i). Income Tax Implications for Obibini Ghana Limited (51% Share Acquisition)

• Change in Ownership: Acquiring 51% of Obibini Ghana Limited’s shares constitutes a change in underlying ownership (Section 62(1), Income Tax Act, 2015 (Act 896)).
• Asset and Liability Realization: A change in ownership exceeding 50% within three years triggers a deemed realization of assets and liabilities immediately before the change (Section 38(1)(f), Section 62, Act 896).
  • Underlying Ownership: Defined as membership interests owned directly or indirectly by individuals or entities with no membership interest (Section 133, Act 896).
  • Land Realization: The land (cost: GH₵100,000; current value: GH₵500,000) is deemed realized at market value (Section 42, Act 896).
    • Gain: GH₵500,000 – GH₵100,000 = GH₵400,000.
    • Tax: Taxed at 25%, resulting in a tax liability on the gain.
  • The company is deemed to re-acquire the asset at market value (GH₵500,000).
• Restrictions Post-Change (Section 62(2), Act 896):
  • Financial Costs: The GH₵100,000 financial cost cannot be carried forward (Section 16(3)).
  • Loss Deduction: The GH₵2,500,000 loss cannot be deducted in future chargeable income calculations (Section 17(1)).
  • Other Deductions: No deductions under Section 23(2), (4), or (5) for amounts included in income before the change.
  • Loss Carryback: Losses incurred after the change cannot be carried back to years before the change (Section 24(6)).
• Separate Assessment Periods: If the ownership changes on 31st January 2020, the period 1st to 31st January 2020 is treated as one year of assessment, and 1st February 2020 onward as another (Section 62(3), Act 896).

ii).Tax Planning Opportunities for Obibini Ghana Limited

• Mitigate Ownership Change Restrictions: The restrictions under Section 62, Income Tax Act, 2015 (Act 896) (e.g., loss and financial cost carryforward limitations, deemed asset realization) apply when underlying ownership changes by more than 50% within a three-year period.
• Strategy: Spread the share acquisition over a period exceeding three years to avoid triggering a change in ownership.
  • The investor can acquire shares incrementally (e.g., less than 50% within three years) to prevent the deemed realization of assets (like the GH₵400,000 gain on land) and preserve deductions for the GH₵2,500,000 loss and GH₵100,000 financial cost.