 and has a useful life of six years with no residual value.
The machine could be sold today for ₦30,000.
Product and process engineering costs will cease after one year if outsourced.
Rent savings from storage use if “Part-2011” production stops is ₦2,000.
General overheads are fixed and not allocated to “Part-2011” if outsourced.
Assume a required rate of return of 12%.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Fixed Costs, Make or buy decision, Non-Financial Factors, Outsourcing, Penalty, Pricing, Variable Costs
Level: Level 2

Topic: Decision-making techniques
Series: NOV 2021

BL – MAY 2016 – L1 – SA – Q10 – Introduction to Law

This question asks about the maximum term of imprisonment for an economic crime.

Question

The maximum term of imprisonment on conviction for an economic crime is
A. 10 years
B. 15 years
C. 18 years
D. 20 years
E. 25 years

Answer

Find Related Questions by Tags, levels, etc.

Tags: Economic Crime, Imprisonment, Penalty
Level: Level 1

Topic: Introduction to Law
Series: MAY 2016

Question Tag: Penalty

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ATP – Aug 2017 – L2 – Q2 – Indirect Taxes and Capital Taxes

Determine direct and indirect tax liabilities, including penalties, for Tosese Limited for 2015.

ATP – Aug 2017 – L2 – Q1 – Indirect Taxes

Compute input tax claimable and VAT payable for The Mall Limited for August 2016.

PM – Nov 2021 – L2 – Q2 – Decision-Making Techniques

Determine whether to outsource production, calculate indifference price, and evaluate non-financial factors for internal production.

BL – MAY 2016 – L1 – SA – Q10 – Introduction to Law

This question asks about the maximum term of imprisonment for an economic crime.

ATP – Aug 2017 – L2 – Q2 – Indirect Taxes and Capital Taxes

Determine direct and indirect tax liabilities, including penalties, for Tosese Limited for 2015.

ATP – Aug 2017 – L2 – Q1 – Indirect Taxes

Compute input tax claimable and VAT payable for The Mall Limited for August 2016.

PM – Nov 2021 – L2 – Q2 – Decision-Making Techniques

Determine whether to outsource production, calculate indifference price, and evaluate non-financial factors for internal production.

BL – MAY 2016 – L1 – SA – Q10 – Introduction to Law

This question asks about the maximum term of imprisonment for an economic crime.

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ATP – Aug 2017 – L2 – Q2 – Indirect Taxes and Capital Taxes

Determine direct and indirect tax liabilities, including penalties, for Tosese Limited for 2015.

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ATP – Aug 2017 – L2 – Q1 – Indirect Taxes

Compute input tax claimable and VAT payable for The Mall Limited for August 2016.

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PM – Nov 2021 – L2 – Q2 – Decision-Making Techniques

Determine whether to outsource production, calculate indifference price, and evaluate non-financial factors for internal production.

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BL – MAY 2016 – L1 – SA – Q10 – Introduction to Law

This question asks about the maximum term of imprisonment for an economic crime.

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ATP – Aug 2017 – L2 – Q2 – Indirect Taxes and Capital Taxes

Determine direct and indirect tax liabilities, including penalties, for Tosese Limited for 2015.

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ATP – Aug 2017 – L2 – Q1 – Indirect Taxes

Compute input tax claimable and VAT payable for The Mall Limited for August 2016.

You're reporting an error for "ATP – Aug 2017 – L2 – Q1 – Indirect Taxes"

PM – Nov 2021 – L2 – Q2 – Decision-Making Techniques

Determine whether to outsource production, calculate indifference price, and evaluate non-financial factors for internal production.

You're reporting an error for "PM – Nov 2021 – L2 – Q2 – Decision-Making Techniques"

BL – MAY 2016 – L1 – SA – Q10 – Introduction to Law

This question asks about the maximum term of imprisonment for an economic crime.

You're reporting an error for "BL – MAY 2016 – L1 – SA – Q10 – Introduction to Law"

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