Taxation of Capital Transactions

STP – Feb 2020 – L2 – Q3 – Taxation of Capital Transactions

Advise Ravid Ghana Ltd on tax implications of selling land and office building for GHS200,000.

Question

Ravid Ghana Ltd is a software development company with its registered office located at North Kaneshie in the Greater-Accra Region of Ghana. In March 2016 the company purchased a parcel of land at Oyarifa at a cost of GH¢25,000.00. The company spent GH¢5,000 to construct a fence wall around the property and to complete title registration processes at the Lands Commission. In May 2017, the company also purchased an office building at Madina valued at GH¢100,000.00 as well as a Toyota Hilux pick-up valued at GH¢100,000.00. In February 2018, the board of directors of the company decided to dispose of the parcel of land purchased in March 2016 and the office building in order to raise money to finance the purchase of strategic assets. The company engaged the services of a valuer to determine the market value of the land located at Oyarifa. The company paid the valuer GH¢5,000.00 for services rendered. In August 2019, the company sold the parcel of land and the office building in a single transaction for GH¢200,000.00. At the time of the sale, the market value of the land was GH¢50,000.00 and the office building was GH¢150,000.00. The written down value of the building was GH¢70,000.00 at the time of the sale.

Required: Advise the company on the income tax implications of the realization of the assets.

Answer

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Tags: Asset Realization, Capital Gains, Consideration Apportionment, Depreciable assets, Income Tax
Level: Level 2

Topic: Taxation of Capital Transactions
Series: FEB 2020

STP – Aug 2018 – L2 – Q1 – Taxation of Capital Transactions

Advise Welmount Ghana Ltd on tax implications of selling land and shares, and measures to mitigate tax exposure.

Question

Welmount Ghana Ltd is a construction company with its registered office located at Cantoments in Accra. In February 2007 it purchased a parcel of land at Achimota at the cost of GH₵75,000. The company spent GH₵25,000 to construct a fence wall around the property and to complete title registration processes at the Lands Commission. In March 2008, the company also purchased shares in Barclays bank of Ghana for GH₵20,000. In April 2017, the board of directors of the company decided to purchase another parcel of land at Tse Addo near the Trade Fair at La. The board further resolved to sell off the parcel of land purchased in February 2007 and the shares the company held in Barclays bank to finance the purchase of the parcel of land at Tse Addo. The company engaged the services of a valuer to determine the market value of the land located at Achimota and the shares the company held in Barclays bank. The company paid the valuer GH₵30,000 for his services. A marketing firm was contracted to advertise the sale of the parcel of land and the shares and the firm submitted a bill of GH₵35,000 to the company. In June 2017, the company sold the parcel of land and the shares in a single transaction for GH₵500,000. At the time of the sale, the market value of the parcel of land was GH₵400,000 and that of the shares was GH₵100,000. The company paid GH₵40,000 to a law firm to conduct due diligence on the parcel of land the company intended to purchase. In February 2018, the Managing Director of the company signed the purchase agreement and an amount of GH₵600,000 was paid to the owners of the property.

Required:

I. Advise on the company on the income tax implications of the realization of the assets. (20 marks) II. Advise on measures the company could have adopted to mitigate its tax exposure (if any) on the realization of the assets.

Answer

Find Related Questions by Tags, levels, etc.

Tags: apportionment, Asset Realization, Capital Gains, Income Tax Act, Roll-Over Relief, Tax Planning
Level: Level 2

Topic: Taxation of Capital Transactions
Series: AUG 2018

STP – Feb 2021 – L2 – Q3 – Taxation of Capital Transactions

Advise Tremor Ghana Ltd on tax implications of asset disposals and tax planning opportunities.

Question

Tremor Ghana Ltd is a trading company with its registered office located at North Legon. The basis period of the company ends on $31^{\text {st }}$ December of every year. In August 2018, the company acquired the following assets.

ASSET	COST (GHc)
Computers	$50,000.00$
Motor Vehicles	$150,000.00$
Land	$350,000.00$

In November 2019, the company disposed of the assets for the following amounts:

ASSET	COST (GHc)
Computers	$70,000.00$
Motor Vehicles	$160,000.00$
Land	$450,000.00$

In January 2020, the company acquired a new office building at the cost of GHc600,000.

Required: (i) Advise the company on the income tax implications of the realization of the assets in November 2019. 20 marks (ii) Identify the tax planning opportunities the company could have employed to mitigate its tax exposure on the realization of the assets.

Answer

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Topic: Taxation of Capital Transactions
Series: FEBRUARY 2021

STP – Aug 2013 – L2 – Q1 – Taxation of Capital Transactions

Tax implications of purchasing equity in a mining company.

Question

(a) The Board of Kwaamens Ltd has approached you as their preferred Tax Consultant for advice on the tax implications of the purchase of equity in a mining company.

(b). The Board of Kwaamens Ltd has approached you as their preferred Tax Consultant for advice on the grant of capital allowance on a leased asset.

(c). The Board of Kwaamens Ltd has approached you as their preferred Tax Consultant for advice on the VAT implications of the lease payments.

(d). The Board of Kwaamens Ltd has approached you as their preferred Tax Consultant for advice on the tax implications of the sale of class 3 mining asset.

(e). The Board of Kwaamens Ltd has approached you as their preferred Tax Consultant for advice on the grant of capital allowance on the use of a machinery by a mining company.

Answer

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Tags: Capital Allowance, machinery, Mining Company
Level: Level 2

Topic: Taxation of Capital Transactions
Series: AUG 2013

STP – Feb 2021 – L2 – Q1 – Strategic Tax Planning

Advise on tax implications of AIG acquiring 55% stake in Fluid Logistics Ghana and providing a GH₵6.5M loan, plus tax planning options.

Question

The President of America Is Great (AIG) Group, a US Corporation, is exploring the possibility of acquiring a fifty-five percent stake in Fluid Logistics Ghana Limited. The stated capital of Fluid Logistics Ghana Limited is GH₵1,500,000. AIG Corporation intends providing a loan of GH₵6,500,000 to Fluid Logistics Ghana Limited when the transaction for the acquisition of the fifty-five percent stake is completed. The President of AIG Corporation is seeking your advice on the tax implications of the proposed transactions.

Required: Advise the President on: i. The income tax implications of the acquisition of a fifty-five percent stake in Fluid Logistics Ghana Limited. 9 marks ii. The income tax implications of providing the loan of GH₵6,500,000. 9 marks iii. The tax planning options available to minimize the tax effects of the proposed transactions.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Acquisition, Arm's Length, Corporate Tax, Debt-to-Equity Ratio, Ghana tax law, Income Tax, Loan, Tax implications, Tax Planning, Thin Capitalization
Level: Level 2

Topic: Tax Strategies for Business Growth and Expansion, Taxation of Capital Transactions
Series: FEBRUARY 2021

STP – Feb 2020 – L2 – Q3 – Taxation of Capital Transactions

Advise Ravid Ghana Ltd on tax implications of selling land and office building for GHS200,000.

Question

Required: Advise the company on the income tax implications of the realization of the assets.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Asset Realization, Capital Gains, Consideration Apportionment, Depreciable assets, Income Tax
Level: Level 2

Topic: Taxation of Capital Transactions
Series: FEB 2020

STP – Aug 2018 – L2 – Q1 – Taxation of Capital Transactions

Advise Welmount Ghana Ltd on tax implications of selling land and shares, and measures to mitigate tax exposure.

Question

Required:

Answer

Find Related Questions by Tags, levels, etc.

Tags: apportionment, Asset Realization, Capital Gains, Income Tax Act, Roll-Over Relief, Tax Planning
Level: Level 2

Topic: Taxation of Capital Transactions
Series: AUG 2018

STP – Feb 2021 – L2 – Q3 – Taxation of Capital Transactions

Advise Tremor Ghana Ltd on tax implications of asset disposals and tax planning opportunities.

Question

ASSET	COST (GHc)
Computers	$50,000.00$
Motor Vehicles	$150,000.00$
Land	$350,000.00$

In November 2019, the company disposed of the assets for the following amounts:

ASSET	COST (GHc)
Computers	$70,000.00$
Motor Vehicles	$160,000.00$
Land	$450,000.00$

In January 2020, the company acquired a new office building at the cost of GHc600,000.

Answer

Find Related Questions by Tags, levels, etc.

Topic: Taxation of Capital Transactions
Series: FEBRUARY 2021

STP – Aug 2013 – L2 – Q1 – Taxation of Capital Transactions

Tax implications of purchasing equity in a mining company.

Question

(a) The Board of Kwaamens Ltd has approached you as their preferred Tax Consultant for advice on the tax implications of the purchase of equity in a mining company.

(b). The Board of Kwaamens Ltd has approached you as their preferred Tax Consultant for advice on the grant of capital allowance on a leased asset.

(c). The Board of Kwaamens Ltd has approached you as their preferred Tax Consultant for advice on the VAT implications of the lease payments.

(d). The Board of Kwaamens Ltd has approached you as their preferred Tax Consultant for advice on the tax implications of the sale of class 3 mining asset.

(e). The Board of Kwaamens Ltd has approached you as their preferred Tax Consultant for advice on the grant of capital allowance on the use of a machinery by a mining company.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Allowance, machinery, Mining Company
Level: Level 2

Topic: Taxation of Capital Transactions
Series: AUG 2013

STP – Feb 2021 – L2 – Q1 – Strategic Tax Planning

Advise on tax implications of AIG acquiring 55% stake in Fluid Logistics Ghana and providing a GH₵6.5M loan, plus tax planning options.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Acquisition, Arm's Length, Corporate Tax, Debt-to-Equity Ratio, Ghana tax law, Income Tax, Loan, Tax implications, Tax Planning, Thin Capitalization
Level: Level 2

Topic: Tax Strategies for Business Growth and Expansion, Taxation of Capital Transactions
Series: FEBRUARY 2021

Topic: Taxation of Capital Transactions

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STP – Feb 2020 – L2 – Q3 – Taxation of Capital Transactions

Advise Ravid Ghana Ltd on tax implications of selling land and office building for GHS200,000.

STP – Aug 2018 – L2 – Q1 – Taxation of Capital Transactions

Advise Welmount Ghana Ltd on tax implications of selling land and shares, and measures to mitigate tax exposure.

STP – Feb 2021 – L2 – Q3 – Taxation of Capital Transactions

Advise Tremor Ghana Ltd on tax implications of asset disposals and tax planning opportunities.

STP – Aug 2013 – L2 – Q1 – Taxation of Capital Transactions

Tax implications of purchasing equity in a mining company.

STP – Feb 2021 – L2 – Q1 – Strategic Tax Planning

Advise on tax implications of AIG acquiring 55% stake in Fluid Logistics Ghana and providing a GH₵6.5M loan, plus tax planning options.

STP – Feb 2020 – L2 – Q3 – Taxation of Capital Transactions

Advise Ravid Ghana Ltd on tax implications of selling land and office building for GHS200,000.

STP – Aug 2018 – L2 – Q1 – Taxation of Capital Transactions

Advise Welmount Ghana Ltd on tax implications of selling land and shares, and measures to mitigate tax exposure.

STP – Feb 2021 – L2 – Q3 – Taxation of Capital Transactions

Advise Tremor Ghana Ltd on tax implications of asset disposals and tax planning opportunities.

STP – Aug 2013 – L2 – Q1 – Taxation of Capital Transactions

Tax implications of purchasing equity in a mining company.

STP – Feb 2021 – L2 – Q1 – Strategic Tax Planning

Advise on tax implications of AIG acquiring 55% stake in Fluid Logistics Ghana and providing a GH₵6.5M loan, plus tax planning options.

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STP – Feb 2020 – L2 – Q3 – Taxation of Capital Transactions

Advise Ravid Ghana Ltd on tax implications of selling land and office building for GHS200,000.

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STP – Aug 2018 – L2 – Q1 – Taxation of Capital Transactions

Advise Welmount Ghana Ltd on tax implications of selling land and shares, and measures to mitigate tax exposure.

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STP – Feb 2021 – L2 – Q3 – Taxation of Capital Transactions

Advise Tremor Ghana Ltd on tax implications of asset disposals and tax planning opportunities.

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STP – Aug 2013 – L2 – Q1 – Taxation of Capital Transactions

Tax implications of purchasing equity in a mining company.

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STP – Feb 2021 – L2 – Q1 – Strategic Tax Planning

Advise on tax implications of AIG acquiring 55% stake in Fluid Logistics Ghana and providing a GH₵6.5M loan, plus tax planning options.

You're reporting an error for "STP – Feb 2021 – L2 – Q1 – Strategic Tax Planning"

STP – Feb 2020 – L2 – Q3 – Taxation of Capital Transactions

Advise Ravid Ghana Ltd on tax implications of selling land and office building for GHS200,000.

You're reporting an error for "STP – Feb 2020 – L2 – Q3 – Taxation of Capital Transactions"

STP – Aug 2018 – L2 – Q1 – Taxation of Capital Transactions

Advise Welmount Ghana Ltd on tax implications of selling land and shares, and measures to mitigate tax exposure.

You're reporting an error for "STP – Aug 2018 – L2 – Q1 – Taxation of Capital Transactions"

STP – Feb 2021 – L2 – Q3 – Taxation of Capital Transactions

Advise Tremor Ghana Ltd on tax implications of asset disposals and tax planning opportunities.

You're reporting an error for "STP – Feb 2021 – L2 – Q3 – Taxation of Capital Transactions"

STP – Aug 2013 – L2 – Q1 – Taxation of Capital Transactions

Tax implications of purchasing equity in a mining company.

You're reporting an error for "STP – Aug 2013 – L2 – Q1 – Taxation of Capital Transactions"

STP – Feb 2021 – L2 – Q1 – Strategic Tax Planning

Advise on tax implications of AIG acquiring 55% stake in Fluid Logistics Ghana and providing a GH₵6.5M loan, plus tax planning options.

You're reporting an error for "STP – Feb 2021 – L2 – Q1 – Strategic Tax Planning"

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