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.
a). Under the provisions of the Internal Revenue Act, 2000 (Act 592), as amended a person’s income from an employment, as a general rule, is taxable. A person’s income from an employment is that person’s gains or profits from that employment. The gains or profits from an employment of a person include the allowances or benefits paid in cash or given in kind to, or on behalf of, that person from that employment.
As the Head of Tax Department of your company, you are required to indicate exceptions, if any, to the above general rule in your advisory capacity to your Managing Director, who is scheduled to make a presentation to strategic investors of your company. (10 Marks)
b). The Ghana Revenue Authority is in the process of abolishing the Provisional Assessments under section 76 of the Internal Revenue Act, 2000, (Act 592), as amended and instead, fully roll out the Self-assessment under section 78 of the Internal Revenue Act, 2000, (Act 592), as amended to all taxpayers (at the Large Taxpayer Office, Medium Taxpayer Offices, and Small Taxpayer Offices). As a tax consultant, you have been invited by the Association of Ghana Industries to speak to its members on the topic “The Merits of Self-assessment”.
You are required to state briefly only five (5) of the benefits or importance of Self-assessment. (10 Marks)
a) The following relates to the Kanto Mining Company (KMC) for the 2023 year of assessment.
GHe’ million
Operating Margin
1,700
Tax paid against 2023 year of assessment
100
Royalty paid
1.64
The following forms part of the tax returns of the company: i) The gross production was 2 million ounces of gold. ii) Revenue from the sale of the gold was GH¢6.8 billion. iii) Financial cost incurred from derivative which was included in the determination of the margin above was GH¢12 million. iv) The company made income from tailings amounting to GH¢14 million. The tailings value was not used in the determination of the margin above. v) The company received a machinery worth GH¢250 million in return for gold sold to affiliate, the market value of the machinery was GH¢270 million. This was not used in the computation of the margin above. vi) Research and development expenditure of GH¢0.7 million was used in arriving at the margin above. vii) Revenue received from the sale of fertilizer was GH¢45 million. This was a one-off transaction with an associated cost of GH¢23 million. These details have been included by the accountant in arriving at the margin above as part of gross revenue and production cost respectively. viii) Loan of GH¢120 million was received with interest of GH¢30 million each year to be liquidated in the next 4 years from an uncontrolled company. Part of the gold was used to pay for the interest repayment through a hedged programme. The quantity of gold was valued at GH¢38 million at the time of exchange and has not been accounted for in the books of account. ix) Shaft sinking and overburdening stripping cost incurred in the development of another field was GH¢67 million and added to production cost. x) Contribution towards community development programme of GH¢46.5 million was added to cost of production. The company provided proof with pictures of the donation with paper headlines on the ceremony. xi) Dividend received from three sources: a mining company at Obuasi, a petroleum upstream company in Takoradi and ceramics company at Datok (Upper East) all in Ghana amounting to GH¢20,000, GH¢30,000 and GH¢40,000 respectively. The total amount has been captured as part of revenue in note (ii) above. xii) Written Down Value carried forward of mining assets was GH¢140 million agreed with the Ghana Revenue Authority. They have granted capital allowance three times.
Required: Compute the tax payable.
b) Maanikuur Company LTD, a self-assessed taxpayer of the Ghana Revenue Authority (GRA), estimated its chargeable income for the assessment year, 2023 to be GH¢30 million.
The company commissioned a new Plant in April 2023 and realised that its production capacity has improved hence revised its estimated chargeable income to GH¢50 million in May 2023 and notified the GRA accordingly. Withholding taxes of GH¢150,000 was paid in May 2023.
In November 2023, the Directors were advised by the company’s External Auditors to adjust their chargeable income to avoid an imposition of a penalty by GRA. This was adhered to and subsequently the estimate was further revised to GH¢75 million and notified GRA. Withholding taxes of GH¢260,000 was paid in November 2023.
The company submitted its 2023 annual tax returns on the due date of 30 April 2024 and posted actual chargeable income of GH¢93.750 million.
The company tax rate is 25% and the Bank of Ghana statutory rate is 20%.
Required: i) Compute the instalment payments for the four quarters in the 2023 year of assessment. (6 marks) ii) Compute penalty payable by Maanikuur Company LTD, if any for 2023. (2 marks)
Explain the following as used in tax administration:
i) Self-Assessment
ii) Pre-emptive Assessment
iii) Administrative Assessment
iv) Tax Audit Assessment
Paa Tee is a sole proprietor and has not filed his tax returns for 2018 year of assessment as at April 1, 2019. He has approached you to file his tax returns for him and from all indications, he has paid all his taxes based on the self-assessment estimate.
Required:
i) What steps (if any) will you take to enable Paa Tee file his tax return and are there any financial implications in filing? (2 marks)
ii) What factors may give rise to an adjusted assessment by the Commissioner-General?
The Income Tax Act, 2015 (Act 896), as amended, requires all taxpayers to be on self-assessment as taxpayers know better their circumstances for tax purposes.
Required:
Evaluate FOUR (4) benefits of the self-assessment regime.
Ghana Revenue Authority has embarked on comprehensive reforms geared towards “Voluntary Tax Compliance.” Among the reforms is requesting taxpayers to determine their tax liabilities and consequently the tax payable. This has been criticized by some taxpayers as increasing the cost of compliance or doing business. You have been engaged by the Ministry of Finance to help Ghana Revenue Authority educate taxpayers on these reforms.
You are required to explain to taxpayers:
i. Self-Assessment Tax Regime.
(4 marks)
ii. Critically examine the benefits taxpayers stand to derive from the Self-Assessment Regime that has become part of tax administration in Ghana.
(6 marks)
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.
a). Under the provisions of the Internal Revenue Act, 2000 (Act 592), as amended a person’s income from an employment, as a general rule, is taxable. A person’s income from an employment is that person’s gains or profits from that employment. The gains or profits from an employment of a person include the allowances or benefits paid in cash or given in kind to, or on behalf of, that person from that employment.
As the Head of Tax Department of your company, you are required to indicate exceptions, if any, to the above general rule in your advisory capacity to your Managing Director, who is scheduled to make a presentation to strategic investors of your company. (10 Marks)
b). The Ghana Revenue Authority is in the process of abolishing the Provisional Assessments under section 76 of the Internal Revenue Act, 2000, (Act 592), as amended and instead, fully roll out the Self-assessment under section 78 of the Internal Revenue Act, 2000, (Act 592), as amended to all taxpayers (at the Large Taxpayer Office, Medium Taxpayer Offices, and Small Taxpayer Offices). As a tax consultant, you have been invited by the Association of Ghana Industries to speak to its members on the topic “The Merits of Self-assessment”.
You are required to state briefly only five (5) of the benefits or importance of Self-assessment. (10 Marks)
a) The following relates to the Kanto Mining Company (KMC) for the 2023 year of assessment.
GHe’ million
Operating Margin
1,700
Tax paid against 2023 year of assessment
100
Royalty paid
1.64
The following forms part of the tax returns of the company: i) The gross production was 2 million ounces of gold. ii) Revenue from the sale of the gold was GH¢6.8 billion. iii) Financial cost incurred from derivative which was included in the determination of the margin above was GH¢12 million. iv) The company made income from tailings amounting to GH¢14 million. The tailings value was not used in the determination of the margin above. v) The company received a machinery worth GH¢250 million in return for gold sold to affiliate, the market value of the machinery was GH¢270 million. This was not used in the computation of the margin above. vi) Research and development expenditure of GH¢0.7 million was used in arriving at the margin above. vii) Revenue received from the sale of fertilizer was GH¢45 million. This was a one-off transaction with an associated cost of GH¢23 million. These details have been included by the accountant in arriving at the margin above as part of gross revenue and production cost respectively. viii) Loan of GH¢120 million was received with interest of GH¢30 million each year to be liquidated in the next 4 years from an uncontrolled company. Part of the gold was used to pay for the interest repayment through a hedged programme. The quantity of gold was valued at GH¢38 million at the time of exchange and has not been accounted for in the books of account. ix) Shaft sinking and overburdening stripping cost incurred in the development of another field was GH¢67 million and added to production cost. x) Contribution towards community development programme of GH¢46.5 million was added to cost of production. The company provided proof with pictures of the donation with paper headlines on the ceremony. xi) Dividend received from three sources: a mining company at Obuasi, a petroleum upstream company in Takoradi and ceramics company at Datok (Upper East) all in Ghana amounting to GH¢20,000, GH¢30,000 and GH¢40,000 respectively. The total amount has been captured as part of revenue in note (ii) above. xii) Written Down Value carried forward of mining assets was GH¢140 million agreed with the Ghana Revenue Authority. They have granted capital allowance three times.
Required: Compute the tax payable.
b) Maanikuur Company LTD, a self-assessed taxpayer of the Ghana Revenue Authority (GRA), estimated its chargeable income for the assessment year, 2023 to be GH¢30 million.
The company commissioned a new Plant in April 2023 and realised that its production capacity has improved hence revised its estimated chargeable income to GH¢50 million in May 2023 and notified the GRA accordingly. Withholding taxes of GH¢150,000 was paid in May 2023.
In November 2023, the Directors were advised by the company’s External Auditors to adjust their chargeable income to avoid an imposition of a penalty by GRA. This was adhered to and subsequently the estimate was further revised to GH¢75 million and notified GRA. Withholding taxes of GH¢260,000 was paid in November 2023.
The company submitted its 2023 annual tax returns on the due date of 30 April 2024 and posted actual chargeable income of GH¢93.750 million.
The company tax rate is 25% and the Bank of Ghana statutory rate is 20%.
Required: i) Compute the instalment payments for the four quarters in the 2023 year of assessment. (6 marks) ii) Compute penalty payable by Maanikuur Company LTD, if any for 2023. (2 marks)
Explain the following as used in tax administration:
i) Self-Assessment
ii) Pre-emptive Assessment
iii) Administrative Assessment
iv) Tax Audit Assessment
Paa Tee is a sole proprietor and has not filed his tax returns for 2018 year of assessment as at April 1, 2019. He has approached you to file his tax returns for him and from all indications, he has paid all his taxes based on the self-assessment estimate.
Required:
i) What steps (if any) will you take to enable Paa Tee file his tax return and are there any financial implications in filing? (2 marks)
ii) What factors may give rise to an adjusted assessment by the Commissioner-General?
The Income Tax Act, 2015 (Act 896), as amended, requires all taxpayers to be on self-assessment as taxpayers know better their circumstances for tax purposes.
Required:
Evaluate FOUR (4) benefits of the self-assessment regime.
Ghana Revenue Authority has embarked on comprehensive reforms geared towards “Voluntary Tax Compliance.” Among the reforms is requesting taxpayers to determine their tax liabilities and consequently the tax payable. This has been criticized by some taxpayers as increasing the cost of compliance or doing business. You have been engaged by the Ministry of Finance to help Ghana Revenue Authority educate taxpayers on these reforms.
You are required to explain to taxpayers:
i. Self-Assessment Tax Regime.
(4 marks)
ii. Critically examine the benefits taxpayers stand to derive from the Self-Assessment Regime that has become part of tax administration in Ghana.
(6 marks)
