Tax Treatment – Knowsia

ATP – Aug 2019 – L2 – Q5 – Individual Tax Liability

Compute Steve Mills’ 2018 tax liability, including salary, allowances, and reliefs.

Question

Mr Steve Mills was employed as the Chief Executive Officer of Mpeasem Company Limited, on a monthly Salary of GH¢ 40,000.00, subject to 20% upward review after every two years. His appointment took effect from January 1, 2015. Mr Steve Mills 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:
i. Responsibility: 2,000.00
ii. Accountable Entertainment: 500.00
iii. House / Garden Boy: 15% (Basic Salary)
iv. Clothing (Paid January 1 each year): 20% (Basic Salary)
v. Professional Allowance: 10% (Basic Salary)

During the year 2018, 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 Ebeyeyie Co. Ltd and Chinderi Oil Mills (Ghana) Ltd are 15,000 and 30,000. Mr Steve Mills contributes 5.5% of his basic Salary to SSNIT and 10% to the third tier Pension Fund to which his employer also contributes 5%. He is married and has three children. The eldest son is attending KNUST, and the rest are in Government approved Senior High Schools in Accra. His wife is a housewife and does not provide much for the up keep of the children. He provides for his 70 year old father. He has applied for and granted all reliefs. Mr Steve Mills represents the company at all state functions and programmes and is therefore expected to be decently dressed at all times. The industry standard also requires all employees to be decently dressed.

Annual Individual Tax Rates (Effective 1st January 2018)

	GH¢	%
First	3,132	NIL
Next	840	5
Next	1,200	10
Next	33,720	17.5
Next	38,892	25

Required:
a. Compute the tax liability for Mr Steve Mills for 2018 year of Assessment.

b. Provide justification for the basis of your treatment of the transactions, where necessary.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Allowances, Commissioner-General Ruling, Employment Income, Tax Treatment
Level: Level 2

Topic: Income Tax Computation
Series: AUG 2019

PT – Nov 2024 – L2 – Q4c – Tax Treatment of Repairs and Renovations

Explains the tax treatment of repairs and renovations for businesses.

Question

Question:
Repairs are essential for maintaining the safety of a property, and renovation improves the overall functionality of a property.

Required:
What is the tax treatment of repairs and renovations?

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital allowances, Depreciation, Renovations, Repairs, Tax Deductibility, Tax Treatment
Level: Level 2

Topic: Corporate Tax Liabilities
Series: Nov 2024

PT – Mar 2024 – L2 – Q5c – Income Tax Liabilities

Explain the tax treatment of a gift received.

Question

What is the tax treatment of a gift received?

Answer

Find Related Questions by Tags, levels, etc.

Tags: Gift tax, Income Tax, Income Tax Act, Tax Treatment
Level: Level 2

Topic: Income Tax Liabilities
Series: MAR 2024

AT – Aug 2022 – L3 – Q1a – International taxation

Tax treatment for a non-resident company using a subsidiary to execute a project.

Question

Jantua Ltd (Jantua) is a company incorporated in the Republic of Israel with subsidiaries across other countries, including Frankaa Company Ltd (Frankaa) in Ghana. All subsidiaries were incorporated in their respective countries by Jantua.

Jantua won a contract with the Ministry of Roads and Highways to construct a road in Ghana. Jantua used its subsidiary, Frankaa, to carry out the project. Jantua billed the Ministry of Roads and Highways for the work done. Likewise, Frankaa billed Jantua for management and technical services on the road project.

Required:
What is the tax treatment of this arrangement?
(4 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Contracting services, Non-resident company, Permanent Establishment, Tax Treatment, Withholding Tax
Level: Level 3

Topic: International taxation
Series: AUG 2022

AT – NOV 2021 – L3 – Q1a – Business income – Corporate income tax | International taxation

Compute tax payable for a Free Zone Enterprise based on income from local and export sales and determine the treatment of certain adjustments.

Question

Orga Ltd has the following information relating to its operation as a Free Zone Enterprise for the 2020 year of assessment with a basis period from January to December each year:

Description	Amount (GH¢)
Revenue	35,000,000
Cost	(21,000,000)
Profit	14,000,000

Additional information:

Depreciation of GH¢200,000 has been added to the cost above.
Revenue: Local sales GH¢25,000,000; Exports GH¢10,000,000.
The Managing Director was provided with a mini bar and a swimming pool as part of his employment package costing GH¢1,200,000 in his private residence. The employer added only GH¢200,000 as part of the employment income for tax purposes. The total cost has been adjusted to the cost above.
The dividend received from the United States of America net of taxes of 10% was GH¢22,500. This income has not yet been recorded, although it has been credited in the bank statement.
The excess proceeds from the sale of a depreciable asset over the written down value amount to GH¢300,000. This has not yet been recorded in the company’s accounts.

Required:
i) Compute the tax payable. (6 marks)
ii) Explain the tax treatment of the cost of the swimming pool and mini bar. (2 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Depreciation, Dividend income, Excess Proceeds, Export Sales, Free Zone Enterprise, Local sales, Tax computation, Tax Treatment
Level: Level 3

Topic: Business income - Corporate income tax, International taxation
Series: NOV 2021

ATP – Aug 2019 – L2 – Q5 – Individual Tax Liability

Compute Steve Mills’ 2018 tax liability, including salary, allowances, and reliefs.

Question

Annual Individual Tax Rates (Effective 1st January 2018)

	GH¢	%
First	3,132	NIL
Next	840	5
Next	1,200	10
Next	33,720	17.5
Next	38,892	25

Required:
a. Compute the tax liability for Mr Steve Mills for 2018 year of Assessment.

b. Provide justification for the basis of your treatment of the transactions, where necessary.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Allowances, Commissioner-General Ruling, Employment Income, Tax Treatment
Level: Level 2

Topic: Income Tax Computation
Series: AUG 2019

PT – Nov 2024 – L2 – Q4c – Tax Treatment of Repairs and Renovations

Explains the tax treatment of repairs and renovations for businesses.

Question

Question:
Repairs are essential for maintaining the safety of a property, and renovation improves the overall functionality of a property.

Required:
What is the tax treatment of repairs and renovations?

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital allowances, Depreciation, Renovations, Repairs, Tax Deductibility, Tax Treatment
Level: Level 2

Topic: Corporate Tax Liabilities
Series: Nov 2024

PT – Mar 2024 – L2 – Q5c – Income Tax Liabilities

Explain the tax treatment of a gift received.

Question

What is the tax treatment of a gift received?

Answer

Find Related Questions by Tags, levels, etc.

Tags: Gift tax, Income Tax, Income Tax Act, Tax Treatment
Level: Level 2

Topic: Income Tax Liabilities
Series: MAR 2024

AT – Aug 2022 – L3 – Q1a – International taxation

Tax treatment for a non-resident company using a subsidiary to execute a project.

Question

Required:
What is the tax treatment of this arrangement?
(4 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Contracting services, Non-resident company, Permanent Establishment, Tax Treatment, Withholding Tax
Level: Level 3

Topic: International taxation
Series: AUG 2022

AT – NOV 2021 – L3 – Q1a – Business income – Corporate income tax | International taxation

Compute tax payable for a Free Zone Enterprise based on income from local and export sales and determine the treatment of certain adjustments.

Question

Orga Ltd has the following information relating to its operation as a Free Zone Enterprise for the 2020 year of assessment with a basis period from January to December each year:

Description	Amount (GH¢)
Revenue	35,000,000
Cost	(21,000,000)
Profit	14,000,000

Additional information:

Depreciation of GH¢200,000 has been added to the cost above.
Revenue: Local sales GH¢25,000,000; Exports GH¢10,000,000.
The Managing Director was provided with a mini bar and a swimming pool as part of his employment package costing GH¢1,200,000 in his private residence. The employer added only GH¢200,000 as part of the employment income for tax purposes. The total cost has been adjusted to the cost above.
The dividend received from the United States of America net of taxes of 10% was GH¢22,500. This income has not yet been recorded, although it has been credited in the bank statement.
The excess proceeds from the sale of a depreciable asset over the written down value amount to GH¢300,000. This has not yet been recorded in the company’s accounts.

Required:
i) Compute the tax payable. (6 marks)
ii) Explain the tax treatment of the cost of the swimming pool and mini bar. (2 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Depreciation, Dividend income, Excess Proceeds, Export Sales, Free Zone Enterprise, Local sales, Tax computation, Tax Treatment
Level: Level 3

Topic: Business income - Corporate income tax, International taxation
Series: NOV 2021

Question Tag: Tax Treatment

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ATP – Aug 2019 – L2 – Q5 – Individual Tax Liability

Compute Steve Mills’ 2018 tax liability, including salary, allowances, and reliefs.

PT – Nov 2024 – L2 – Q4c – Tax Treatment of Repairs and Renovations

Explains the tax treatment of repairs and renovations for businesses.

PT – Mar 2024 – L2 – Q5c – Income Tax Liabilities

Explain the tax treatment of a gift received.

AT – Aug 2022 – L3 – Q1a – International taxation

Tax treatment for a non-resident company using a subsidiary to execute a project.

AT – NOV 2021 – L3 – Q1a – Business income – Corporate income tax | International taxation

Compute tax payable for a Free Zone Enterprise based on income from local and export sales and determine the treatment of certain adjustments.

ATP – Aug 2019 – L2 – Q5 – Individual Tax Liability

Compute Steve Mills’ 2018 tax liability, including salary, allowances, and reliefs.

PT – Nov 2024 – L2 – Q4c – Tax Treatment of Repairs and Renovations

Explains the tax treatment of repairs and renovations for businesses.

PT – Mar 2024 – L2 – Q5c – Income Tax Liabilities

Explain the tax treatment of a gift received.

AT – Aug 2022 – L3 – Q1a – International taxation

Tax treatment for a non-resident company using a subsidiary to execute a project.

AT – NOV 2021 – L3 – Q1a – Business income – Corporate income tax | International taxation

Compute tax payable for a Free Zone Enterprise based on income from local and export sales and determine the treatment of certain adjustments.

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ATP – Aug 2019 – L2 – Q5 – Individual Tax Liability

Compute Steve Mills’ 2018 tax liability, including salary, allowances, and reliefs.

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PT – Nov 2024 – L2 – Q4c – Tax Treatment of Repairs and Renovations

Explains the tax treatment of repairs and renovations for businesses.

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PT – Mar 2024 – L2 – Q5c – Income Tax Liabilities

Explain the tax treatment of a gift received.

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AT – Aug 2022 – L3 – Q1a – International taxation

Tax treatment for a non-resident company using a subsidiary to execute a project.

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AT – NOV 2021 – L3 – Q1a – Business income – Corporate income tax | International taxation

Compute tax payable for a Free Zone Enterprise based on income from local and export sales and determine the treatment of certain adjustments.

You're reporting an error for "AT – NOV 2021 – L3 – Q1a – Business income – Corporate income tax | International taxation"

ATP – Aug 2019 – L2 – Q5 – Individual Tax Liability

Compute Steve Mills’ 2018 tax liability, including salary, allowances, and reliefs.

You're reporting an error for "ATP – Aug 2019 – L2 – Q5 – Individual Tax Liability"

PT – Nov 2024 – L2 – Q4c – Tax Treatment of Repairs and Renovations

Explains the tax treatment of repairs and renovations for businesses.

You're reporting an error for "PT – Nov 2024 – L2 – Q4c – Tax Treatment of Repairs and Renovations"

PT – Mar 2024 – L2 – Q5c – Income Tax Liabilities

Explain the tax treatment of a gift received.

You're reporting an error for "PT – Mar 2024 – L2 – Q5c – Income Tax Liabilities"

AT – Aug 2022 – L3 – Q1a – International taxation

Tax treatment for a non-resident company using a subsidiary to execute a project.

You're reporting an error for "AT – Aug 2022 – L3 – Q1a – International taxation"

AT – NOV 2021 – L3 – Q1a – Business income – Corporate income tax | International taxation

Compute tax payable for a Free Zone Enterprise based on income from local and export sales and determine the treatment of certain adjustments.

You're reporting an error for "AT – NOV 2021 – L3 – Q1a – Business income – Corporate income tax | International taxation"

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