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  • 20 Marks

AT – Nov 2023 – L1 – SB – Q2 – Petroleum Profits Tax

Calculation of hydrocarbon and companies income tax for Brass Petroleum Producing Company Ltd under Petroleum Industry Act and Companies Income Tax Act.

Brass Petroleum Producing Company Limited has been operating as an oil prospecting company in Nigeria for fifteen years. The company operates in both onshore and shallow water in the Koko area of the Niger Delta region.

Following the provisions of the Petroleum Industry Act 2021, the company applied for, and was granted a petroleum prospecting license (PPL) on January 1, 2021.

Extracts from the company’s financial records for the year ended December 31, 2021, revealed the following:

Description N’million
Revenue:
Value of crude oil sold 184,450
Value of condensate from associated gas sold 47,175
Value of natural gas liquid from associated gas sold 41,650
Gross revenue 273,275
Balancing charge 32
Total Gross Revenue 273,307
Deduct:
Production cost 106,470
Cost of gas reinjection wells 600
Drilling cost incurred 4,360
Depreciation of plant, machinery, and fixtures 1,500
Decommissioning and abandonment 1,900
Repairs and maintenance 5,750
Royalty cost paid 40,990
Niger Delta Development Commission charge 250
Finance costs 510
Terminaling cost 1,380
Donations to recognised charity home 130
Concession rentals 20,470
Host community fund 1,000
Local government municipal levy 100
Environmental remediation fund 1,420
Cost incurred in seeking information for oil deposits 370
Total Deductible Expenses 187,200
Net Profit 86,107

Additional Information:

  1. Value of crude oil sold:
    • Type: Forcados
    • Quantity (barrels): 6,200,000
    • Actual Price ($): 70
    • Fiscal Price ($): 72
  2. Value of condensate from associated gas sold:
    • Type: OSO condensate
    • Quantity (barrels): 3,700,000
    • Actual Price ($): 30
    • Fiscal Price ($): 30
  3. Value of gas liquid from associated gas sold:
    • Type: Pennington
    • Quantity (barrels): 2,800,000
    • Actual Price ($): 35
    • Fiscal Price ($): 34
  4. Drilling cost incurred:
    • Tangible drilling cost for first exploration well: N2,800 million
    • Drilling the first two appraisal wells: N1,560 million
    • Total: N4,360 million
  5. Repairs and maintenance:
    • Repairs of plant, machinery, and fixtures: N2,750 million
    • Repairs or alteration of production implement utensils: N3,000 million
    • Total: N5,750 million
  6. Losses brought forward from last year: N655 million
  7. Capital allowances computed:
    • Brought forward: N320 million
    • For the current year: N1,400 million
    • Total: N1,720 million
  8. Production allowances after commencement of the Petroleum Industry Act: N3,300 million
  9. Exchange Rate: Assume N425 is equivalent to US$1.

Required:

As the company’s Tax Manager, you are to prepare a report to the Managing Director, showing in line with the provisions of Petroleum Industry Act 2021 and Companies Income Tax Act 2004 (as amended), the:

a. Hydrocarbon tax (14 Marks)

b. Companies income tax payable (6 Marks)

(Total: 20 Marks)

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  • 20 Marks

TAX – Nov 2015 – L2 – Q3 – Personal Income Tax (PIT)

This question involves computing the personal income tax liability of an employee for two consecutive years.

Mr. Babangida Muhammed was employed as General Manager by Casio Nigeria Limited, a subsidiary of a United Kingdom-based holding company. He commenced the employment on 1 January 2013. He has provided the following details:

2013 (₦’000) 2014 (₦’000)
Basic salary 5,400 6,000
Rent subsidy 1,800 1,800
Furniture grant 600 600
Entertainment allowance 660 660
Other benefits
– Brand new car (valued at) 3,800,000
– Scholarship for children 500 500

Mr. Babangida Muhammed has approached your firm to assist him in determining his personal income tax liability for the last two years and assist in obtaining a current Tax Clearance Certificate on his behalf from his relevant tax authority. Your firm is also to determine whether he had underpaid his tax for the previous two years and if so, how much additional tax he may be required to pay.

Additional information provided:

Income/Expense Category 2013 (₦’000) 2014 (₦’000)
Gratuity from former employment 240 –
Rental income (Gross) 600 600
Interest on Fixed Deposit 75 90
Life Assurance Premium 100 100
Contribution to NHF (2.5% of Basic Salary) 2.5% 2.5%
Contribution to National Pension Scheme (7.5% of Total Emoluments) 7.5% 7.5%
Repair expenses for property – 45
Maintenance of aged parents 480 –
Personal Income Tax paid 850 960

Required:
a. The Personal Income Tax payable in 2013 and 2014 Years of Assessment.
(16 Marks)
b. The effect of previous payments on the tax payable.
(4 Marks)
(Total: 20 Marks)

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  • 30 Marks

AX – Nov 2021 – L2 – Q1 – Personal Income Tax (PIT)

Calculation of personal income tax liability for two job offers and providing advice on the offer that yields a higher income after tax.

Miss Opeyemi Olunba is a young engineer who has been working in an oil sector for
over 5 years. She currently earns a gross salary of N10,000,000 per annum. She
recently attended two interviews for a new job at Joke Oil & Gas in Rivers State and
Dabiri Hotels & Suite in Lagos State.
She has been called by the two companies to assume office on April 1, 2021. The
following salaries and allowances were offered by the two companies:

Additional information:

  1. If Miss Opeyemi accepts the offer from Joke Oil & Gas, she will rent out her Lagos apartment for N20,000,000 per annum but will need a loan of N12,000,000 at 20% interest to modify the apartment.
  2. She will pay rent of N5,000,000 in Port Harcourt if she relocates.
  3. She maintains her child, a student at St. John University,
  4. She also supports her parents.
  5. She pays a life assurance premium of N5,000,000 annually.
  6. Her employers will deduct contributions for the National Housing Fund (N5,000,000) and Pension Fund (N3,000,000).
  7. She also pays National Health Insurance Premium (N1,000,000).

Required:

a. Compute Miss Opeyemi’s personal income tax liability for the relevant year of assessment for both offers.
b. Advise her on which employment will give her a higher income after tax.

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  • 20 Marks

TAX – May 2018 – L2 – Q1a – Personal Income Tax

Compute the Personal Income Tax payable by an individual based on salary, allowances, pension, and other income details.

Alhaji Tijani Bello is married and has six children aged between 4 and 21 years. All except Phillip aged 21 are still in school. The following details were obtained from his employment records:
(i) He retired from his previous employment with Standard Chartered Company Limited on September 30, 2015. He was on an annual salary of N6,630,000.
(ii) On October 1, 2015, he took up a new employment with Rehoco International Consulting on a salary of N9,600,000 per annum, transport allowance of N480,000 per annum, and rent allowance of N660,000 per annum.
(iii) From October 1, 2015, he will be on a pension income of N960,000 per annum from his pension fund administrators.
(iv) Contributions to the National Housing Fund and National Pension Scheme are N195,000 and N615,000, respectively.
(v) Alhaji Tijani Bello has a Life Assurance Policy on his life with the sum assured of N7,500,000 and an annual premium of N660,000.
(vi) He lived with his wife and two aged parents on whom he spent a total sum of N1,500,000 per annum.
(vii) Alhaji Tijani Bello received dividends from his publicly quoted investment on the Nigeria Stock Exchange as follows:

Date Amount (N)
1/1/2014 600,000
1/7/2014 720,000

Required:
a. Compute the Personal Income Tax payable by Alhaji Tijani Bello for the relevant year of assessment.

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  • 1 Marks

FA – Nov 2019 – L1 – SA – Q7 Accounting Treatment for Bad and Doubtful Debts-

Calculate the allowance for receivables recognized in the statement of profit or loss.

What is the amount of allowance recognized in the statement of profit or loss?

The following is an information extract from the books of accounts of Walling Parking Enterprises, a sole trader:

  • Trade receivables balance for the period: N1,300,000
  • The chance of collecting 2% of the receivables figure is remote.
  • It is virtually certain that 95% of the balance of the receivables is collectable.

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  • 3 Marks

FA – May 2016 – L1 – SA – Q17 – Accounting Treatment for Bad and Doubtful Debts

Identifying the effect of a reduction in the allowance for doubtful debts.

Which of the following reflects the effect of a reduction in the allowance for doubtful debts?
A. Reduction in net profit
B. Reduction in cash balance
C. Reduction in gross profit
D. Increase in gross profit
E. Increase in net profit

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  • 20 Marks

PT – Dec 2023 – L2 – Q3 – Income Tax Liabilities

Calculate chargeable income for a Finance Manager based on detailed employment benefits and allowances.

Abotsi has been in employment at Asempa Ltd since 1 August 2019 as Finance Manager on a salary scale of GH¢32,000 by GH¢8,000 to GH¢48,000.

His service conditions include the following:
i) Responsibility allowance of 18% of basic salary
ii) Utilities allowance per annum of 10% of basic salary
iii) Risk allowance of 20% on basic salary and car maintenance allowance of 5% of basic salary
iv) Leave allowance of GH¢1,900 per annum
v) Medical allowance per annum of GH¢3,500
vi) Meals allowance of GH¢700 per month
vii) Two house helps on GH¢500 wages per month each. The amount is paid to Abotsi in cash directly by the company
viii) Bonus of 25% of annual basic salary
ix) Annual Overtime allowance of GH¢18,000
x) Unaccountable entertainment allowance of GH¢2,000 a year
xi) Provision of a well-furnished bungalow in respect of which he pays GH¢400 per month as rent by way of deduction at source
xii) Provision of a vehicle with driver and fuel for both official and private purposes
xiii) Special retirement package by way of a provident fund of which he contributes 9% of his basic salary, while the company contributes 11%. (The scheme is approved by the regulatory body)
xiv) Social Security and National Insurance Trust contribution of 5.5% and the employer contributes 13% of basic salary
xv) On 1 January 2021, he was given a car loan of GH¢20,000 to purchase a car for his mother at a simple interest rate of 15% per annum. The institution gives similar facilities to other customers at the rate of 28% but the statutory rate (Bank of Ghana rate) is 25%. The loan is to be paid within the period of 24 months
xvi) He is married to Abotsiwaa and Abotsimaa who are unemployed and contribute little or no financial support to their husband. Their responsibilities are limited to the management of the house
xvii) He has six (6) children, four (4) of whom are in Silicon Valley International School, Accra-Ghana, while the rest are working
xviii) He is also responsible for the upkeep of four (4) aged relatives of his
xix) He is currently pursuing MPHIL in Finance at UPSA where he incurred GH¢25,000 by way of educational expenses in 2021
xx) He is a director of Adwoa Mansa Ltd and receives a director’s emolument of GH¢24,450 (net of taxes)
xxi) He received a dividend of GH¢20,000 (net of taxes) from the Afia Manu Bank. The dividend was taxed at 8%.

Required:
Calculate his chargeable income for the 2021 Year of Assessment. (20 marks)

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  • 20 Marks

AT – May 2016 – L3 – Q1 – Tax administration in Ghana, Business income – Corporate income tax

Compute the tax liabilities and take-home pay for an employee provided various benefits and allowances for the 2014 Year of Assessment.

Mr. Frank Danso was employed by Ghana Trust Ltd on 1st September 2010 on a salary scale of GH¢4,500 x 500-7,500 as the financial controller of the company. He is provided with the following as part of his conditions of service for the 2014 Year of Assessment:

i) Well-furnished rented flat by his employers in respect of which he pays GH¢100 per month as rent by way of deductions at source.
ii) Watchman allowance of GH¢200 per annum, paid directly to Mr. Frank Danso.
iii) Risk allowance of GH¢905 per annum.
iv) Leave allowance of GH¢500 per annum.
v) Garden boy allowance of GH¢100 per quarter paid directly to Mr. Frank Danso.
vi) Medical allowance of GH¢680 per annum.
vii) Meals allowance of GH¢50 per month.
viii) Two maidservants each on wages of GH¢200 per annum. The amount is paid to the maid servants directly by the company.
ix) Bonus of 40% on annual basic salary.
x) Entertainment allowance of GH¢400 a year (accountable).
xi) Duty post allowance of GH¢100 per month.
xii) He has Life Assurance Policies with EIC Ltd. Below are the details:

Policy Sum Assured (GH¢) Annual Premium (GH¢)
A 4,000 420
B 2,800 240
C 16,000 1,650
D 5,000 525

xiii) He is entitled to a company car and fuel for both official and private use.
xiv) He has two wives and ten children; four of whom are in SHS in Accra, and the rest are gainfully employed; he caters for 3 of his aged relatives.
xv) He contributes 7% of his salary towards the company’s Provident Fund which has been approved by the National Pension Authority, and he also contributes 5.5% of his salary to the SSNIT.

Required:
a) Compute his tax liabilities for the 2014 Year of Assessment using 2014 rates.
(15 marks)

b) Determine his take-home pay for the 2014 Year of Assessment.
(5 marks)

Total: 20 marks

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  • 20 Marks

AT – Nov 2023 – L1 – SB – Q2 – Petroleum Profits Tax

Calculation of hydrocarbon and companies income tax for Brass Petroleum Producing Company Ltd under Petroleum Industry Act and Companies Income Tax Act.

Brass Petroleum Producing Company Limited has been operating as an oil prospecting company in Nigeria for fifteen years. The company operates in both onshore and shallow water in the Koko area of the Niger Delta region.

Following the provisions of the Petroleum Industry Act 2021, the company applied for, and was granted a petroleum prospecting license (PPL) on January 1, 2021.

Extracts from the company’s financial records for the year ended December 31, 2021, revealed the following:

Description N’million
Revenue:
Value of crude oil sold 184,450
Value of condensate from associated gas sold 47,175
Value of natural gas liquid from associated gas sold 41,650
Gross revenue 273,275
Balancing charge 32
Total Gross Revenue 273,307
Deduct:
Production cost 106,470
Cost of gas reinjection wells 600
Drilling cost incurred 4,360
Depreciation of plant, machinery, and fixtures 1,500
Decommissioning and abandonment 1,900
Repairs and maintenance 5,750
Royalty cost paid 40,990
Niger Delta Development Commission charge 250
Finance costs 510
Terminaling cost 1,380
Donations to recognised charity home 130
Concession rentals 20,470
Host community fund 1,000
Local government municipal levy 100
Environmental remediation fund 1,420
Cost incurred in seeking information for oil deposits 370
Total Deductible Expenses 187,200
Net Profit 86,107

Additional Information:

  1. Value of crude oil sold:
    • Type: Forcados
    • Quantity (barrels): 6,200,000
    • Actual Price ($): 70
    • Fiscal Price ($): 72
  2. Value of condensate from associated gas sold:
    • Type: OSO condensate
    • Quantity (barrels): 3,700,000
    • Actual Price ($): 30
    • Fiscal Price ($): 30
  3. Value of gas liquid from associated gas sold:
    • Type: Pennington
    • Quantity (barrels): 2,800,000
    • Actual Price ($): 35
    • Fiscal Price ($): 34
  4. Drilling cost incurred:
    • Tangible drilling cost for first exploration well: N2,800 million
    • Drilling the first two appraisal wells: N1,560 million
    • Total: N4,360 million
  5. Repairs and maintenance:
    • Repairs of plant, machinery, and fixtures: N2,750 million
    • Repairs or alteration of production implement utensils: N3,000 million
    • Total: N5,750 million
  6. Losses brought forward from last year: N655 million
  7. Capital allowances computed:
    • Brought forward: N320 million
    • For the current year: N1,400 million
    • Total: N1,720 million
  8. Production allowances after commencement of the Petroleum Industry Act: N3,300 million
  9. Exchange Rate: Assume N425 is equivalent to US$1.

Required:

As the company’s Tax Manager, you are to prepare a report to the Managing Director, showing in line with the provisions of Petroleum Industry Act 2021 and Companies Income Tax Act 2004 (as amended), the:

a. Hydrocarbon tax (14 Marks)

b. Companies income tax payable (6 Marks)

(Total: 20 Marks)

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  • 20 Marks

TAX – Nov 2015 – L2 – Q3 – Personal Income Tax (PIT)

This question involves computing the personal income tax liability of an employee for two consecutive years.

Mr. Babangida Muhammed was employed as General Manager by Casio Nigeria Limited, a subsidiary of a United Kingdom-based holding company. He commenced the employment on 1 January 2013. He has provided the following details:

2013 (₦’000) 2014 (₦’000)
Basic salary 5,400 6,000
Rent subsidy 1,800 1,800
Furniture grant 600 600
Entertainment allowance 660 660
Other benefits
– Brand new car (valued at) 3,800,000
– Scholarship for children 500 500

Mr. Babangida Muhammed has approached your firm to assist him in determining his personal income tax liability for the last two years and assist in obtaining a current Tax Clearance Certificate on his behalf from his relevant tax authority. Your firm is also to determine whether he had underpaid his tax for the previous two years and if so, how much additional tax he may be required to pay.

Additional information provided:

Income/Expense Category 2013 (₦’000) 2014 (₦’000)
Gratuity from former employment 240 –
Rental income (Gross) 600 600
Interest on Fixed Deposit 75 90
Life Assurance Premium 100 100
Contribution to NHF (2.5% of Basic Salary) 2.5% 2.5%
Contribution to National Pension Scheme (7.5% of Total Emoluments) 7.5% 7.5%
Repair expenses for property – 45
Maintenance of aged parents 480 –
Personal Income Tax paid 850 960

Required:
a. The Personal Income Tax payable in 2013 and 2014 Years of Assessment.
(16 Marks)
b. The effect of previous payments on the tax payable.
(4 Marks)
(Total: 20 Marks)

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  • 30 Marks

AX – Nov 2021 – L2 – Q1 – Personal Income Tax (PIT)

Calculation of personal income tax liability for two job offers and providing advice on the offer that yields a higher income after tax.

Miss Opeyemi Olunba is a young engineer who has been working in an oil sector for
over 5 years. She currently earns a gross salary of N10,000,000 per annum. She
recently attended two interviews for a new job at Joke Oil & Gas in Rivers State and
Dabiri Hotels & Suite in Lagos State.
She has been called by the two companies to assume office on April 1, 2021. The
following salaries and allowances were offered by the two companies:

Additional information:

  1. If Miss Opeyemi accepts the offer from Joke Oil & Gas, she will rent out her Lagos apartment for N20,000,000 per annum but will need a loan of N12,000,000 at 20% interest to modify the apartment.
  2. She will pay rent of N5,000,000 in Port Harcourt if she relocates.
  3. She maintains her child, a student at St. John University,
  4. She also supports her parents.
  5. She pays a life assurance premium of N5,000,000 annually.
  6. Her employers will deduct contributions for the National Housing Fund (N5,000,000) and Pension Fund (N3,000,000).
  7. She also pays National Health Insurance Premium (N1,000,000).

Required:

a. Compute Miss Opeyemi’s personal income tax liability for the relevant year of assessment for both offers.
b. Advise her on which employment will give her a higher income after tax.

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  • 20 Marks

TAX – May 2018 – L2 – Q1a – Personal Income Tax

Compute the Personal Income Tax payable by an individual based on salary, allowances, pension, and other income details.

Alhaji Tijani Bello is married and has six children aged between 4 and 21 years. All except Phillip aged 21 are still in school. The following details were obtained from his employment records:
(i) He retired from his previous employment with Standard Chartered Company Limited on September 30, 2015. He was on an annual salary of N6,630,000.
(ii) On October 1, 2015, he took up a new employment with Rehoco International Consulting on a salary of N9,600,000 per annum, transport allowance of N480,000 per annum, and rent allowance of N660,000 per annum.
(iii) From October 1, 2015, he will be on a pension income of N960,000 per annum from his pension fund administrators.
(iv) Contributions to the National Housing Fund and National Pension Scheme are N195,000 and N615,000, respectively.
(v) Alhaji Tijani Bello has a Life Assurance Policy on his life with the sum assured of N7,500,000 and an annual premium of N660,000.
(vi) He lived with his wife and two aged parents on whom he spent a total sum of N1,500,000 per annum.
(vii) Alhaji Tijani Bello received dividends from his publicly quoted investment on the Nigeria Stock Exchange as follows:

Date Amount (N)
1/1/2014 600,000
1/7/2014 720,000

Required:
a. Compute the Personal Income Tax payable by Alhaji Tijani Bello for the relevant year of assessment.

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  • 1 Marks

FA – Nov 2019 – L1 – SA – Q7 Accounting Treatment for Bad and Doubtful Debts-

Calculate the allowance for receivables recognized in the statement of profit or loss.

What is the amount of allowance recognized in the statement of profit or loss?

The following is an information extract from the books of accounts of Walling Parking Enterprises, a sole trader:

  • Trade receivables balance for the period: N1,300,000
  • The chance of collecting 2% of the receivables figure is remote.
  • It is virtually certain that 95% of the balance of the receivables is collectable.

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  • 3 Marks

FA – May 2016 – L1 – SA – Q17 – Accounting Treatment for Bad and Doubtful Debts

Identifying the effect of a reduction in the allowance for doubtful debts.

Which of the following reflects the effect of a reduction in the allowance for doubtful debts?
A. Reduction in net profit
B. Reduction in cash balance
C. Reduction in gross profit
D. Increase in gross profit
E. Increase in net profit

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  • 20 Marks

PT – Dec 2023 – L2 – Q3 – Income Tax Liabilities

Calculate chargeable income for a Finance Manager based on detailed employment benefits and allowances.

Abotsi has been in employment at Asempa Ltd since 1 August 2019 as Finance Manager on a salary scale of GH¢32,000 by GH¢8,000 to GH¢48,000.

His service conditions include the following:
i) Responsibility allowance of 18% of basic salary
ii) Utilities allowance per annum of 10% of basic salary
iii) Risk allowance of 20% on basic salary and car maintenance allowance of 5% of basic salary
iv) Leave allowance of GH¢1,900 per annum
v) Medical allowance per annum of GH¢3,500
vi) Meals allowance of GH¢700 per month
vii) Two house helps on GH¢500 wages per month each. The amount is paid to Abotsi in cash directly by the company
viii) Bonus of 25% of annual basic salary
ix) Annual Overtime allowance of GH¢18,000
x) Unaccountable entertainment allowance of GH¢2,000 a year
xi) Provision of a well-furnished bungalow in respect of which he pays GH¢400 per month as rent by way of deduction at source
xii) Provision of a vehicle with driver and fuel for both official and private purposes
xiii) Special retirement package by way of a provident fund of which he contributes 9% of his basic salary, while the company contributes 11%. (The scheme is approved by the regulatory body)
xiv) Social Security and National Insurance Trust contribution of 5.5% and the employer contributes 13% of basic salary
xv) On 1 January 2021, he was given a car loan of GH¢20,000 to purchase a car for his mother at a simple interest rate of 15% per annum. The institution gives similar facilities to other customers at the rate of 28% but the statutory rate (Bank of Ghana rate) is 25%. The loan is to be paid within the period of 24 months
xvi) He is married to Abotsiwaa and Abotsimaa who are unemployed and contribute little or no financial support to their husband. Their responsibilities are limited to the management of the house
xvii) He has six (6) children, four (4) of whom are in Silicon Valley International School, Accra-Ghana, while the rest are working
xviii) He is also responsible for the upkeep of four (4) aged relatives of his
xix) He is currently pursuing MPHIL in Finance at UPSA where he incurred GH¢25,000 by way of educational expenses in 2021
xx) He is a director of Adwoa Mansa Ltd and receives a director’s emolument of GH¢24,450 (net of taxes)
xxi) He received a dividend of GH¢20,000 (net of taxes) from the Afia Manu Bank. The dividend was taxed at 8%.

Required:
Calculate his chargeable income for the 2021 Year of Assessment. (20 marks)

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  • 20 Marks

AT – May 2016 – L3 – Q1 – Tax administration in Ghana, Business income – Corporate income tax

Compute the tax liabilities and take-home pay for an employee provided various benefits and allowances for the 2014 Year of Assessment.

Mr. Frank Danso was employed by Ghana Trust Ltd on 1st September 2010 on a salary scale of GH¢4,500 x 500-7,500 as the financial controller of the company. He is provided with the following as part of his conditions of service for the 2014 Year of Assessment:

i) Well-furnished rented flat by his employers in respect of which he pays GH¢100 per month as rent by way of deductions at source.
ii) Watchman allowance of GH¢200 per annum, paid directly to Mr. Frank Danso.
iii) Risk allowance of GH¢905 per annum.
iv) Leave allowance of GH¢500 per annum.
v) Garden boy allowance of GH¢100 per quarter paid directly to Mr. Frank Danso.
vi) Medical allowance of GH¢680 per annum.
vii) Meals allowance of GH¢50 per month.
viii) Two maidservants each on wages of GH¢200 per annum. The amount is paid to the maid servants directly by the company.
ix) Bonus of 40% on annual basic salary.
x) Entertainment allowance of GH¢400 a year (accountable).
xi) Duty post allowance of GH¢100 per month.
xii) He has Life Assurance Policies with EIC Ltd. Below are the details:

Policy Sum Assured (GH¢) Annual Premium (GH¢)
A 4,000 420
B 2,800 240
C 16,000 1,650
D 5,000 525

xiii) He is entitled to a company car and fuel for both official and private use.
xiv) He has two wives and ten children; four of whom are in SHS in Accra, and the rest are gainfully employed; he caters for 3 of his aged relatives.
xv) He contributes 7% of his salary towards the company’s Provident Fund which has been approved by the National Pension Authority, and he also contributes 5.5% of his salary to the SSNIT.

Required:
a) Compute his tax liabilities for the 2014 Year of Assessment using 2014 rates.
(15 marks)

b) Determine his take-home pay for the 2014 Year of Assessment.
(5 marks)

Total: 20 marks

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