Part-Time Income – NBC Institute

TAX – May 2015 – L2 – SA – Q2 – Personal Income Tax (PIT)

Tax compliance requirements and tax liability calculation for Mr. Sola Abijah based on employment and part-time income.

Question

You have been approached by Mr. Sola Abijah, a political science graduate who did his compulsory National Youth Service in a media organization in 2009. On completion of National Youth Service in January 2010, he was offered a part-time job as a freelance writer in two international newspapers. He receives an income (net of Withholding tax) based on the articles he writes that are published by the newspapers. In March 2010, he joined a popular political party and served as the party’s temporary Public Relations Officer, also on a part-time income basis.

On 2 January 2012, he secured employment on full-time basis as Senior Manager, Corporate Affairs, in Jola Investment Enterprises on a salary of ₦12,000,000 per annum.

He was ignorant of the requirements for filing Tax Returns and paying tax to Government. He has been served a warning by the State Board of Internal Revenue (SBIR) to desist from non-disclosure of his other incomes, failing which, a Best of Judgement assessment may be raised on him by the tax inspector.

Mr. Abijah has approached you to provide tax advisory services in respect of his income tax compliance requirements and the likely tax liability that may be imposed on him by the SBIR.

The following additional information has been presented to you:

Requirements:

(a) State the difference between employment income and part-time income. (3 Marks)
(b) Explain why, when and to whom taxpayers are expected to file income tax returns. (5 Marks)
(c) Explain the circumstances that may arise to cause a tax authority to raise a Best of Judgement Assessment. (4 Marks)
(d) Compute the tax liability on Mr. Abijah’s Total Income. (8 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Best of Judgement, Employment Income, Income Tax Law, Part-Time Income, Tax Compliance, Tax Filing Obligations
Level: Level 2

Series: MAY 2015

TX – May 2019 – L3 – Q2a – Taxable Income Calculation and Obligations

Calculate the taxable income and assess the tax obligations for a secondment and other income.

Question

Agyemang Boateng has been working with Intellect Consult Limited (ICL) since 2010. At the beginning of January 2016, he was seconded to Accra Metropolitan Assembly (AMA) for a period of six months to be part of a team to spearhead a restructuring exercise and the review of the system of internal controls at the Revenue department of AMA.

Terms of the AMA engagement:

ICL was to be paid a one-off settlement of GH¢10,000 at the completion of the engagement as well as reimbursement of monthly operational expenses incurred based on submission of the relevant invoices.

Agyemang’s only entitlements from AMA were the following monthly allowances:

Inconvenience Allowance: GH¢300
Extra Duties Allowance: GH¢200
Agyemang’s secondment to AMA did not in any way affect his salary and other entitlements from his employer, ICL, as these continued to accrue to him during the period of the secondment.

Agyemang’s earnings and entitlements from ICL for the year of assessment ended 31 December 2016 are as follows:

Basic Salary: GH¢46,000
Bonus: GH¢9,500
Fuel allowance: GH¢1,750
Entertainment allowance: GH¢7,500
Additional Information:

Agyemang stays in a fully furnished ICL bungalow at East Legon in Accra. ICL charges him a rent of GH¢150 per month.
Agyemang makes use of ICL’s company vehicle, driver, and fuel for official use only.
On 1 January 2016, Agyemang successfully applied for a GH¢10,000 loan from his employer, ICL. His employer charged him interest of 2% per annum on the loan. During this period, Bank of Ghana policy rate was 15%. The loan was repayable within ten months.
On 1 October 2016, Agyemang commenced part-time lecturing in Accounting at a local private Senior High School. He was paid monthly for his services, and the total amount received for the three months ended 31 December 2016 was GH¢5,000 gross.
Agyemang’s other non-employment-related income received during the year ended 31 December 2016 were:

Net royalties received for his Accounting textbook: GH¢21,250
Gross local company dividends (Unquoted Company shares): GH¢13,000
Interest on Bank deposits from local financial institutions: GH¢10,000
Gross lottery winnings: GH¢12,000
Required:

i) Calculate Agyemang’s taxable income for the year ended 31 December 2016. (10 marks)

ii) State AMA’s tax obligation when making the disbursement of GH¢10,000 to ICL. (1 mark)

iii) What are the tax implications to Agyemang with respect to the following:

Part-time lecturing
Royalty
Dividends
Interest on bank deposit (2 marks)
iv) What is the tax implication of the loan taken by Agyemang? (1 mark)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Dividends, Employment Income, Interest, Loans, Part-Time Income, Royalties, Taxable Income, Withholding Tax
Level: Level 3

Topic: Tax planning
Series: MAY 2019

TAX – May 2015 – L2 – SA – Q2 – Personal Income Tax (PIT)

Tax compliance requirements and tax liability calculation for Mr. Sola Abijah based on employment and part-time income.

Question

On 2 January 2012, he secured employment on full-time basis as Senior Manager, Corporate Affairs, in Jola Investment Enterprises on a salary of ₦12,000,000 per annum.

Mr. Abijah has approached you to provide tax advisory services in respect of his income tax compliance requirements and the likely tax liability that may be imposed on him by the SBIR.

The following additional information has been presented to you:

Requirements:

Answer

Find Related Questions by Tags, levels, etc.

Tags: Best of Judgement, Employment Income, Income Tax Law, Part-Time Income, Tax Compliance, Tax Filing Obligations
Level: Level 2

Series: MAY 2015

TX – May 2019 – L3 – Q2a – Taxable Income Calculation and Obligations

Calculate the taxable income and assess the tax obligations for a secondment and other income.

Question

Terms of the AMA engagement:

Agyemang’s only entitlements from AMA were the following monthly allowances:

Agyemang’s earnings and entitlements from ICL for the year of assessment ended 31 December 2016 are as follows:

Basic Salary: GH¢46,000
Bonus: GH¢9,500
Fuel allowance: GH¢1,750
Entertainment allowance: GH¢7,500
Additional Information:

i) Calculate Agyemang’s taxable income for the year ended 31 December 2016. (10 marks)

ii) State AMA’s tax obligation when making the disbursement of GH¢10,000 to ICL. (1 mark)

iii) What are the tax implications to Agyemang with respect to the following:

Part-time lecturing
Royalty
Dividends
Interest on bank deposit (2 marks)
iv) What is the tax implication of the loan taken by Agyemang? (1 mark)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Dividends, Employment Income, Interest, Loans, Part-Time Income, Royalties, Taxable Income, Withholding Tax
Level: Level 3

Topic: Tax planning
Series: MAY 2019

Question Tag: Part-Time Income

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TAX – May 2015 – L2 – SA – Q2 – Personal Income Tax (PIT)

Tax compliance requirements and tax liability calculation for Mr. Sola Abijah based on employment and part-time income.

TX – May 2019 – L3 – Q2a – Taxable Income Calculation and Obligations

Calculate the taxable income and assess the tax obligations for a secondment and other income.

TAX – May 2015 – L2 – SA – Q2 – Personal Income Tax (PIT)

Tax compliance requirements and tax liability calculation for Mr. Sola Abijah based on employment and part-time income.

TX – May 2019 – L3 – Q2a – Taxable Income Calculation and Obligations

Calculate the taxable income and assess the tax obligations for a secondment and other income.

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TAX – May 2015 – L2 – SA – Q2 – Personal Income Tax (PIT)

Tax compliance requirements and tax liability calculation for Mr. Sola Abijah based on employment and part-time income.

You're reporting an error for "TAX – May 2015 – L2 – SA – Q2 – Personal Income Tax (PIT)"

TX – May 2019 – L3 – Q2a – Taxable Income Calculation and Obligations

Calculate the taxable income and assess the tax obligations for a secondment and other income.

You're reporting an error for "TX – May 2019 – L3 – Q2a – Taxable Income Calculation and Obligations"

TAX – May 2015 – L2 – SA – Q2 – Personal Income Tax (PIT)

Tax compliance requirements and tax liability calculation for Mr. Sola Abijah based on employment and part-time income.

You're reporting an error for "TAX – May 2015 – L2 – SA – Q2 – Personal Income Tax (PIT)"

TX – May 2019 – L3 – Q2a – Taxable Income Calculation and Obligations

Calculate the taxable income and assess the tax obligations for a secondment and other income.

You're reporting an error for "TX – May 2019 – L3 – Q2a – Taxable Income Calculation and Obligations"

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