Topic: Income Tax Computation

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

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

Question

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.

Answer

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Tags: Allowances, Commissioner-General Ruling, Employment Income, Tax Treatment
Level: Level 2

Topic: Income Tax Computation
Series: AUG 2019

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

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

Question

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%.

Answer

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Tags: Capital allowances, Corporate Tax, Financial Statement, Penalties, Withholding Tax
Level: Level 2

Topic: Income Tax Computation
Series: AUG 2019

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

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

Question

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).

Answer

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Tags: Tax Compliance, Withholding Tax
Level: Level 2

Topic: Income Tax Computation
Series: AUGUST 2020

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

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

Question

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.

Answer

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Tags: Consultancy Income, Disability Allowance, Employment Income, Tax
Level: Level 2

Topic: Income Tax Computation
Series: AUGUST 2020

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

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

Question

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.

Answer

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Tags: Capital allowances, Depreciation Allowances, Non-current Assets
Level: Level 2

Topic: Income Tax Computation
Series: FEB 2020

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

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

Question

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).

Answer

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Tags: Income Tax Act, Mining, Unrelieved losses
Level: Level 2

Topic: Income Tax Computation
Series: FEB 2020

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.

Question

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.

Answer

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Tags: Employment Income, Foreign income, Income Tax, Tax Liability
Level: Level 2

Topic: Income Tax Computation
Series: FEB 2020

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

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

Question

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)

Answer

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Level: Level 3

Topic: Income Tax Computation
Series: FEB 2017

ATP – Feb 2017 – L3 – Q3 – Pooling System

Explain general features of the pooling system for capital allowances.

Question

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)

Answer

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Tags: Capital allowances, Compliance, Depreciation
Level: Level 3

Topic: Income Tax Computation
Series: FEB 2017

ATP – Aug 2017 – L2 – Q4 – Income Tax Computation

Compute tax credit relief for Mr Brefo Nimo based on dividend income from the Netherlands.

Question

Mr Brefo Nimo returned to Ghana after staying in the Netherlands for over 20 years and took up an appointment with Amanfro Limited as the Director of Finance. His gross monthly basic salary for 2016 year of assessment was GH¢10,000.00. He contributed 5.5% to Social Security and National Insurance Trust (SSNIT). Mr Brefo Nimo has investments in the Netherlands, from which he earned a gross dividend of 2,000 Euros in 2016, from which 350 Euros was withheld as dividend tax and the balance remitted to him in Ghana. A double taxation Agreement exists between Ghana and the Netherlands.
The rate of Exchange is GH¢5.2 to 1.00 Euro.

Required:
a) Compute the Tax Credit Relief that will be granted to Mr Brefo Nimo.

b) Compute the tax liability of Mr Brefo Nimo for 2016 Year of assessment.

Answer

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Tags: Dividend tax, Effective Tax Rate, Income Tax, SSNIT Contribution, Tax Liability
Level: Level 2

Topic: Income Tax Computation
Series: AUG 2017

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

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

Question

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.

Answer

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Tags: Allowances, Commissioner-General Ruling, Employment Income, Tax Treatment
Level: Level 2

Topic: Income Tax Computation
Series: AUG 2019

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

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

Question

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

Answer

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Tags: Capital allowances, Corporate Tax, Financial Statement, Penalties, Withholding Tax
Level: Level 2

Topic: Income Tax Computation
Series: AUG 2019

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

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

Question

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).

Answer

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Tags: Tax Compliance, Withholding Tax
Level: Level 2

Topic: Income Tax Computation
Series: AUGUST 2020

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

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

Question

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.

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

Answer

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Level: Level 2

Topic: Income Tax Computation
Series: AUGUST 2020

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

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

Question

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

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.

Answer

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Tags: Capital allowances, Depreciation Allowances, Non-current Assets
Level: Level 2

Topic: Income Tax Computation
Series: FEB 2020

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

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

Question

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

Answer

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Tags: Income Tax Act, Mining, Unrelieved losses
Level: Level 2

Topic: Income Tax Computation
Series: FEB 2020

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.

Question

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.

Answer

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Tags: Employment Income, Foreign income, Income Tax, Tax Liability
Level: Level 2

Topic: Income Tax Computation
Series: FEB 2020

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

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

Question

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)

Answer

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Tags: Capital Allowanc, chargeable income, Tax Liability
Level: Level 3

Topic: Income Tax Computation
Series: FEB 2017

ATP – Feb 2017 – L3 – Q3 – Pooling System

Explain general features of the pooling system for capital allowances.

Question

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)

Answer

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Tags: Capital allowances, Compliance, Depreciation
Level: Level 3

Topic: Income Tax Computation
Series: FEB 2017

ATP – Aug 2017 – L2 – Q4 – Income Tax Computation

Compute tax credit relief for Mr Brefo Nimo based on dividend income from the Netherlands.

Question

Required:
a) Compute the Tax Credit Relief that will be granted to Mr Brefo Nimo.

b) Compute the tax liability of Mr Brefo Nimo for 2016 Year of assessment.

Answer

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Tags: Dividend tax, Effective Tax Rate, Income Tax, SSNIT Contribution, Tax Liability
Level: Level 2