Employment Income Taxation

ATP – Aug 2017 – L2 – Q3 – Employment Income Taxation

Compute tax liability for Mr Alavanyo Godoo for 2016, including salary, allowances, and pension withdrawal.

Question

Mr Alavanyo Godoo was employed as the Chief Executive Officer of Mandigo Company Limited, on a monthly Salary of GH¢20,000.00, subject to review after every three years. His appointment took effect from January 1, 2014. Mr Alavanyo Godoo 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: a) Responsibility GH¢1,000.00 b) Accountable Entertainment (supported by receipts) GH¢300.00 c) House / Garden Boy 15% (Basic Salary) d) Clothing (Paid January 1 each year) 20% (Basic Salary) e) Professional Allowance 15% (Basic Salary)

During the year 2016, 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 Bremang Ltd and Asukwakwa (Ghana) Ltd are 15,000 and 30,000. Mr Alavanyo Godoo contributes 5.5% of his basic Salary to SSNIT and 10% to the third tier Pension Fund to which his employer also contributes 5%. During the year under review, Mr Alavanyo Godoo withdrew 60% of the balance as at 30th June 2016 from his Pension Fund.

He has the following Life Assurance Policies:

Company	Sum Assured GH¢	Premium GH¢
Gomido Insurance Co. Ltd.	40,000.00	3,600.00
Ebeyeyie Co. Ltd	25,000.00	2,400.00

He is married and has three children. The eldest son is attending Medical School at John Hopkins University, Maryland USA and the rest are in Government approved Senior Secondary Schools in Accra. His wife is a housewife and does not provide much for the upkeep of the children. He looks after his 65 year old mother. He has applied for and granted all reliefs.

Required: Compute the tax liability for Mr Alavanyo Godoo for the 2016 year of Assessment.

Annual Tax Rates

	GH¢	%
First	2,592	NIL
Next	1,296	5
Next	1,812	10
Next	33,180	17.5
Next	33,880	25

20 Marks

Answer

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Tags: Allowances, Benefits in kind, Pension Fund, Salary, Tax Reliefs
Level: Level 2

Topic: Employment Income Taxation
Series: AUG 2017

ATP – Feb 2016 – L2 – Q3 – Income Tax Computation

Compute Mr. Abu Sakari’s tax liability for 2014 based on salary, allowances, benefits, and reliefs.

Question

Mr. Abu Sakari has been appointed the Head of Tax Department of Jubilee Hub Limited with effect from 1st January 2014 on annual basic salary of GHS84,000.00. Mr. Sakari also enjoys the following allowances and benefits by virtue of his position:

i. Risk allowance of GHS400.00 per month.
ii. Responsibility allowance of GHS500.00 per month.
iii. Child education allowance of GHS600.00 per month.

He is provided with a soft furnished accommodation by the company as well as a Toyota Camry saloon car which is fuelled by the company. He contributes 5.5% of his salary to the Social Security Fund and the company contributes 13%. He is a widower with four children. The first child is pursuing a BSc. Nursing program at the University of Ghana, the second child attends Presbyterian Boys Senior High School, Legon, and the last two girls attend University of Ghana Junior High School, Legon. He is fully responsible for the upkeep of his father aged 61 years and his mother aged 58 years.

He has two life assurance policies with the following details:

Company	Sum Assured (GHS)	Annual Premium (GHS)
a) Vanguard Life Company	48,000.00	4,900.00
b) Enterprise Life Company	45,000.00	3,200.00

You are required to:
a) Compute Mr. Abu Sakari’s tax liability for the 2014 year of assessment.

b) Determine Mr. Abu Sakari’s take-home pay for the 2014 tax year.

Answer

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Tags: Deductions, Employment Income, Life Insurance, Social Security, Take-home pay
Level: Level 2

Topic: Employment Income Taxation
Series: FEB 2016

ATP – Aug 2015 – L2 – Q2 – Employment Income Taxation

List conditions for tax-exempt passage allowances for expatriates under Ghana tax laws.

Question

(a). As a tax consultant, you have been contacted by a prospective investor who is planning his staff budget for expatriates and would like to know if there are any qualifying conditions under which allowances or payments made to an employee (expatriate) by an employer for a passage to or from Ghana in respect of that person’s appointment or termination of employment will not be taxed in the hand of that person (employee) under the tax laws of Ghana.

You are required to indicate the three qualifying conditions available under the Internal Revenue Act, 2000 (Act 592) as amended.

(b). Under what circumstances will a person who owns a chargeable asset be deemed to have realized the asset in accordance with the provisions of the Internal Revenue Act, 2000 (Act 592) as amended. Are there any exceptions?

(c). Jones Lamptey completed construction of a building at a cost of GHS105,000.00 in June 2011 at Madina. In April 2014, he had undertaken repairs to the building amounting to GHS3,600.00 as a result of cracks and leakages to the roof. In June 2014, he also paid an amount of GHS800 for fire insurance on the building to State Insurance Company of Ghana. In September 2014, Jones sold the house to Abeiku Martey for GHS150,900.00 and paid sales commission of 3% of the sales proceed to Dumsor Real Estate Agency, who arranged and facilitated the transaction. In November 2014, Jones used GHS130,000.00 of the sales proceed of the building at Madina to purchase another building at Lakeside Estate because he wanted to live in a gated community.

You are required to determine capital gains, if any, accruing to Jones Lamptey from these transactions.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Expatriate Allowances, Ghana tax laws, Income Tax, Passage Costs
Level: Level 2

Topic: Employment Income Taxation
Series: AUG 2015

ATP – Aug 2017 – L2 – Q3 – Employment Income Taxation

Compute tax liability for Mr Alavanyo Godoo for 2016, including salary, allowances, and pension withdrawal.

Question

He has the following Life Assurance Policies:

Company	Sum Assured GH¢	Premium GH¢
Gomido Insurance Co. Ltd.	40,000.00	3,600.00
Ebeyeyie Co. Ltd	25,000.00	2,400.00

Required: Compute the tax liability for Mr Alavanyo Godoo for the 2016 year of Assessment.

Annual Tax Rates

	GH¢	%
First	2,592	NIL
Next	1,296	5
Next	1,812	10
Next	33,180	17.5
Next	33,880	25

20 Marks

Answer

Find Related Questions by Tags, levels, etc.

Tags: Allowances, Benefits in kind, Pension Fund, Salary, Tax Reliefs
Level: Level 2

Topic: Employment Income Taxation
Series: AUG 2017

ATP – Feb 2016 – L2 – Q3 – Income Tax Computation

Compute Mr. Abu Sakari’s tax liability for 2014 based on salary, allowances, benefits, and reliefs.

Question

i. Risk allowance of GHS400.00 per month.
ii. Responsibility allowance of GHS500.00 per month.
iii. Child education allowance of GHS600.00 per month.

He has two life assurance policies with the following details:

Company	Sum Assured (GHS)	Annual Premium (GHS)
a) Vanguard Life Company	48,000.00	4,900.00
b) Enterprise Life Company	45,000.00	3,200.00

You are required to:
a) Compute Mr. Abu Sakari’s tax liability for the 2014 year of assessment.

b) Determine Mr. Abu Sakari’s take-home pay for the 2014 tax year.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Deductions, Employment Income, Life Insurance, Social Security, Take-home pay
Level: Level 2

Topic: Employment Income Taxation
Series: FEB 2016

ATP – Aug 2015 – L2 – Q2 – Employment Income Taxation

List conditions for tax-exempt passage allowances for expatriates under Ghana tax laws.

Question

You are required to indicate the three qualifying conditions available under the Internal Revenue Act, 2000 (Act 592) as amended.

You are required to determine capital gains, if any, accruing to Jones Lamptey from these transactions.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Expatriate Allowances, Ghana tax laws, Income Tax, Passage Costs
Level: Level 2

Topic: Employment Income Taxation
Series: AUG 2015

Topic: Employment Income Taxation

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ATP – Aug 2017 – L2 – Q3 – Employment Income Taxation

Compute tax liability for Mr Alavanyo Godoo for 2016, including salary, allowances, and pension withdrawal.

ATP – Feb 2016 – L2 – Q3 – Income Tax Computation

Compute Mr. Abu Sakari’s tax liability for 2014 based on salary, allowances, benefits, and reliefs.

ATP – Aug 2015 – L2 – Q2 – Employment Income Taxation

List conditions for tax-exempt passage allowances for expatriates under Ghana tax laws.

ATP – Aug 2017 – L2 – Q3 – Employment Income Taxation

Compute tax liability for Mr Alavanyo Godoo for 2016, including salary, allowances, and pension withdrawal.

ATP – Feb 2016 – L2 – Q3 – Income Tax Computation

Compute Mr. Abu Sakari’s tax liability for 2014 based on salary, allowances, benefits, and reliefs.

ATP – Aug 2015 – L2 – Q2 – Employment Income Taxation

List conditions for tax-exempt passage allowances for expatriates under Ghana tax laws.

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ATP – Aug 2017 – L2 – Q3 – Employment Income Taxation

Compute tax liability for Mr Alavanyo Godoo for 2016, including salary, allowances, and pension withdrawal.

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ATP – Feb 2016 – L2 – Q3 – Income Tax Computation

Compute Mr. Abu Sakari’s tax liability for 2014 based on salary, allowances, benefits, and reliefs.

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ATP – Aug 2015 – L2 – Q2 – Employment Income Taxation

List conditions for tax-exempt passage allowances for expatriates under Ghana tax laws.

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ATP – Aug 2017 – L2 – Q3 – Employment Income Taxation

Compute tax liability for Mr Alavanyo Godoo for 2016, including salary, allowances, and pension withdrawal.

You're reporting an error for "ATP – Aug 2017 – L2 – Q3 – Employment Income Taxation"

ATP – Feb 2016 – L2 – Q3 – Income Tax Computation

Compute Mr. Abu Sakari’s tax liability for 2014 based on salary, allowances, benefits, and reliefs.

You're reporting an error for "ATP – Feb 2016 – L2 – Q3 – Income Tax Computation"

ATP – Aug 2015 – L2 – Q2 – Employment Income Taxation

List conditions for tax-exempt passage allowances for expatriates under Ghana tax laws.

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