Series: FEB 2017

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  • 20 Marks

ATP – Feb 2017 – L3 – Q5 – Corporate Tax Computation

Compute chargeable income and tax liability for Ashie Mart Limited for 2015.

The Income Statement of Ashie Mart Limited, a supermarket in Accra for the year ended 31st December submitted to Commissioner of Domestic Tax Revenue Division of Ghana Revenue Authority on 30th April 2016.

GH¢ GH¢
Gross Operation Profit
Profit on Sale of Assets
Less General Administration Expenses
Salaries and Wages 540,000
Rent 30,000
Insurance 34,000
Acquisition 16,000
Painting of Premise 36,000
Loans to Staff written off 18,000
Advertisement (Note 1) 24,000
Staff Welfare (Note 2) 52,000
Travelling and Transport 40,000
Donations and Subscription (Note 3) 32,000
Bad Debts (Note 4) 19,000
Depreciation 42,000
(885,300)
Net Profit

The following notes relate to the Accounts:

Note 1 Advertisement GH¢
a. Cost of Neon Sign 10,200
b. Media Advert 14,300
24,500

Note 2 Staff Welfare GH¢
a. Refund of Staff Medical Bills 25,000
b. Safety Wear Acquired for staff 8,600
c. Canteen Equipment 16,900
50,500

Note 3 Donations and Subscriptions GH¢
a. Donation to the Ghana Heart Foundation 20,000
b. Goods given gratis to Customs Officials 6,000
c. Subscription to Ghana Manufactures Association 6,000
32,000

Note 4 Bad Debts GH¢
a. General Provision 12,000
b. Specific Provision 7,500
19,500

Note 5: The Capital Allowance as agreed with the Ghana Revenue Authority for the year is GH¢ 6,500.
Note 6: The company had during the year paid a total of GH¢ 2,600.

Required:
Compute the Chargeable income and Tax liability of Ashie Mart Limited for the 2014 Year of Assessment. (20 Marks)

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  • 20 Marks

ATP – Feb 2017 – L3 – Q4 – End of Service Benefit

Compute tax liability on end of service benefit for Mrs. Victoria Agbenyo.

 

You are a Chartered Tax Practitioner in the employment of Owusu, Fianyo and Associates, a firm of Chartered Tax Practitioners. Owusu, Fianyo and Associates have acted as Tax Consultants to Sakaman Feed Millers Association, one of the firm’s biggest clients, which has increased in size and profitability over the past few years as a result of the policy of government to increase local production of chicken and to reduce its importation.

Mrs. Victoria Agbenyo, the Executive Secretary, is considering leaving the employment of Sakaman Feed Millers Association although she is yet to discuss this with her employer by the 31st December 2017. She joined the company on April 1, 2010. She intends to be a consultant in the Poultry Industry to members of the Association. She is yet to attain the compulsory retirement age and will be paid an end of service benefit of three month’s basic salary for every completed year of service. Her current annual basic salary is GH¢ 72,000.00. She is currently in the maximum individual tax rate.

Required:

a. Compute her liability, if any, on her End of Service benefit. (5 Marks)

b. Prepare guidelines for Mrs Victoria Agbenyo based on the following:

i. Show the relevant due dates for the payments of her tax liabilities and SSNIT contributions (5 Marks)

ii. Advise Mrs Victoria Agbenyo of any other tax administration requirements which her business will be required to comply with and the penalties for failing to comply. (11 Marks)

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  • 20 Marks

ATP – Feb 2017 – L3 – Q3 – Pooling System

Explain general features of the pooling system for capital allowances.

You are a Chartered Tax Practitioner and you have been consulted to produce an article for publication in The Tax Collector, the monthly journal of the Ghana Revenue Authority on the topic “The Pooling System of granting allowance as provided in the Income Tax Act, 2015 (Act 896).

Required:

a. Explain the general features of the pool system. (10 Marks)

b. What are conditions expected to be satisfied before the grant of Capital Allowances? (8 Marks)

 

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  • 20 Marks

ATP – Feb 2017 – L3 – Q2 – VAT Returns

Explain what VAT Returns are for a newly registered company.

The Managing Director of EDVALLEY (Ghana) Limited, a newly registered company, has approached you to assist their company to comply with the Value Added Tax law in Ghana. They have asked you specifically to assist in the area of VAT Return and payment of the related tax.

Required:

a) Explain what VAT Returns are (4 Marks)

b) Advise the Managing Director company with respect to registration, submission of returns and the payment of the tax. (10 Marks)

c) A person with turnover below the registrable level could apply voluntarily to the Commissioner-General to be registered as a taxable person.

Required:

Outline the circumstances under which the Commissioner–General could refuse the request to register a taxable person. (6 Marks)

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  • 20 Marks

ATP – Feb 2017 – L3 – Q1 – Tax Avoidance

Explain arrangement and tax avoidance with examples under Income Tax Act 2015.

a). Section 34 (i) of the Income Tax Act, 2015 (Act 896) states that:

“For the purpose of determining liability of tax under this Act, the Commissioner-General may re-characterize or disregard an arrangement or part of an arrangement that is entered into or carried out as part of tax avoidance scheme:

a. Which is fictitious or does not have a substantial economic effect, or

b. Whose form does not reflect its substance’’

Required:

Briefly explain with two examples for each of the following:

i. Arrangement (5 Marks)

ii. Tax avoidance (5 Marks)

b). Under the Customs, Excise and Preventive Service (Management) Law, 1993 PNDCL 330; explain the following:

i) Quarantine (2 Marks)

ii) Drawback (2 Marks)

iii) Excisable goods (2 Marks)

iv) Uncustomed goods (2 Marks)

v) Rummaging (2 Marks)

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  • 20 Marks

ATP – Feb 2017 – L3 – Q5 – Corporate Tax Computation

Compute chargeable income and tax liability for Ashie Mart Limited for 2015.

The Income Statement of Ashie Mart Limited, a supermarket in Accra for the year ended 31st December submitted to Commissioner of Domestic Tax Revenue Division of Ghana Revenue Authority on 30th April 2016.

GH¢ GH¢
Gross Operation Profit
Profit on Sale of Assets
Less General Administration Expenses
Salaries and Wages 540,000
Rent 30,000
Insurance 34,000
Acquisition 16,000
Painting of Premise 36,000
Loans to Staff written off 18,000
Advertisement (Note 1) 24,000
Staff Welfare (Note 2) 52,000
Travelling and Transport 40,000
Donations and Subscription (Note 3) 32,000
Bad Debts (Note 4) 19,000
Depreciation 42,000
(885,300)
Net Profit

The following notes relate to the Accounts:

Note 1 Advertisement GH¢
a. Cost of Neon Sign 10,200
b. Media Advert 14,300
24,500

Note 2 Staff Welfare GH¢
a. Refund of Staff Medical Bills 25,000
b. Safety Wear Acquired for staff 8,600
c. Canteen Equipment 16,900
50,500

Note 3 Donations and Subscriptions GH¢
a. Donation to the Ghana Heart Foundation 20,000
b. Goods given gratis to Customs Officials 6,000
c. Subscription to Ghana Manufactures Association 6,000
32,000

Note 4 Bad Debts GH¢
a. General Provision 12,000
b. Specific Provision 7,500
19,500

Note 5: The Capital Allowance as agreed with the Ghana Revenue Authority for the year is GH¢ 6,500.
Note 6: The company had during the year paid a total of GH¢ 2,600.

Required:
Compute the Chargeable income and Tax liability of Ashie Mart Limited for the 2014 Year of Assessment. (20 Marks)

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  • 20 Marks

ATP – Feb 2017 – L3 – Q4 – End of Service Benefit

Compute tax liability on end of service benefit for Mrs. Victoria Agbenyo.

 

You are a Chartered Tax Practitioner in the employment of Owusu, Fianyo and Associates, a firm of Chartered Tax Practitioners. Owusu, Fianyo and Associates have acted as Tax Consultants to Sakaman Feed Millers Association, one of the firm’s biggest clients, which has increased in size and profitability over the past few years as a result of the policy of government to increase local production of chicken and to reduce its importation.

Mrs. Victoria Agbenyo, the Executive Secretary, is considering leaving the employment of Sakaman Feed Millers Association although she is yet to discuss this with her employer by the 31st December 2017. She joined the company on April 1, 2010. She intends to be a consultant in the Poultry Industry to members of the Association. She is yet to attain the compulsory retirement age and will be paid an end of service benefit of three month’s basic salary for every completed year of service. Her current annual basic salary is GH¢ 72,000.00. She is currently in the maximum individual tax rate.

Required:

a. Compute her liability, if any, on her End of Service benefit. (5 Marks)

b. Prepare guidelines for Mrs Victoria Agbenyo based on the following:

i. Show the relevant due dates for the payments of her tax liabilities and SSNIT contributions (5 Marks)

ii. Advise Mrs Victoria Agbenyo of any other tax administration requirements which her business will be required to comply with and the penalties for failing to comply. (11 Marks)

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  • 20 Marks

ATP – Feb 2017 – L3 – Q3 – Pooling System

Explain general features of the pooling system for capital allowances.

You are a Chartered Tax Practitioner and you have been consulted to produce an article for publication in The Tax Collector, the monthly journal of the Ghana Revenue Authority on the topic “The Pooling System of granting allowance as provided in the Income Tax Act, 2015 (Act 896).

Required:

a. Explain the general features of the pool system. (10 Marks)

b. What are conditions expected to be satisfied before the grant of Capital Allowances? (8 Marks)

 

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  • 20 Marks

ATP – Feb 2017 – L3 – Q2 – VAT Returns

Explain what VAT Returns are for a newly registered company.

The Managing Director of EDVALLEY (Ghana) Limited, a newly registered company, has approached you to assist their company to comply with the Value Added Tax law in Ghana. They have asked you specifically to assist in the area of VAT Return and payment of the related tax.

Required:

a) Explain what VAT Returns are (4 Marks)

b) Advise the Managing Director company with respect to registration, submission of returns and the payment of the tax. (10 Marks)

c) A person with turnover below the registrable level could apply voluntarily to the Commissioner-General to be registered as a taxable person.

Required:

Outline the circumstances under which the Commissioner–General could refuse the request to register a taxable person. (6 Marks)

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  • 20 Marks

ATP – Feb 2017 – L3 – Q1 – Tax Avoidance

Explain arrangement and tax avoidance with examples under Income Tax Act 2015.

a). Section 34 (i) of the Income Tax Act, 2015 (Act 896) states that:

“For the purpose of determining liability of tax under this Act, the Commissioner-General may re-characterize or disregard an arrangement or part of an arrangement that is entered into or carried out as part of tax avoidance scheme:

a. Which is fictitious or does not have a substantial economic effect, or

b. Whose form does not reflect its substance’’

Required:

Briefly explain with two examples for each of the following:

i. Arrangement (5 Marks)

ii. Tax avoidance (5 Marks)

b). Under the Customs, Excise and Preventive Service (Management) Law, 1993 PNDCL 330; explain the following:

i) Quarantine (2 Marks)

ii) Drawback (2 Marks)

iii) Excisable goods (2 Marks)

iv) Uncustomed goods (2 Marks)

v) Rummaging (2 Marks)

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