Depreciable assets – NBC Institute

PT – Nov 2023 – L2 – Q5c – Income Tax Liabilities

Define and distinguish between capital, depreciable, and investment assets under the Income Tax Act.

Question

Section 133 of the Income Tax Act, 2015 (Act 896) provides for the interpretation of capital assets, depreciable assets, and investment assets.

Required:
What are the distinguishing features of capital assets, depreciable assets, and investment assets under the above-mentioned legislation? (5 marks)

Answer

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Tags: Capital Assets, Definitions, Depreciable assets, Income Tax Act, Investment Assets
Level: Level 2

Topic: Corporate Tax Liabilities
Series: NOV 2023

PT – July 2023 – L2 – Q4a – Corporate Tax Liabilities

Calculation of capital allowance and assessable income for Karma Ltd for three years of assessment.

Question

Karma Ltd commenced business on 1 March 2020 preparing accounts to December each year. The following assets were acquired for use in the business:

Asset	Date of Acquisition	Cost (GH¢)
Industrial Building	15/10/2019	2,500,000
Plant & Machinery	20/11/2019	1,600,000
Computers	03/01/2020	80,000
Office Equipment	10/01/2020	138,000
Motor Van	15/02/2020	220,000
Toyota Saloon Car	30/09/2020	180,000

Additional assets acquired during 2022:

Computers and accessories – GH¢105,000
Office Equipment – GH¢78,000

The Toyota Saloon Car was written off in an accident on 31 October 2022, and the company received GH¢120,000 as compensation.

Profits declared by Karma Ltd for the first three years of assessment:

Period to 31/12/2020: GH¢600,000
Year to 31/12/2021: GH¢1,500,000
Year to 31/12/2022: GH¢2,680,000

Required:
Compute the capital allowance and the assessable income of the company for the relevant years of assessment. (12 marks)

Answer

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Tags: Assessable Income, Capital Allowance, Corporate Tax, Depreciable assets, Tax computation
Level: Level 2

Topic: Corporate Tax Liabilities
Series: JULY 2023

PT – Nov 2021 – L2 – Q4b – Corporate Tax Liabilities

Explain the tax implications and rules governing the pooling system for depreciable assets.

Question

A Class 1, 2, or 3 depreciable assets owned and employed by a person during a year of assessment in the production of income from a particular business shall, at the time the asset is first owned and employed by that person, be placed in a pool with all other assets of the same class owned and employed by that person in the business.

Required:
What are the implications and taxation rules governing the above statement?

Answer

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Tags: Capital Allowance, Corporate Tax, Depreciable assets, Pooling System, Tax Rules
Level: Level 2

Topic: Corporate Tax Liabilities
Series: NOV 2021

TX – May 2019 – L3 – Q3B – Tax planning

Discuss the tax implications of finance lease arrangements, particularly concerning the eligibility for capital allowance under the Income Tax Act 2015 (Act 896).

Question

b) At a tax seminar organised by The Institute of Chartered Accountants (Ghana) in December 2016, the issue of tax implications for finance lease arrangement dominated the discussion. The facilitator said that both the lessor and the lessee shall be denied capital allowance under the tax law.

The facilitator intimated that capital allowance is granted to persons who acquire assets and own them and use such to generate business income. Both the lessor and the lessee, consequently do not qualify for capital allowance under the Income Tax Act (Act 896), 2015 and its regulations, he added.

Required:
As a tax advisor, submit a response to the above based on the tax provisions. The response is to be published in the Institute’s Journal. (7 marks)

Answer

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Tags: Capital Allowance, Depreciable assets, Finance lease, Income Tax Act 2015 (Act 896), Tax deduction
Level: Level 3

Topic: Tax planning
Series: MAY 2019

AT – Nov 2015 – L3 – Q2a – Capital allowance

Explaining the conditions under which the Ghana Revenue Authority grants capital allowances.

Question

Capital allowance is an incentive granted to all persons in business and investment. They are, however, granted upon fulfillment of certain conditions.

Required:
Explain fully the conditions under which GRA may grant Capital Allowance to a person.

Answer

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Tags: Capital Allowance, Corporate Taxation, Depreciable assets, Tax Incentives
Level: Level 3

Topic: Capital allowance
Series: NOV 2015

AT – May 2017 – L3 – Q5a – Business income – Corporate income tax

Submit a paper explaining the tax provisions on repairs and improvements and the conditions under which capital allowance may be granted.

Question

a) You have recently been employed to join Kwame Adom Consult as a tax professional. Your partner has tasked you to present a paper on the circumstances under which “Repairs and Improvement” under Act 896 (Act 2015) are capitalised and capital allowance granted.

Required:
Submit a seasoned paper on the tax provision on “Repairs and Improvement” and the conditions under which capital allowance may be granted.
(10 marks)

Answer

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Tags: Capital Allowance, Depreciable assets, Improvements, Repairs, Tax deduction, Tax provisions
Level: Level 3

Topic: Business income - Corporate income tax
Series: MAY 2017

AT – May 2017 – L3 – Q4c – Business income – Corporate income tax

Calculate the capital allowance for the year 2016 after the exchange of assets, and discuss the treatment of goodwill.

Question

c) Sakote Ltd, a trading company, has the following extracts from its financial records:

It bought a 4 X 4 Vehicle for an amount of GH¢225,000.00 in the year 2015. The cost of the vehicle was limited to an amount of GH¢75,000 for capital allowance purposes in the year 2015.
It also put up a building at a cost of GH¢150,000.00 in the same year. The cost of the land was GH¢20,000 and GH¢130,000 was the cost of the building.
The Company accordingly informed the Commissioner-General about putting the assets into use and in the generation of its income in 2015 year of assessment.
In the year 2016, it exchanged the vehicle for 4 plots of land. The value of the plots of land agreed with the landowners was GH¢220,000. The exchange was deemed satisfactory to both parties, and documentations were carried through.

Required:

i) Calculate the amount of capital allowance claimable for 2016 year of assessment by Sakote Ltd. (7 marks)
ii) Sakote Ltd paid for Goodwill amounting to GH¢10,000 in 2016 and intends to grant capital allowance on the value of the goodwill. Explain whether or not this arrangement is in accordance with the tax laws. (3 marks)
(Total: 10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Asset exchange, Capital Allowance, Corporate Income, Depreciable assets, Tax implications
Level: Level 3

Topic: Business income - Corporate income tax
Series: MAY 2017

PT – Nov 2023 – L2 – Q5c – Income Tax Liabilities

Define and distinguish between capital, depreciable, and investment assets under the Income Tax Act.

Question

Section 133 of the Income Tax Act, 2015 (Act 896) provides for the interpretation of capital assets, depreciable assets, and investment assets.

Required:
What are the distinguishing features of capital assets, depreciable assets, and investment assets under the above-mentioned legislation? (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Assets, Definitions, Depreciable assets, Income Tax Act, Investment Assets
Level: Level 2

Topic: Corporate Tax Liabilities
Series: NOV 2023

PT – July 2023 – L2 – Q4a – Corporate Tax Liabilities

Calculation of capital allowance and assessable income for Karma Ltd for three years of assessment.

Question

Karma Ltd commenced business on 1 March 2020 preparing accounts to December each year. The following assets were acquired for use in the business:

Asset	Date of Acquisition	Cost (GH¢)
Industrial Building	15/10/2019	2,500,000
Plant & Machinery	20/11/2019	1,600,000
Computers	03/01/2020	80,000
Office Equipment	10/01/2020	138,000
Motor Van	15/02/2020	220,000
Toyota Saloon Car	30/09/2020	180,000

Additional assets acquired during 2022:

Computers and accessories – GH¢105,000
Office Equipment – GH¢78,000

The Toyota Saloon Car was written off in an accident on 31 October 2022, and the company received GH¢120,000 as compensation.

Profits declared by Karma Ltd for the first three years of assessment:

Period to 31/12/2020: GH¢600,000
Year to 31/12/2021: GH¢1,500,000
Year to 31/12/2022: GH¢2,680,000

Required:
Compute the capital allowance and the assessable income of the company for the relevant years of assessment. (12 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Assessable Income, Capital Allowance, Corporate Tax, Depreciable assets, Tax computation
Level: Level 2

Topic: Corporate Tax Liabilities
Series: JULY 2023

PT – Nov 2021 – L2 – Q4b – Corporate Tax Liabilities

Explain the tax implications and rules governing the pooling system for depreciable assets.

Question

Required:
What are the implications and taxation rules governing the above statement?

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Allowance, Corporate Tax, Depreciable assets, Pooling System, Tax Rules
Level: Level 2

Topic: Corporate Tax Liabilities
Series: NOV 2021

TX – May 2019 – L3 – Q3B – Tax planning

Discuss the tax implications of finance lease arrangements, particularly concerning the eligibility for capital allowance under the Income Tax Act 2015 (Act 896).

Question

Required:
As a tax advisor, submit a response to the above based on the tax provisions. The response is to be published in the Institute’s Journal. (7 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Allowance, Depreciable assets, Finance lease, Income Tax Act 2015 (Act 896), Tax deduction
Level: Level 3

Topic: Tax planning
Series: MAY 2019

AT – Nov 2015 – L3 – Q2a – Capital allowance

Explaining the conditions under which the Ghana Revenue Authority grants capital allowances.

Question

Capital allowance is an incentive granted to all persons in business and investment. They are, however, granted upon fulfillment of certain conditions.

Required:
Explain fully the conditions under which GRA may grant Capital Allowance to a person.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Allowance, Corporate Taxation, Depreciable assets, Tax Incentives
Level: Level 3

Topic: Capital allowance
Series: NOV 2015

AT – May 2017 – L3 – Q5a – Business income – Corporate income tax

Submit a paper explaining the tax provisions on repairs and improvements and the conditions under which capital allowance may be granted.

Question

Required:
Submit a seasoned paper on the tax provision on “Repairs and Improvement” and the conditions under which capital allowance may be granted.
(10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Allowance, Depreciable assets, Improvements, Repairs, Tax deduction, Tax provisions
Level: Level 3

Topic: Business income - Corporate income tax
Series: MAY 2017

AT – May 2017 – L3 – Q4c – Business income – Corporate income tax

Calculate the capital allowance for the year 2016 after the exchange of assets, and discuss the treatment of goodwill.

Question

c) Sakote Ltd, a trading company, has the following extracts from its financial records:

It bought a 4 X 4 Vehicle for an amount of GH¢225,000.00 in the year 2015. The cost of the vehicle was limited to an amount of GH¢75,000 for capital allowance purposes in the year 2015.
It also put up a building at a cost of GH¢150,000.00 in the same year. The cost of the land was GH¢20,000 and GH¢130,000 was the cost of the building.
The Company accordingly informed the Commissioner-General about putting the assets into use and in the generation of its income in 2015 year of assessment.
In the year 2016, it exchanged the vehicle for 4 plots of land. The value of the plots of land agreed with the landowners was GH¢220,000. The exchange was deemed satisfactory to both parties, and documentations were carried through.

Required:

Answer

Find Related Questions by Tags, levels, etc.

Tags: Asset exchange, Capital Allowance, Corporate Income, Depreciable assets, Tax implications
Level: Level 3

Topic: Business income - Corporate income tax
Series: MAY 2017

Question Tag: Depreciable assets

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PT – Nov 2023 – L2 – Q5c – Income Tax Liabilities

Define and distinguish between capital, depreciable, and investment assets under the Income Tax Act.

PT – July 2023 – L2 – Q4a – Corporate Tax Liabilities

Calculation of capital allowance and assessable income for Karma Ltd for three years of assessment.

PT – Nov 2021 – L2 – Q4b – Corporate Tax Liabilities

Explain the tax implications and rules governing the pooling system for depreciable assets.

TX – May 2019 – L3 – Q3B – Tax planning

Discuss the tax implications of finance lease arrangements, particularly concerning the eligibility for capital allowance under the Income Tax Act 2015 (Act 896).

AT – Nov 2015 – L3 – Q2a – Capital allowance

Explaining the conditions under which the Ghana Revenue Authority grants capital allowances.

AT – May 2017 – L3 – Q5a – Business income – Corporate income tax

Submit a paper explaining the tax provisions on repairs and improvements and the conditions under which capital allowance may be granted.

AT – May 2017 – L3 – Q4c – Business income – Corporate income tax

Calculate the capital allowance for the year 2016 after the exchange of assets, and discuss the treatment of goodwill.

PT – Nov 2023 – L2 – Q5c – Income Tax Liabilities

Define and distinguish between capital, depreciable, and investment assets under the Income Tax Act.

PT – July 2023 – L2 – Q4a – Corporate Tax Liabilities

Calculation of capital allowance and assessable income for Karma Ltd for three years of assessment.

PT – Nov 2021 – L2 – Q4b – Corporate Tax Liabilities

Explain the tax implications and rules governing the pooling system for depreciable assets.

TX – May 2019 – L3 – Q3B – Tax planning

Discuss the tax implications of finance lease arrangements, particularly concerning the eligibility for capital allowance under the Income Tax Act 2015 (Act 896).

AT – Nov 2015 – L3 – Q2a – Capital allowance

Explaining the conditions under which the Ghana Revenue Authority grants capital allowances.

AT – May 2017 – L3 – Q5a – Business income – Corporate income tax

Submit a paper explaining the tax provisions on repairs and improvements and the conditions under which capital allowance may be granted.

AT – May 2017 – L3 – Q4c – Business income – Corporate income tax

Calculate the capital allowance for the year 2016 after the exchange of assets, and discuss the treatment of goodwill.

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Question Tag: Depreciable assets

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PT – Nov 2023 – L2 – Q5c – Income Tax Liabilities

Define and distinguish between capital, depreciable, and investment assets under the Income Tax Act.

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PT – July 2023 – L2 – Q4a – Corporate Tax Liabilities

Calculation of capital allowance and assessable income for Karma Ltd for three years of assessment.

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PT – Nov 2021 – L2 – Q4b – Corporate Tax Liabilities

Explain the tax implications and rules governing the pooling system for depreciable assets.

You're reporting an error for "PT – Nov 2021 – L2 – Q4b – Corporate Tax Liabilities"

TX – May 2019 – L3 – Q3B – Tax planning

Discuss the tax implications of finance lease arrangements, particularly concerning the eligibility for capital allowance under the Income Tax Act 2015 (Act 896).

You're reporting an error for "TX – May 2019 – L3 – Q3B – Tax planning"

AT – Nov 2015 – L3 – Q2a – Capital allowance

Explaining the conditions under which the Ghana Revenue Authority grants capital allowances.

You're reporting an error for "AT – Nov 2015 – L3 – Q2a – Capital allowance"

AT – May 2017 – L3 – Q5a – Business income – Corporate income tax

Submit a paper explaining the tax provisions on repairs and improvements and the conditions under which capital allowance may be granted.

You're reporting an error for "AT – May 2017 – L3 – Q5a – Business income – Corporate income tax"

AT – May 2017 – L3 – Q4c – Business income – Corporate income tax

Calculate the capital allowance for the year 2016 after the exchange of assets, and discuss the treatment of goodwill.

You're reporting an error for "AT – May 2017 – L3 – Q4c – Business income – Corporate income tax"

PT – Nov 2023 – L2 – Q5c – Income Tax Liabilities

Define and distinguish between capital, depreciable, and investment assets under the Income Tax Act.

You're reporting an error for "PT – Nov 2023 – L2 – Q5c – Income Tax Liabilities"

PT – July 2023 – L2 – Q4a – Corporate Tax Liabilities

Calculation of capital allowance and assessable income for Karma Ltd for three years of assessment.

You're reporting an error for "PT – July 2023 – L2 – Q4a – Corporate Tax Liabilities"

PT – Nov 2021 – L2 – Q4b – Corporate Tax Liabilities

Explain the tax implications and rules governing the pooling system for depreciable assets.

You're reporting an error for "PT – Nov 2021 – L2 – Q4b – Corporate Tax Liabilities"

TX – May 2019 – L3 – Q3B – Tax planning

Discuss the tax implications of finance lease arrangements, particularly concerning the eligibility for capital allowance under the Income Tax Act 2015 (Act 896).

You're reporting an error for "TX – May 2019 – L3 – Q3B – Tax planning"

AT – Nov 2015 – L3 – Q2a – Capital allowance

Explaining the conditions under which the Ghana Revenue Authority grants capital allowances.

You're reporting an error for "AT – Nov 2015 – L3 – Q2a – Capital allowance"

AT – May 2017 – L3 – Q5a – Business income – Corporate income tax

Submit a paper explaining the tax provisions on repairs and improvements and the conditions under which capital allowance may be granted.

You're reporting an error for "AT – May 2017 – L3 – Q5a – Business income – Corporate income tax"

AT – May 2017 – L3 – Q4c – Business income – Corporate income tax

Calculate the capital allowance for the year 2016 after the exchange of assets, and discuss the treatment of goodwill.

You're reporting an error for "AT – May 2017 – L3 – Q4c – Business income – Corporate income tax"

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