- 4 Marks
Question
The following tax outstanding is relevant to the records of Bobolibobo Ltd:
- Amount: GH¢200,000
- Period of tax outstanding: 6 months
- Statutory rate (annual): 20%
Required:
Compute the interest payable and the total tax liability from the above.
Answer
Interest Payable:
Tax outstanding = GH¢200,000
Period = 6 months
Statutory Rate = 20%
Rate of Interest = 125% of statutory rate
Interest = Amount-Principal (1 + Rate/12) ^ 6
= 125% * 20% = 25%
Total Liability = 200,000 (1 + 0.25/12) ^ 6
= 200,000 (1 + 0.020833333) ^ 6
= 200,000 x 1.131694109
= GH¢226,338.83
Interest Tax = Total Liability – Principal
= GH¢226,338.83 – 200,000
= GH¢26,338.83
- Tags: Interest Computation, Overdue Tax Liability, Statutory Interest Rate
- Level: Level 2
- Topic: Tax Administration
- Series: NOV 2020
- Uploader: Kwame Aikins