- 20 Marks
ATP – Feb 2020 – L2 – Q4 – Income Tax Computation
Explain unrelieved losses and rights for Mancheri Company under Income Tax Act for 2019 loss.
Question
Mancheri Company Limited was incorporated under the Companies Act, 1963, (Act 179) on 1st April, 2018 to prospect for diamonds in the Oti River in Mancheri in the Oti Region of Ghana. The Managing Director was presented a draft management report on the operations of the company. A review of the Comprehensive Income Statement for the year ended 31st March, 2019 showed a loss of GH¢3,663,000. He was not happy with the loss declared. He remembered a radio discussion, while on duty to Accra, where a Ghana Revenue Authority (GRA) official being interviewed talked on “Unrelieved Losses” in his presentation. He therefore approached you to explain and advise him on the implications of the loss on future tax liabilities of the company.
A summary of the Income Statement was as follows:
| Description | GH¢ | GH¢ |
|---|---|---|
| Income from Operations | 108,000 | |
| Operational Cost | 2,240,000 | |
| Administration and General Expenses | 1,395,000 | |
| Finance Charges | 136,000 | |
| 3,771,000 | ||
| Net Loss | 3,663,000 |
Required:
Explain in a report to the Managing Director what are “Unrelieved Losses” and the rights available to the company for the loss declared at the end of its first year of operations under the Income Tax Act, 2015 (Act 896).
Find Related Questions by Tags, levels, etc.
- Tags: Income Tax Act, Mining, Unrelieved losses
- Level: Level 2
- Topic: Income Tax Computation
- Series: FEB 2020
