- 10 Marks
AT – Aug 2022 – L3 – Q2b – Tax administration in Ghana
Explain unrelieved losses under the Income Tax Act and its implications for Dekey Company.
Question
Dekey Company Ltd was incorporated under the Companies Act, 2019 (Act 992) on 1 January 2021 to prospect for diamonds in the Densu River in the Eastern Region of Ghana.
A review of its Comprehensive Income Statement for the year ended 31 December 2021 showed a loss of GH¢29,304,000 for the 2021 year of assessment.
An extract of the Comprehensive Income Statement is as follows:
| Description | GH¢ |
|---|---|
| Income from Operations | 864,000 |
| Operational Cost | 17,920,000 |
| Administration and General Expenses | 11,160,000 |
| Finance Charges | 1,088,000 |
| Net Loss | (29,304,000) |
The CEO of Dekey Company Ltd remembered a discussion on “Unrelieved Losses” during a training workshop. The CEO has approached you, a final year tax candidate, to explain and advise him on the implications of the loss on future tax liabilities of the company.
Required:
Write a report explaining to the CEO what “Unrelieved Losses” are 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).
Find Related Questions by Tags, levels, etc.
- Tags: Income Tax Act, Loss carryforward, Mineral Operations, Unrelieved losses
- Level: Level 3
- Topic: Tax administration in Ghana
- Series: AUG 2022