- 3 Marks
Question
c) Bawa is a junior staff member of Blinks Ltd. Her monthly basic salary is GH¢2,000. She was paid an overtime allowance totalling GH¢500 during the month of February 2021.
Required:
What is the tax implication of the overtime allowance paid?
(3 marks)
Answer
Although Bawa is a junior staff member, her monthly basic salary of GH¢2,000 exceeds the maximum qualifying salary of GH¢18,000 per annum (i.e., GH¢1,500 per month). Therefore, her entire overtime payment will be included in her taxable income and taxed at the applicable graduated rates.
Total Taxable Income = GH¢2,000 (Basic Salary) + GH¢500 (Overtime Allowance) = GH¢2,500
The entire amount of GH¢2,500 will be taxed at the graduated rates.
(3 marks)
- Topic: Employment Income, Income Tax Liabilities, Taxation of Overtime
- Series: APR 2022
- Uploader: Cheoli