Question Tag: Carried Interest

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  • 20 Marks

AT – April 2022 – L3 – Q4 – Capital allowance | Business income – Corporate income tax

Calculate capital allowance and chargeable income for Joefel Company Ltd. Explain sources of revenue from upstream petroleum operations in Ghana.

a) Joefel Company Ltd, manufacturer of fruit juice for local consumption commenced business on 1 October 2019, with accounting year-end at 31 December each year. The company submitted its accounts for 2019 and was assessed accordingly. The company submitted its tax returns for 2020 year of assessment to the Ghana Revenue Authority on 30 April 2021. Below are the details:

Additional information:
1) Advert and publicity
Radio and television 3,300
Newspaper advert 2,400
Permanent signboard at the company’s entrance in 2020 18,000

2) Installation of plant and others
Installation of plant 21,500
Heavy duty Generator bought in 2019 to support Plant and Machinery 20,500
General maintenance before the use of the plant 18,000

3) Staff Welfare
Staff medical bills 3,700
Safety wear for staff 10,500
Canteen Equipment purchased on 30 November 2020 12,000

4) Donation and Subscription
Goods given as gratis to customs officials 13,000
Donation of goods to SOS Children Village 10,000
Subscription to Association of Ghana Industries 5,000

5) Wages and Salaries
Old staff 120,000
Fresh graduates employed by Joefel Company Ltd. (Fresh graduates
constitute 1% of total workforce) 26,000

6) Other Income
Compensation from a customer for cancellation of a sale order 8,000
Compensation for loss of trading stock of the company 10,000
Compensation for cancellation of purchase order by supplier 5,000

Note 2) above has not been included in the plant and machinery acquired.

Required:

a
i) Compute the appropriate capital allowance for 2019 and 2020 years of assessment.
(8 marks)
ii) Calculate the chargeable income of the company for the 2020 year of assessment.
(6 marks)
b) Explain of the following sources of revenue accruing to the Government of Ghana from the upstream petroleum operations in Ghana:
i) Royalty.
ii) Carried Interest.
iii) Additional Interest.
iv) Additional Oil Entitlement.
(6 marks)

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  • 10 Marks

AT – Nov 2021 – L3 – Q5a – Petroleum operations

Explain taxation concepts in relation to petroleum operations, including surface rentals, stability agreements, and carried interest.

Explain the following concepts in relation to the taxation of petroleum operations:
i) Surface Rentals
ii) Stability Agreements
iii) Carried Interest
iv) Additional Carried Interest
(10 marks)

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  • 20 Marks

AT – Nov 2015 – L3 – Q5 – Business income – Corporate income tax

Analyzing withholding tax, taxable gifts, upstream petroleum taxation, carried interest, and mining license factors.

a) Songe Enterprise Limited is a dealer in rice. It buys its rice from the Rice Masters, a wholesaler, and sells to retailers. It has not over the years deducted withholding tax on payments to its suppliers, and its management is contemplating doing so to avoid any possible sanctions from the Ghana Revenue Authority. It has received a letter from the Ghana Revenue Authority to conduct a tax audit on its activities. Ahead of the tax audit, the management has invited you as a Tax Consultant to conduct a tax health check on its operations and put things right.

Required:
Advise the company on the withholding tax situation on payment to its suppliers.
(6 marks)

b) What constitutes taxable gifts under Direct Tax?
(3 marks)

c) Should a contractor in the upstream petroleum sector be subject to tax by the Ghana Revenue Authority in a situation where its products are exported to its Parent Company without evidence of sale (technically called “export without sale”)?
(4 marks)

d) Carried interest is part of the income stream by the Host Government. What is the basis for the ownership of carried interest under petroleum upstream operations and the mining and mineral operations?
(4 marks)

e) CJA Ltd has been incorporated and intends to go into mining operations. You have been approached as a Tax Consultant on the key considerations for the issuance of a mining license.

Required:
What are the factors to be considered by the Minerals Commission before a license is recommended for issuance?
(3 marks)

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  • 5 Marks

AT – May 2017 – L3 – Q5c – Petroleum operations

Explain surface rental and carried interest as revenue streams from petroleum operations in Ghana.

c) Ghana has joined its counterparts as an oil-producing country. Discuss fully the following revenue streams due to Ghana from the exploitation of the resource:

i) Surface Rental (2.5 marks)
ii) Carried Interest (2.5 marks)

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  • 9 Marks

AT – Nov 2016 – L3 – Q5b – Minerals and mining

Compute the royalty payable by Go-Get Mining Company for the second quarter of its operations in 2015.

b) Compute the Royalty payable on the operation of Go-Get Mining Company from the second quarter of its operations in 2015 from the following financial data:

Item GH¢
Revenue 100,000
Cost of operation 65,000
Capital allowance agreed 15,000
Royalty (first quarter) 60,000

(3 marks)

Required: 2015 individual income tax rate

Income Bracket Tax Rate
First 1,584 Nil
Next 792 5%
Next 1,104 10%
Next 28,200 17.5%
Exceeding 31,680 25%

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  • 9 Marks

AT – Nov 2016 – L3 – Q5a – Petroleum operations

Discuss the types of revenue generated from upstream petroleum operations, focusing on carried interest, additional carried interest, and additional oil entitlement.

a) Ghana, having found oil in commercial quantity, has joined its counterparts in the world in the production of oil. Fiscal systems have been put in place to bring in various revenue streams to the Government of Ghana.

Required:
Discuss fully the under-listed revenue types from upstream petroleum operations:

i) Carried Interest (3 marks)
ii) Additional Carried Interest (3 marks)
iii) Additional Oil Entitlement (3 marks)

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  • 5 Marks

AT – Nov 2023 – L3 – Q5b – Petroleum operations

Compute the government take from royalty, carried interest, and additional participation interest in petroleum operations.

Nananom Petroleum Ghana Ltd produced 3,000,000 barrels of oil per month. The crude oil was sold at $70 per barrel. Royalty due is 5%, Carried Interest of 11%, and Additional Interest of 3.75%.

Required:
Compute the state or government take in the following:
i) Royalty
ii) Carried interest
iii) Additional participation interest

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  • 20 Marks

AT – April 2022 – L3 – Q4 – Capital allowance | Business income – Corporate income tax

Calculate capital allowance and chargeable income for Joefel Company Ltd. Explain sources of revenue from upstream petroleum operations in Ghana.

a) Joefel Company Ltd, manufacturer of fruit juice for local consumption commenced business on 1 October 2019, with accounting year-end at 31 December each year. The company submitted its accounts for 2019 and was assessed accordingly. The company submitted its tax returns for 2020 year of assessment to the Ghana Revenue Authority on 30 April 2021. Below are the details:

Additional information:
1) Advert and publicity
Radio and television 3,300
Newspaper advert 2,400
Permanent signboard at the company’s entrance in 2020 18,000

2) Installation of plant and others
Installation of plant 21,500
Heavy duty Generator bought in 2019 to support Plant and Machinery 20,500
General maintenance before the use of the plant 18,000

3) Staff Welfare
Staff medical bills 3,700
Safety wear for staff 10,500
Canteen Equipment purchased on 30 November 2020 12,000

4) Donation and Subscription
Goods given as gratis to customs officials 13,000
Donation of goods to SOS Children Village 10,000
Subscription to Association of Ghana Industries 5,000

5) Wages and Salaries
Old staff 120,000
Fresh graduates employed by Joefel Company Ltd. (Fresh graduates
constitute 1% of total workforce) 26,000

6) Other Income
Compensation from a customer for cancellation of a sale order 8,000
Compensation for loss of trading stock of the company 10,000
Compensation for cancellation of purchase order by supplier 5,000

Note 2) above has not been included in the plant and machinery acquired.

Required:

a
i) Compute the appropriate capital allowance for 2019 and 2020 years of assessment.
(8 marks)
ii) Calculate the chargeable income of the company for the 2020 year of assessment.
(6 marks)
b) Explain of the following sources of revenue accruing to the Government of Ghana from the upstream petroleum operations in Ghana:
i) Royalty.
ii) Carried Interest.
iii) Additional Interest.
iv) Additional Oil Entitlement.
(6 marks)

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  • 10 Marks

AT – Nov 2021 – L3 – Q5a – Petroleum operations

Explain taxation concepts in relation to petroleum operations, including surface rentals, stability agreements, and carried interest.

Explain the following concepts in relation to the taxation of petroleum operations:
i) Surface Rentals
ii) Stability Agreements
iii) Carried Interest
iv) Additional Carried Interest
(10 marks)

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  • 20 Marks

AT – Nov 2015 – L3 – Q5 – Business income – Corporate income tax

Analyzing withholding tax, taxable gifts, upstream petroleum taxation, carried interest, and mining license factors.

a) Songe Enterprise Limited is a dealer in rice. It buys its rice from the Rice Masters, a wholesaler, and sells to retailers. It has not over the years deducted withholding tax on payments to its suppliers, and its management is contemplating doing so to avoid any possible sanctions from the Ghana Revenue Authority. It has received a letter from the Ghana Revenue Authority to conduct a tax audit on its activities. Ahead of the tax audit, the management has invited you as a Tax Consultant to conduct a tax health check on its operations and put things right.

Required:
Advise the company on the withholding tax situation on payment to its suppliers.
(6 marks)

b) What constitutes taxable gifts under Direct Tax?
(3 marks)

c) Should a contractor in the upstream petroleum sector be subject to tax by the Ghana Revenue Authority in a situation where its products are exported to its Parent Company without evidence of sale (technically called “export without sale”)?
(4 marks)

d) Carried interest is part of the income stream by the Host Government. What is the basis for the ownership of carried interest under petroleum upstream operations and the mining and mineral operations?
(4 marks)

e) CJA Ltd has been incorporated and intends to go into mining operations. You have been approached as a Tax Consultant on the key considerations for the issuance of a mining license.

Required:
What are the factors to be considered by the Minerals Commission before a license is recommended for issuance?
(3 marks)

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  • 5 Marks

AT – May 2017 – L3 – Q5c – Petroleum operations

Explain surface rental and carried interest as revenue streams from petroleum operations in Ghana.

c) Ghana has joined its counterparts as an oil-producing country. Discuss fully the following revenue streams due to Ghana from the exploitation of the resource:

i) Surface Rental (2.5 marks)
ii) Carried Interest (2.5 marks)

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  • 9 Marks

AT – Nov 2016 – L3 – Q5b – Minerals and mining

Compute the royalty payable by Go-Get Mining Company for the second quarter of its operations in 2015.

b) Compute the Royalty payable on the operation of Go-Get Mining Company from the second quarter of its operations in 2015 from the following financial data:

Item GH¢
Revenue 100,000
Cost of operation 65,000
Capital allowance agreed 15,000
Royalty (first quarter) 60,000

(3 marks)

Required: 2015 individual income tax rate

Income Bracket Tax Rate
First 1,584 Nil
Next 792 5%
Next 1,104 10%
Next 28,200 17.5%
Exceeding 31,680 25%

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You're reporting an error for "AT – Nov 2016 – L3 – Q5b – Minerals and mining"

  • 9 Marks

AT – Nov 2016 – L3 – Q5a – Petroleum operations

Discuss the types of revenue generated from upstream petroleum operations, focusing on carried interest, additional carried interest, and additional oil entitlement.

a) Ghana, having found oil in commercial quantity, has joined its counterparts in the world in the production of oil. Fiscal systems have been put in place to bring in various revenue streams to the Government of Ghana.

Required:
Discuss fully the under-listed revenue types from upstream petroleum operations:

i) Carried Interest (3 marks)
ii) Additional Carried Interest (3 marks)
iii) Additional Oil Entitlement (3 marks)

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  • 5 Marks

AT – Nov 2023 – L3 – Q5b – Petroleum operations

Compute the government take from royalty, carried interest, and additional participation interest in petroleum operations.

Nananom Petroleum Ghana Ltd produced 3,000,000 barrels of oil per month. The crude oil was sold at $70 per barrel. Royalty due is 5%, Carried Interest of 11%, and Additional Interest of 3.75%.

Required:
Compute the state or government take in the following:
i) Royalty
ii) Carried interest
iii) Additional participation interest

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