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  • 15 Marks

STP – Feb 2020 – L2 – Q5 – Anti-Avoidance Provisions

Identify and discuss three anti-avoidance provisions in the Income Tax Act, 2015 (Act 896) and their limitations on tax planning.

Although tax planners have the liberty to devise schemes which reduce the tax liability of their clients, the Income Tax Act, 2015 (Act 896) contains provisions which limit tax planning schemes.

Required:
Identify any three (3) anti-avoidance provisions in Act 896 and discuss how each of these provisions places a limitation on the ability of a person to engage in tax planning.

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  • 22 Marks

STP – Feb 2020 – L2 – Q4 – Business Entity Tax Implications

Advise on tax implications of establishing a company, partnership, or sole proprietorship and identify which offers the least tax exposure for an investor.

As a renowned tax consultant, a potential investor in the real estate sector in Ghana is seeking your expert opinion on the tax implications of establishing a company, a partnership or a sole proprietorship and which form of the business organisations gives the least tax exposure for an investor.

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  • 20 Marks

STP – Aug 2020 – L2 – Q3 – Ownership Change Tax Implications

Discuss income tax implications for Obibini Ghana Limited if an investor acquires 51% of its shares.

Obibini Ghana Limited is a wholly owned Ghanaian real estate company. The basis period of the company ends on 31st December each year. In order to raise additional capital to expand its activities, the company is looking for an investor who would acquire at least 51% of the shares of the company. The managers of the company are engaged in negotiations with a potential investor and the parties expect the transaction to be completed on 31st January 2020. The financial statements of the company revealed that the company made a loss of GH₵2,500,000 for the period ended 31st December 2019. The company also had financial cost of GH₵100,000.00
The company also has a parcel of land located at Abokobi which the company purchased three years ago at the cost of GH₵100,000.00. The current value of the land is GH₵500,000.00

Required
The managers of the Obibini Ghana are seeking your opinion on the following:
i. the income tax implications for the company if an investor acquires 51% of the company’s shares.

ii. The tax planning opportunities available which could reduce the income tax exposure of company if an investor acquires 51% of the company’s shares.

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  • 20 Marks

STP – Aug 2020 – L2 – Q2 – Corporate Restructuring

Restructure Mr. Kofi Opoku’s companies to reduce tax exposure and provide cheaper financing for Speed Transport Ghana Limited.

Mr. Kofi Opoku is the direct shareholder of Unique Farms Ghana Limited and Speed Transport Ghana Limited. Unique Farms is engaged in tree crop farming and the company harvested the tree crops for the first time in 2019. In April, 2020, he received a copy of the audited financial statements of the two companies.
An analysis of the audited financial statements of the companies revealed the Unique Farms Ghana Limited is more profitable of the two companies. Speed Transport Ghana Limited however requires a lot of money for its operating activities and it mostly resorts to borrowing from financial institutions to meet its expenditure requirements. The high borrowing costs was affecting the profitability of the company.
Mr. Opoku also noticed that tax exposure on his investments is not ideal. Mr. Kofi Opoku has been informed that you are an expert in strategic tax planning.

Required
You are required to help Mr. Kofi Opoku restructure his companies in a manner that would provide a cheaper financing option for Speed Transport Ghana Limited and reduce his overall tax exposure on the investments.

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  • 20 Marks

STP – Aug 2020 – L2 – Q1 – Tax Planning vs. Tax Avoidance

Discuss distinction between tax planning and tax avoidance under Ghanaian tax law with examples and references.

The Council of the Chartered Institute of Taxation, Ghana (CITG) has invited you to speak at a Continuous Development Program (CPD) on the topic “The distinction between tax planning schemes and tax avoidance arrangements under Ghanaian tax laws”.
In the letter of invitation, the Council indicated that you are to submit a detailed write-up of your presentation.

Required
With the aid of appropriate examples and specific references to Ghanaian tax law provisions, write in sufficient detail, the content of your presentation.

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  • 20 Marks

STP – Aug 2018 – L2 – Q1 – Taxation of Capital Transactions

Advise Welmount Ghana Ltd on tax implications of selling land and shares, and measures to mitigate tax exposure.

Welmount Ghana Ltd is a construction company with its registered office located at Cantoments in Accra. In February 2007 it purchased a parcel of land at Achimota at the cost of GH₵75,000. The company spent GH₵25,000 to construct a fence wall around the property and to complete title registration processes at the Lands Commission. In March 2008, the company also purchased shares in Barclays bank of Ghana for GH₵20,000. In April 2017, the board of directors of the company decided to purchase another parcel of land at Tse Addo near the Trade Fair at La. The board further resolved to sell off the parcel of land purchased in February 2007 and the shares the company held in Barclays bank to finance the purchase of the parcel of land at Tse Addo. The company engaged the services of a valuer to determine the market value of the land located at Achimota and the shares the company held in Barclays bank. The company paid the valuer GH₵30,000 for his services. A marketing firm was contracted to advertise the sale of the parcel of land and the shares and the firm submitted a bill of GH₵35,000 to the company. In June 2017, the company sold the parcel of land and the shares in a single transaction for GH₵500,000. At the time of the sale, the market value of the parcel of land was GH₵400,000 and that of the shares was GH₵100,000. The company paid GH₵40,000 to a law firm to conduct due diligence on the parcel of land the company intended to purchase. In February 2018, the Managing Director of the company signed the purchase agreement and an amount of GH₵600,000 was paid to the owners of the property.

Required:

I. Advise on the company on the income tax implications of the realization of the assets. (20 marks) II. Advise on measures the company could have adopted to mitigate its tax exposure (if any) on the realization of the assets.

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  • 18 Marks

STP – Feb 2021 – L2 – Q5 – Non-tax Factors for Investment Location

State and explain three non-tax factors influencing the choice of investment location.

a) State and explain three (3) non-tax factors which may inform the choice of a particular location for an investment.

b) Discuss three (3) tax incentives available to investors who register under the Free Zone Act, 1995 (Act 504).

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  • 12 Marks

STP – Feb 2021 – L2 – Q4 – Taxation and Operating Strategies

Explain three anti-avoidance provisions in Ghana's Income Tax laws and their impact on tax planning.

State and explain three (3) anti-avoidance provisions found in the Income Tax laws of Ghana and how these provisions place a limitation on the tax planning opportunities available to taxpayers.

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  • 25 Marks

STP – Feb 2021 – L2 – Q3 – Taxation of Capital Transactions

Advise Tremor Ghana Ltd on tax implications of asset disposals and tax planning opportunities.

Tremor Ghana Ltd is a trading company with its registered office located at North Legon. The basis period of the company ends on $31^{\text {st }}$ December of every year. In August 2018, the company acquired the following assets.

ASSET COST (GHc)
Computers $50,000.00$
Motor Vehicles $150,000.00$
Land $350,000.00$

In November 2019, the company disposed of the assets for the following amounts:

ASSET COST (GHc)
Computers $70,000.00$
Motor Vehicles $160,000.00$
Land $450,000.00$

In January 2020, the company acquired a new office building at the cost of GHc600,000.

Required: (i) Advise the company on the income tax implications of the realization of the assets in November 2019. 20 marks (ii) Identify the tax planning opportunities the company could have employed to mitigate its tax exposure on the realization of the assets.

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  • 25 Marks

STP – Feb 2021 – L2 – Q1 – Strategic Tax Planning

Advise on tax implications of AIG acquiring 55% stake in Fluid Logistics Ghana and providing a GH₵6.5M loan, plus tax planning options.

The President of America Is Great (AIG) Group, a US Corporation, is exploring the possibility of acquiring a fifty-five percent stake in Fluid Logistics Ghana Limited. The stated capital of Fluid Logistics Ghana Limited is GH₵1,500,000. AIG Corporation intends providing a loan of GH₵6,500,000 to Fluid Logistics Ghana Limited when the transaction for the acquisition of the fifty-five percent stake is completed. The President of AIG Corporation is seeking your advice on the tax implications of the proposed transactions.

Required: Advise the President on: i. The income tax implications of the acquisition of a fifty-five percent stake in Fluid Logistics Ghana Limited. 9 marks ii. The income tax implications of providing the loan of GH₵6,500,000. 9 marks iii. The tax planning options available to minimize the tax effects of the proposed transactions.

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  • 20 Marks

AT – Aug 2022 – L3 – Q3 – Tax planning | International taxation

Provide a briefing paper on tax planning options available for an individual and their companies.

John Zookay is a Ghanaian Citizen who has lived in the Republic of Liberia for many years.
He is also a citizen of Liberia. He is an employee of a Multinational Company that has a
subsidiary company in Ghana and Liberia. He works for the Ghanaian subsidiary company,
but his role makes him work for the other subsidiary in Liberia as well. John has chosen Ghana
as a place of his permanent home even though his immediate family is based in the Republic
of Liberia and he visits Ghana anytime during the year.
In 2018, John spent more than 184 days outside Ghana working for the Liberia office. In
addition to his employment income in Ghana, he earned some income from a high yielding
fixed deposit accounts maintained with Bank of Africa, Ghana. His gross interest income for
the year 2018 was GH¢10,000 from Bank of Africa. A few years back, whilst studying in the
United Kingdom, he maintained some high yielding interest bearing account from which he
earned £3,500 in 2018. John does not know how the current income tax law “Income Tax Act,
2015 (Act 896)” will affect his incomes earned from Ghana and elsewhere in the United
Kingdom and is worried that he would be liable to tax on all his incomes in Ghana. He is keen
on getting tax planning advice from you to enable him reduce his tax liability (if any).
John also had serious business interests in Ghana. In view of this interests, he set up two
companies limited by shares in Ghana in which he implemented his business ideas. The
following are the objects of his two companies:
1) farming and production of palm fruits on commercial scale; and
2) processing of palm fruits into oil for both the local and international market

John together with his management team strategically decided that each of the companies
maintains equity in each other in order to avoid difficulties with sourcing for external funding
thus using income from dividends within his companies effectively. John intends that at some
point, he will merge the two companies into one to avoid all the legal compliance obligations
and duplication of cost associated with running separate companies. All the two companies are
instalment taxpayers and are required to file their self-assessment estimate at their various tax
offices.
John desperately needs your assistance to enable him structure his personal and business
interest so as to minimise his tax liability.
Required:
a) Prepare a briefing paper to John on the tax implications on him and his companies. (10 marks)
b) Advise him on the compliance obligations of his companies under self-assessment. (10 marks)

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  • 20 Marks

AT – May 2020 – L3 – Q3 – Tax Planning

Prepare a report explaining tax planning, its objectives, and tax planning maxims with examples for a manufacturing company's Board of Directors.

“Tax planning involves anticipating a set of circumstances and the identification of opportunities to minimize or defer tax liabilities within the law”.

You have been appointed as a Tax Consultant to Ken Group Ltd, a manufacturing company, having issues with Ghana Revenue Authority on tax evasion and avoidance. Your first assignment is to meet the Board of Directors to brief them on various issues governing tax planning and how to take advantage of the provisions in the taxation laws to avoid the payment of certain taxes and possibly defer certain tax liabilities.

Required: Write a report explaining the following:
a) Tax planning and its intended objectives. (10 marks)
b) Tax planning maxims or variables with appropriate examples. (10 marks)

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  • 4 Marks

AT – NOV 2021 – L3 – Q1c – Tax Planning

Outlines tax planning measures that can be used to reduce tax liability for a sole proprietorship business.

Evaluate FOUR (4) tax planning measures that you can adopt in your desire to form a sole proprietorship business. (4 marks)

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  • 10 Marks

AT – Nov 2020 – L3 – Q2b – Tax planning

Tax implications for a Singaporean investor looking to establish shoe or juice manufacturing companies in Ghana.

Following the government’s commitment to build one factory in each district in Ghana and its desire to ensure food sufficiency through the planting for food and jobs program, an investor from Singapore intends to invest in a shoe manufacturing company to be located at Accra in the Greater Accra Region of Ghana. He also considers starting a juice manufacturing company at Nsawam in the Eastern Region of Ghana in response to the investment drive of the government.

As part of the investment, he intends to incur the following cost and start operations in 2018 on either proposal, which is the shoe manufacturing company or the juice manufacturing company.

Description Amount (GH¢)
Building 7,200,000
Plant and Machinery 11,700,000
Furniture and Fittings 180,000
Computers 180,000

Additionally, he intends to recruit fresh graduates from the All Nations University College of Ghana. It is further projected that in the first three years, 2018, 2019, and 2020, it will incur GH¢36,000, GH¢32,400, and GH¢18,000 losses, respectively. The investor hopes to start making profit from the year 2021. He intends to borrow at 20% interest from his USA associate, amounting to the equivalent of GH¢100,000,000. The equity he intends to start with is GH¢36,000,000.

Required: As a tax adviser, evaluate the proposed investment by the Singaporean investor and the tax implication on the various activities highlighted in the scenario.

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  • 8 Marks

AT – Dec 2023 – L3 – Q2b – Tax planning

Discussing tax planning opportunities available to sole proprietorships that are not available to limited liability companies.

Tax planning opportunities are available to all persons. All business units may not have the same tax planning opportunities, hence the need to carefully select a business unit that may provide the intended benefits to the owner or owners.

Required:
Discuss FOUR (4) tax planning opportunities available to sole proprietorships which may not be available to limited liability companies.

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  • 10 Marks

AT – July 2023 – L3 – Q3a – Mergers, amalgamation, and reorganization

Discussing the tax implications of a 51% share acquisition and strategies to mitigate tax exposure.

Exclusif Homes Ghana Ltd is a wholly owned Ghanaian real estate company. The basis period of the company ends on 31 December each year. The company has obtained a government contract to build low-cost houses across the country. In order to raise additional capital to undertake this project, the company is looking for an investor who would acquire at least 51% of the shares of the company. The managers of the company are engaged in negotiations with several potential investors, and there is the likelihood of having an investor and agreements signed on 31 January 2022.

The financial statements of Exclusif Homes Ghana Ltd revealed that the company made a loss of GH¢2,500,000 for the period ended 31 December 2021. Included in the expenses of the company are financial costs and bad debt amounting to GH¢100,000 and GH¢150,000 respectively.

The company also has a parcel of land located at Abokobi which the company purchased three years ago at the cost of GH¢100,000. The current value of the land is GH¢500,000.

Required:
Advise Exclusif Homes Ghana Ltd on the following:

  1. The income tax implications for the company if an investor acquires 51% of the company’s shares and the tax planning opportunities available which could reduce the income tax exposure of the company if an investor acquires 51% of the company’s shares.
  2. Measures the acquirer can adopt to mitigate the tax effects (if any) of the proposed transaction.

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  • 4 Marks

AT – Nov 2017 – L3 – Q3b – Tax planning

Explaining the variables that constitute tax planning.

Tax planning is the act of arranging one’s tax affairs in ways that postpone or avoid taxes. By employing effective tax planning variables, one can have more positive cash flows to save and invest or more money to spend.

Required:
Explain what constitutes the variables of tax planning. (4 marks)

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  • 10 Marks

AT – Nov 2017 – L3 – Q3a – Business income – Corporate income tax, Tax planning

Evaluating the tax implications of an ICT hardware manufacturing business versus a mango plantation investment.

Following the government’s commitment to build one factory in each district in Ghana, an investor from Mauritius intends to invest in an ICT-Hardware manufacturing company to be located at Nsawam in the Eastern region of Ghana or start a mango plantation company at Aburi in the Eastern region of Ghana in response to the government’s investment drive.

As part of the investment, he intends to incur the following costs and start operations in 2018 on either proposal (ICT Hardware or Mango plantation):

Item Cost (GH¢)
Building 4,000,000
Plant and Machinery 6,500,000
Furniture and Fittings 100,000
Computers 100,000

Additionally, he intends to recruit fresh graduates from the Islamic University College of Ghana. It is further projected that in the first 3 years (2018, 2019, and 2020), the business will make losses as follows:

  • Year 2018: (GH¢20,000)
  • Year 2019: (GH¢18,000)
  • Year 2020: (GH¢10,000)

The investor hopes to start making profits from 2021 and intends to borrow a loan at 20% interest from his USA associate, amounting to the equivalent of GH¢80,000,000. The equity he intends to start with is GH¢20,000,000.

Required:
As a tax adviser, evaluate the proposed investment by the Mauritius investor and the tax implication on the various activities highlighted in the scenario.

(10 marks)

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  • 4 Marks

AT – March 2023 – L3 – Q2c – Tax planning

Advise on which housing option is more tax-efficient for the Managing Director in relation to employment and rental income.

The Management of 6Up Ltd has asked for advice on which of the following options is better for their Managing Director in connection with tax planning:

Option 1:
To rent the Managing Director’s personal house for use by the Managing Director as part of his condition of employment while taking a withholding tax at the rate of 8% on the rental payment.

Option 2:
To rent another place for the Managing Director instead of his own place so he may consider renting out his place of residence.

Required:
Advise on which option is better from the standpoint of tax planning implication for the Managing Director.

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  • 4 Marks

PSAF – Nov 2016 – L2 – Q5c – Public sector fiscal planning and budgeting

Explain tax policy and tax planning in the context of tax administration in Ghana.

Explain the following terms used in tax administration in Ghana:
i) Tax Policy
ii) Tax Planning
(4 marks)

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