- 20 Marks
ATP – Aug 2017 – L2 – Q3 – Employment Income Taxation
Compute tax liability for Mr Alavanyo Godoo for 2016, including salary, allowances, and pension withdrawal.
Question
Mr Alavanyo Godoo was employed as the Chief Executive Officer of Mandigo Company Limited, on a monthly Salary of GH¢20,000.00, subject to review after every three years. His appointment took effect from January 1, 2014. Mr Alavanyo Godoo is provided a soft furnished accommodation and a vehicle and a driver, which is fuelled by the company. He is also entitled to the following other allowances each month: a) Responsibility GH¢1,000.00 b) Accountable Entertainment (supported by receipts) GH¢300.00 c) House / Garden Boy 15% (Basic Salary) d) Clothing (Paid January 1 each year) 20% (Basic Salary) e) Professional Allowance 15% (Basic Salary)
During the year 2016, he received a total dividend of GH¢6,000.00 net of taxes from two companies where he has investments. The total number of ordinary shares respectively in Bremang Ltd and Asukwakwa (Ghana) Ltd are 15,000 and 30,000. Mr Alavanyo Godoo contributes 5.5% of his basic Salary to SSNIT and 10% to the third tier Pension Fund to which his employer also contributes 5%. During the year under review, Mr Alavanyo Godoo withdrew 60% of the balance as at 30th June 2016 from his Pension Fund.
He has the following Life Assurance Policies:
| Company | Sum Assured GH¢ | Premium GH¢ |
|---|---|---|
| Gomido Insurance Co. Ltd. | 40,000.00 | 3,600.00 |
| Ebeyeyie Co. Ltd | 25,000.00 | 2,400.00 |
He is married and has three children. The eldest son is attending Medical School at John Hopkins University, Maryland USA and the rest are in Government approved Senior Secondary Schools in Accra. His wife is a housewife and does not provide much for the upkeep of the children. He looks after his 65 year old mother. He has applied for and granted all reliefs.
Required: Compute the tax liability for Mr Alavanyo Godoo for the 2016 year of Assessment.
Annual Tax Rates
| GH¢ | % | |
|---|---|---|
| First | 2,592 | NIL |
| Next | 1,296 | 5 |
| Next | 1,812 | 10 |
| Next | 33,180 | 17.5 |
| Next | 33,880 | 25 |
20 Marks
Find Related Questions by Tags, levels, etc.
- Tags: Allowances, Benefits in kind, Pension Fund, Salary, Tax Reliefs
- Level: Level 2
- Topic: Employment Income Taxation
- Series: AUG 2017
