Subject: ADVANCED TAXATION PRACTICE

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  • 20 Marks

ATP – Aug 2019 – L2 – Q5 – Individual Tax Liability

Compute Steve Mills’ 2018 tax liability, including salary, allowances, and reliefs.

Mr Steve Mills was employed as the Chief Executive Officer of Mpeasem Company Limited, on a monthly Salary of GH¢ 40,000.00, subject to 20% upward review after every two years. His appointment took effect from January 1, 2015. Mr Steve Mills is provided a soft furnished accommodation and a vehicle and a driver, which is fuelled by the company. He is also entitled to the following other allowances each month:
i. Responsibility: 2,000.00
ii. Accountable Entertainment: 500.00
iii. House / Garden Boy: 15% (Basic Salary)
iv. Clothing (Paid January 1 each year): 20% (Basic Salary)
v. Professional Allowance: 10% (Basic Salary)

During the year 2018, he received a total dividend of GH¢ 6,000.00 net of taxes from two companies where he has investments. The total number of ordinary shares respectively in Ebeyeyie Co. Ltd and Chinderi Oil Mills (Ghana) Ltd are 15,000 and 30,000. Mr Steve Mills contributes 5.5% of his basic Salary to SSNIT and 10% to the third tier Pension Fund to which his employer also contributes 5%. He is married and has three children. The eldest son is attending KNUST, and the rest are in Government approved Senior High Schools in Accra. His wife is a housewife and does not provide much for the up keep of the children. He provides for his 70 year old father. He has applied for and granted all reliefs. Mr Steve Mills represents the company at all state functions and programmes and is therefore expected to be decently dressed at all times. The industry standard also requires all employees to be decently dressed.

Annual Individual Tax Rates (Effective 1st January 2018)

GH¢ %
First 3,132 NIL
Next 840 5
Next 1,200 10
Next 33,720 17.5
Next 38,892 25

Required:
a. Compute the tax liability for Mr Steve Mills for 2018 year of Assessment.

b. Provide justification for the basis of your treatment of the transactions, where necessary.

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  • 20 Marks

ATP – Aug 2019 – L2 – Q4 – Notice of Assessmen

Explain Commissioner-General’s rights to issue Notice of Assessment and its contents.

a). You are a trainee in the office in Brown Green and Associates, a firm of Tax Practitioners. A gentleman, identified later as Mr Kwesi Sikasem walked in to the office fuming with anger saying that he had received a Notice of Assessment from the Ghana Revenue Authority demanding the payment of a total tax liability of 1.2 million Ghana cedis for 2017 and 2018 Years of Assessment. In the course of discussion you realised that he has been in business since October 2016.

Required:

Explain to Mr Kwesi Sikasem the rights of the Commissioner-General to issue a Notice of Assessment and state what is expected in a Notice of Assessment.

b). Mr Thomas Smith a retired employee of the US Border Security has approached you seek your advice on the possibility of forming a company as a Customs House Agent in Tema.

Required:

With reference to the Customs Act, 2015 (Act 891) as amended, advise Mr Thomas Smith on the categories of persons that can engage in the business of customs house agent

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  • 20 Marks

ATP – Aug 2019 – L2 – Q3 – Corporate Tax and Penalties

Compute Yentua Limited’s 2018 tax liabilities, including penalties, using financial statement data.

Yentua Limited is a company registered in Ghana under the Companies Act 1963, Act 179 on 15th September 2017. It started operations on 1st October, 2017. The company buys metal scraps both from internal and external sources and sells to the iron rod manufacturers in Tema. The company was not registered with the Ghana Revenue Authority and therefore has never submitted any tax returns on its operations. The activities of the company came to light when a team of Revenue Officers from the Enforcement unit of the Ghana Revenue Authority met the Managing Director and his staff in full operation. The team educated the Managing Director and his management team on importance of payment of taxes and registering with the Ghana Revenue Authority and submitting the tax returns to the Authorities regularly. The Managing Director then presented Tax Credit Certificates (TCC) totalling GH¢ 134,000 and receipts for duties paid on imported goods as taxes paid and therefore claimed his company was tax compliant. The Managing Director later approached you as a Tax Practitioner to help the company complete its tax returns on its business operations to Ghana Revenue Authority. The extracts from the company’s financial statement presented by the Finance officer for the year ended 30th September 2018 were as follows:

Yentua Limited
Income Statement

GH¢ GH¢
Turnover 7,800,000.00
Cost of Sales (6,929,300.00)
Gross Profit 870,700.00
Administration and General Expenses (660,000.00)
Net Profit 90,000.00

Note 2: Cost of Sales

GH¢
Local Purchases 4,400,000.00
Imports 1,580,000.00
Freight and Insurance 98,500.00
Import Duties 436,000.00
Cargo Truck 240,000.00
Repairs and Maintenance 52,000.00
Depreciation – Truck 48,000.00
Fuel and Lubricants 24,000.00
Transport and Handling 50,800.00
Total 6,929,300.00

Note 3: Administration and General Expenses

GH¢
Salaries and Allowances 285,000.00
Directors Remuneration 64,000.00
Consultancy Fees 90,000.00
Printing and Stationery 10,500.00
Rent (Office Building) 60,000.00
Rent (Residential) 36,000.00
Equipment Rentals 79,000.00
Utilities 35,500.00
Total 660,000.00

Required:
Determine the tax liabilities due from the company in respect of direct taxes for 2018 year of assessment, including any relevant penalties that are applicable. Corporate Tax rate applicable to the company is 25%.

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  • 20 Marks

ATP – Aug 2019 – L2 – Q2 – Indirect Taxes

Calculate NHIL, GET Fund, VAT, and Withholding Tax for Menuaa Manufacturing for October 2018.

Menuaa Manufacturing Limited (MML) produces iron rods for sale in both the domestic and foreign markets. The company is registered with the Ghana Revenue Authority for Value Added Tax (VAT). The company’s transactions during the month of October 2018 were as follows:

Transactions GH¢
Sales (VAT Inclusive) 756,000
Exports to Sierra Leone 120,000
Relief Supplies 48,000
Purchase of Rolling Equipment 55,500
Hotel Expenses for Staff at a workshop on the new amendment on the VAT law. (VAT Inclusive) 4,500
Stationery purchased for Administration work 15,600
Iron Ingot imported (CIF) 141,750
Local Purchases 50,000

Unless otherwise stated Sales and Purchases are all Value Added Tax exclusive. National Health Insurance and GET Fund Levies are also exclusive except where it has been specifically stated.
Required:
a. You are required to calculate the NHIL and GET fund levies, VAT payable, if any, and Withholding Tax for October 2018.

b. State the last date when each payment is due.

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  • 20 Marks

ATP – Aug 2019 – L2 – Q1 – Tax Administration

Identify functions of Ghana Revenue Authority under Act 791 for tax collection objectives.

(a). The Ghana Revenue Authority Act, 2009 (Act 791) sets out the objectives to be achieved in the performance of its duties as an agency of the state responsible for the collection of both direct and indirect taxes.

Required:

Identify the functions that are set out in Act 791 that are to be performed by the Ghana Revenue Authority to enable it achieve the said objectives.

(b). Section 18 of Act 915, Revenue Administration Act, 2016 sets out prohibition on representation and tax advice.

Required:

Explain the conditions under which a person can act as a Tax Consultant.

(c). Section 100 of Act 915, Revenue Administration Act, 2016 provides guidelines to achieve consistency in the administration of the tax laws and provide guidance to affected persons. The Commissioner-General is therefore required to issue practice notes.

Required:

Explain the principles that guide the Commissioner-General in issuing practice notes.

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  • 20 Marks

ATP – Aug 2020 – L2 – Q5 – Tax Compliance Framework

Explain Self-Assessment and Provisional Assessment in tax administration.

a) The Government of Ghana has changed the policy to “Self-Assessment” as a means to improve on revenue mobilisation as against the policy of “Provisional Assessment”. Explain the terms “Self-Assessment” and “Provisional Assessment” in tax administration.

b) Discuss the rationale for the moving away from Provisional Assessment to Self-Assessment.

c) Adebayo Adadeji has operated as Customs House Agent in Lagos over the years and has decided to take advantage of the common currency due to be introduced into the ECOWAS region. He has approached you to seek your advice as Chartered Tax Consultant on the possibility of forming a company as a Customs House Agent in Tema. With reference to the Customs Act, 2015 (Act 891) as amended, you are required to advise him on the categories of persons that can engage in the business of customs house agent.

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  • 20 Marks

ATP – Aug 2020 – L2 – Q4 – Income Tax Computation

Determine Mr Eric Antwi’s tax payable for 2018, considering business and investment income.

Mr Eric Antwi, retired from the Public Service of Ghana on 3rd December 2017 and started trading as Eric Antwi Enterprise on 1st January, 2018. He is single parent with two children at the University of Ghana. He submitted his Income and Expenditure Statement for the year ended 31st December 2018 to you as the head of the Small Tax Payers Office. Incomes and Expenses accrue evenly throughout the year in 2018.

Mr Antwi presented a withholding tax receipts for GH¢1,176.00 to you requesting that the amount should be refunded to him.

GH¢ GH¢
Total Receipts 204,200
Interest on personal savings account 2,200
Total Pension Received 18,000
Interest on Investment of his Pension in treasury bills 1,200
Accountancy Charges 2,800
Desk Top Computer purchased 5,500
PAYE paid 2,460
Social Security Fund paid 1,200
Rent (Shop) 7,200
Staff Salary (net) 14,400
Stationery 840
Toyota Pick Up purchased for the business use 80,000
Vehicle running expenses including fuel 15,000
Travelling and Transport 3,600
Net Profit 92,600
Total 225,600 225,600

You are required:

a) Determine the tax payable by Mr Eric Antwi for 2018 Year of Assessment.

b) Support your computations with relevant explanations.

c) Compute all other taxes that are due and payable by Mr Antwi. (Ignore penalties and private use elements).

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  • 20 Marks

ATP – Aug 2020 – L2 – Q3 – Income Tax Computation

Compute Dr Kodwo Kusi-Appiah’s tax liability for 2017, including salary and consultancy income.

Dr Kodwo Kusi-Appiah, a physically challenged, is a lecturer at University of Ghana, School of Veterinary Medicine. He dedicates most of his free time providing consultancy services in animal health biosecurity to his clients and Animal Husbandry services in his piggery. He is also a member of team of consultants who provides consultancy services to the Ministry of Food and Agriculture, Animal Production Directorate. In terms of his service contract with Animal Production Directorate, he is required to participate in all anthrax out breaks for cattle and swine fever for pigs. His service contract is for a year, subject to renewal as and when donor funds are available. All the consultancy team members of which Dr Kusi Appiah was one, were paid a predetermined monthly salary GH¢ 4,000 each and an all – inclusive field attendance allowance of GH¢ 1,000.00 each, per day at any disease outbreak site in any part of the country. During the year under review, there was no outbreak of any of the diseases that warranted their field visit.

Dr Kusi-Appiah’s private consultancy practice to Cattle, Pigs and Poultry farmers is strictly by appointment and his clientele base has been growing steadily due to his dedication to work and experience. He earned a total of GH¢12,000 during the year ended 31st December, 2017.

Dr Kusi-Appiah’s earnings and deductions from his employment at the University of Ghana for the year ended 31 December 2017 were:

Item GH¢
Basic Salary 60,000.00
Transport allowance 3,000.00
M Phil Supervision 2,500.00

10% of Basic Salary in lieu of leave

Other benefits from his Employment with the University include:

a) 5.5% of Basic Salary contributions to SSNIT and the 1st Tier Pension Fund. He also contributes 10% of his salary to Staff Savings Scheme to which his employer does not contribute.

b) Soft Furnished Accommodation at the University of Ghana.

c) He was granted two months’ salary advance on 1st February, 2017 to meet the medical treatment of his wife Mrs Rhoda Kusi-Appiah in London. The loan is repayable within one year at an interest rate 10%.

The following additional information are available on the other earnings of Dr Kusi Appiah. He started a piggery project, trading as Kusi-Appiah Farms on 1st January, 2012. The net income from the operations of the piggery for the year ended 31st December, 2017 was GH¢10,500.00

He earned GH¢24,000.00 in respect of his private consultancy services during the year ended 31st December, 2017. With the exception of a total tax of GH¢13,500.00 paid at source from his earnings as a lecturer and GH¢3,600.00 withheld by the Ministry of Agriculture, no other taxes were paid.

You are required to compute the tax liability of Mr Kodwo Kusi –Appiah for the 2017 Year of Assessment.

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  • 20 Marks

ATP – Aug 2020 – L2 – Q2 – Income Tax Computation

Compute Mr Paa Kwesi Arthur’s tax liability for 2019, including salary and dividend income.

Mr Paa Kwesi Arthur returned to Ghana after staying in the Netherlands for over 20 years and took up an appointment with Amanfro Limited as Investment Analyst effective 1st January 2019. His gross monthly basic salary for 2019 year of assessment was GH¢12,000.00. He contributed 5.5% and 10% of his monthly basic salary to Social Security and National Insurance Trust (SSNIT) and Goodwill Pension Trust respectively.
Mr Paa Kwesi Arthur, is a widow and all his children are schooling in the Netherlands. He is only responsible for the up keep of his biological parents, who are above seventy years of age.

Mr Paa Kwesi Arthur has investments in Germany, from which he earned a gross dividend of 12,000 Euros in 2019, from which 720 Euros was withheld as dividend tax and the balance remitted to him in Ghana. There is a Double Taxation Agreement between Ghana and Germany.

The rate of Exchange is GH¢6.2 to 1.00 Euro.

Required:

a) Compute the tax liability of Mr Paa Kwesi Arthur for 2019 Year of assessment.

b) Explain the basis of your computation.

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  • 20 Marks

ATP – Aug 2020 – L2 – Q1 – Indirect Taxes

Calculate NHIL, GET Fund, VAT, and Withholding Tax for Fafali Ghana Limited for January 2019.

Fafali Ghana Limited produces aluminium roofing sheets for both the domestic market and exports to other West African countries. The company is registered with the Ghana Revenue Authority for Value Added Tax (VAT). The company’s transactions during the month of January, 2019 were as follows:

Item GH¢
Sales (VAT Inclusive) 6,804,000.00
Exports to Sierra Leone (US Dollars) 120,000.00
Relief Supplies 148,000.00
Purchase of Modelling Equipment 160,500.00
Staff Training (VAT Inclusive) 10,800.00
Assembly of Equipment (US Dollars) 15,600.00
Alumina imported (All duties paid at importation) 141,750.00
Local Purchases 180,000.00

Unless otherwise stated, Sales and Purchases are all Value Added Tax exclusive. National Health Insurance and GET Fund Levies are also exclusive except where it has been specifically stated. The assembling of equipment was a payment made to a foreign consultant for the service rendered. The average exchange rate for the month was GH¢5.5 to one US dollar.

Required:

a) Calculate the NHIL and GET fund levies, VAT payable, if any, and Withholding Tax for January 2019.

b) State the last date when each payment is due.

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  • 20 Marks

ATP – Feb 2020 – L2 – Q5 – Income Tax Computation

Compute depreciation allowances for Menyami Limited for 2016, 2017, and 2018.

Menyami Limited has been in operations as a Timber Merchant for several years and prepares accounts to 31st December each year. The company’s Non-Current Assets as at 31st December, 2016 were as follows:

Description GH¢
Timber Concession (30 years Lease) 1,500,000
Building 400,000
Plant and Machinery 2,800,000
Timber Trucks 1,200,000
Land Cruiser Vehicle (1/3/2017) 280,000
Pick Up Vehicle (1) (1/5/2018) 180,000
Computers and Accessories 30,000
Furniture and fittings 12,000

Menyami Limited applied to the Commissioner-General and was granted depreciation allowances for the use of the above Non-Current Assets over the years.
In July, 2017, the company acquired a Plywood processing plant on hire purchase at the cost of GH¢1,800,000. The Company paid a deposit of GH¢800,000 and the balance is to be paid over a period of four years in advance starting from 1st January, 2018. The first instalment was paid on due date.
During the year 2018, a plant which was acquired in January, 2016 was rehabilitated at the cost of GH¢20,000.00.

The depreciation allowance rates applicable to each pool of depreciable assets are as follows:

Class Rate
Class 1 40%
Class 2 30%
Class 3 20%
Class 4 10%

All the assets unless otherwise indicated were all bought in January 2016.

Required:
Compute the depreciation allowances for the years 2016, 2017 and 2018 in a columnar format.

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  • 20 Marks

ATP – Feb 2020 – L2 – Q4 – Income Tax Computation

Explain unrelieved losses and rights for Mancheri Company under Income Tax Act for 2019 loss.

Mancheri Company Limited was incorporated under the Companies Act, 1963, (Act 179) on 1st April, 2018 to prospect for diamonds in the Oti River in Mancheri in the Oti Region of Ghana. The Managing Director was presented a draft management report on the operations of the company. A review of the Comprehensive Income Statement for the year ended 31st March, 2019 showed a loss of GH¢3,663,000. He was not happy with the loss declared. He remembered a radio discussion, while on duty to Accra, where a Ghana Revenue Authority (GRA) official being interviewed talked on “Unrelieved Losses” in his presentation. He therefore approached you to explain and advise him on the implications of the loss on future tax liabilities of the company.

A summary of the Income Statement was as follows:

Description GH¢ GH¢
Income from Operations 108,000
Operational Cost 2,240,000
Administration and General Expenses 1,395,000
Finance Charges 136,000
3,771,000
Net Loss 3,663,000

Required:
Explain in a report to the Managing Director what are “Unrelieved Losses” and the rights available to the company for the loss declared at the end of its first year of operations under the Income Tax Act, 2015 (Act 896).

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  • 20 Marks

ATP – Feb 2020 – L2 – Q3 – Sector-Specific Taxation

Compute tax liability for Xornami Insurance Company for 2018 based on trial balance and additional info.

Xornami Insurance Company Limited has been operating a general insurance business in Ghana since 1st January, 2016.

Below is an extract from the Trial Balance as at 31/12/18:

Description GH¢000
Land (Leasehold) 10,000
Building (at cost) 130,000
Motor Vehicles (at cost) 22,000
Furniture & Fittings (at cost) 4,500
Interest received on loans 19,500
Interest on Investment 4,450
Stated Capital 100,000
Gross Premium received 127,600
Claims paid during the year 11,960
Income Tax paid 2,250
Commission paid to Agents 6,172
General Administrative Expenses 40,650
Reinsurance Premium paid 13,250
Reinsurance recoveries 18,540
Premiums returned to clients 19,308

The following additional information are made available to you:
(i) The lease is over a period of 40 years.
(ii) The General Administration Expenses include GH¢15,400 and GH¢2,500 in respect of depreciation and the Lease respectively for the year.
(iii) The company’s reserve for unexpired risk for the year ended 31st December, 2017 was GH¢42,000.
(iv) Assume that the depreciation charged in the financial statements for the year is equal to the depreciation allowances applicable to the company.
(v) Corporate Tax Rate: 25%.

Required:
Compute the tax liability of the company for 2018 year of assessment.

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  • 20 Marks

ATP – Feb 2020 – L2 – Q2 – Employment Income Taxation

Compute tax liabilities for Mr. Tein Escoba for 2018 and 2019 based on income earned in US and Ghana.

Amanfro Plantations Company Limited was incorporated under the company’s Act 1963, Act 179 as a limited liability company on 1st October 2010. The objects of the company is to establish Rubber Plantations at Asempanaye in Western North Region. The company started operations on 1st January 2011. The company has not found its feet since it began operations due to managerial challenges. The board therefore approved the appointment of Mr Tein Escoba, an Agronomist and Rubber Production expert from Brazil as the company’s managing director.

The terms of Mr Tein Escoba’s engagement is that Firestone PLC USA shall be responsible for his salary of US$10,000.00 per month to be paid into his designated bank account in the USA. The Amanfro Plantations Company Limited would, in addition, pay him GH¢8,000.00 per month, with an annual increment of 20% on 1st January each year to meet his cost of stay in Ghana. He was paid a return air ticket costing GH¢9,600 at the end of his eighteen month duty tour to visit his family. He would be responsible for the payment of his taxes on his income due to the US Internal Revenue.

The company employed other management personnel in addition to Mr Tein Escoba. All the management staff of the company were provided with soft furnished accommodation at the project site in order to ensure an effective management of the company. In addition, all the management personnel were allocated chauffeur driven official vehicles with no limit for fuel usage. All other staff of the company were located outside the plantation concession at Asempanaye.

Mr Tein Escoba prior to his taking up the appointment in Ghana was paid US$10,000.00 to enable him relocate the wife and his two children in Mackiney, Texas USA. The cost of his transportation from Rio de Jenairo to the project site in Ghana was borne by him at a total cost of US$7,500.00. Mr Tein Escoba started work on 1st January, 2018 with the company. He paid a total tax liability of US$26,400.00 for each year on his income earned for the years 2018 and 2019 in the USA, for which he provided the relevant receipts to support the payment. He did not pay any other taxes in Ghana when a tax audit was carried out at the company. He realised the anomaly for his failure to pay tax on his earnings in Ghana and has approached you as a Tax Practitioner to help him file his returns, since assuming work in Ghana.

The average exchange rates of the cedi to the dollar for 2018 and 2019 respectively were GH¢4.8 and GH¢5.5.
There is no Double Taxation Agreement between Ghana and the USA.

Required:
Compute the tax liabilities of Mr Tein Escoba for the 2018 and 2019 years of assessment.

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  • 20 Marks

ATP – Feb 2020 – L2 – Q1 – Indirect Taxes

Compute GET Fund, NHIL, and VAT payable for Nyameaye Limited for January 2019.

a) Nyameaye Limited is a company registered under the Companies Act 1963, Act 179 and has been in consultancy business over the years. The company has been registered to operate as a Value Added Tax (VAT) registered company, since it deals in both taxable and non-taxable supplies.

The company’s operations for January, 2019 were as follows:

GH¢
Total value of taxable supplies invoiced (VAT inclusive) 4,353,372
Input Tax on Taxable Supplies 460,317
Value of Exempt Supplies 360,000
Purchase of double cabin Toyota Pick Up (VAT exclusive) 240,000
Value of relief Supplies 108,400

Your review of the invoices showed that VAT and other levies on the Toyota pick-up and hotel bills of GH¢1,880.00 were included in the Input Tax on Taxable supplies.

Required:
Compute the GET Fund Levy, National Health Insurance Levy (NHIL) and VAT payable for the month of January, 2019.

b)i. State and explain the treatments of transactions and filing of returns in respect of the following legislations: Value Added Tax Act, (Act 870); GET Fund levy Act, 2000 (Act 581) and National Health Insurance Levy Act, 2003 (Act 650).

ii. Concisely, outline how taxes are computed and filed under the following Amendment Acts: VAT (Amendment) Acts, 2018 (Act 970), and National Health Insurance Levy (Amendment) Act, 2018 (Act 971); GET Fund (Amendment) Act, 2018 (Act 972).

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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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