- 20 Marks
Question
A) The Income Tax Act 2015, (Act 896) as amended allows businesses to deduct amounts in
the determination of chargeable income. The law categorizes some amounts as domestic expenditure and others as excluded expenditure.
Required: Discuss THREE excluded expenditures and THREE domestic expenditures in the determination of chargeable income.
B)
Mr. Kofi Asante, at his death, left his estate in the hands of non-resident trustees in
favor of his three children, Ama, Kwesi and Yaw. The following information was made available by the trustees in respect of the estate at the end of December 2024.
GH¢ Rental income (gross) 8,000,000 Trading income 6,000,000 Interest income 1,400,000 Income from a transport business 1,420,000 Gifts received from friends and family of Mr. Kofi Asante 1,000,000
Additional information: i) The interest received (income) is from First Bank PLC on the Trustee bank account.
ii) Interest payment to Second Bank on debt/loan repayment is GH¢400,000
iii) Each beneficiary is entitled to a 25% share of the net distributable income.
iv) Fixed annuity to each beneficiary is GH¢600,000 (gross).
v) Trustees’ remuneration per trust deed:
Fixed remuneration of GH¢150,000. 10% of chargeable income.
vi) Administrative and other expenses were GH¢800,000
vii) The trust deed allows the trustees to make discretionary payments to the three children as
follows:
Ama GH¢250,000 Kwesi
GH¢150,000 Yaw
GH¢100,000
viii) Capital allowance agreed with Ghana Revenue Authority was GH¢500,000.
Required: i) Compute the income tax payable by the Trustees on the trust income. ii) Determine the amount due to each beneficiary.
C)
Tax assessment serves as a backbone of the revenue administration framework in Ghana.
It ensures the government has the necessary resources to fund public projects and national development. The GRA employs various type of assessment to determine tax liabilities.
Required: Differentiate adjusted assessment from pre-emptive assessment.
Answer
A) Expenditure is a domestic expenditure to the extent that it is incurred • In maintaining the individual, including the provision of shelter, meals, refreshment, entertainment or other leisure activities. • By the individual in commuting from home; • In acquiring clothing for the individual, other than clothing that is not suitable for wearing outside of work; or • In educating the individual, other than education that is directly relevant to a business conducted by the individual and that does not lead to a degree or diploma.
B)
i) Computation of tax payable
Kofi Asante Computation of Tax Payable Year of Assessment 2024 Basis Period: January 1 to December 31, 2024
GH¢
GH¢ Income:
Rental Income
8,000,000
Trading Income
6,000,000
Interest
1,400,000
Transport Income
1,420,000
Gifts
1,000,000
17,820,000 Add withholding tax 8/92*1,400,000 121,739.13 17,941,739.13
Expenses:
Interest payment
400,000
C)
Differentiate adjusted assessment from pre-emptive assessment.
Summary report of all changes:
- Changed individual’s name from “Mr. Kwabena Ogyam” to “Mr. Kofi Asante” in Question 1b and its answer.
- Changed children’s names from “Gyanwaa” to “Ama”, “Preko” to “Kwesi”, and “Agyeman” to “Yaw” in Question 1b and its answer (if applicable, though not fully in the provided answer snippet).
- Changed bank names from “GCB Bank PLC” to “First Bank PLC” and “GT Bank” to “Second Bank” in Question 1b.
- No other names, companies, or locations were present in Question 1a or 1c requiring changes.
- All changes preserve the original context, amounts, and educational intent without altering computations or legal references.
- Tags: chargeable income, Deductions, Domestic expenditure, Excluded Expenditure, Income Tax, Tax Reliefs
- Level: Level 3
- Topic: Income Tax Computation
- Series: NOV 2025
- Uploader: Samuel Duah