Personal income tax – NBC Institute

TAX – May 2021 – L1 – SB – Q3 – Personal Income Tax (PIT)

Definitions and explanations related to the taxation of employment income as per the Personal Income Tax Act.

Question

The Personal Income Tax Act Cap P8 LFN 2004 (as amended) defines employment to include any appointment or office whether public or otherwise for which remuneration is payable. An employer shall register with the relevant tax authority for the purposes of deducting income tax from its employees with or without formal notification or direction by the relevant tax authority.

Required:
a. Define an “itinerant worker”. (2 Marks)
b. Explain the conditions for taxation of income from employment. (10 Marks)
c. State the penalties payable by employers who failed to file returns of emoluments paid to employees in the preceding year on January 31, of each year, with the relevant tax authority. (8 Marks)

Answer

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Tags: Employment, Itinerant Workers, Personal income tax, Tax Compliance, Tax Penalties
Level: Level 1

Topic: Personal Income Tax
Series: MAY 2021

TAX – May 2019 – L2 – Q3b – Personal Income Tax (PIT)

Identify the tax authority for Mr. Muhammed and calculate his income tax liability based on salary and deductions.

Question

In 2016, Mr. James Muhammed lived at Ojodu Abiodun village, Ogun State and worked for the Federal High Court, Ikeja, Lagos State, on an annual salary of N1,600,000. Mr. Muhammed contributes to an approved pension scheme at the appropriate rate of 8% and also pays a life assurance premium equivalent to 5% of his annual salary.

Required:
(i) Identify the relevant tax authority to which he will be subjected to tax. (2 Marks)
(ii) Compute his personal income tax liability for the relevant assessment year. (6 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Life Assurance Premium, Pension Contribution, Personal income tax, Relevant Tax Authority
Level: Level 2

Topic: Personal Income Tax
Series: MAY 2019

TAX – Nov 2018 – L2 – SA – Q1a – Personal Income Tax (PIT)

Calculate the personal income tax payable by Dr. Ogungbemi for the relevant year of assessment.

Question

Dr. Alade Ogungbemi retired from the service of Oyo State Government after attaining 60 years of age on July 31, 2017. He secured an employment with TUC Foods Limited as human resources manager, effective August 1, 2017.

The following details were provided:

Salary: January 1 – July 31, 2017: N420,000 per month
New employment: N4,800,000 per annum
Pension income, effective August 1, 2017: N840,000 per annum
Transport allowance (new employment): N120,000 per annum
Rent allowance (new employment): N720,000 per annum
Contributions to national housing fund and contributory pension fund scheme at 2½% and 7½% of gross income, respectively
Rental income received (gross):
- July 19, 2015: N240,000
- December 1, 2015: N120,000
- July 4, 2016: N360,000
- December 4, 2016: N420,000
Dr. Ogungbemi is married and has four children. All except one, aged 20 years, are still in school.
Dr. Ogungbemi has a life assurance policy with a sum assured of N7,500,000 and an annual premium of N460,000. His aged parents live with him, and neither of them has an income.

Required:
Compute the personal income tax payable by Dr. Ogungbemi for the relevant year of assessment.

Answer

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Tags: chargeable income, Gross Income, Personal income tax, PIT Computation, Tax Relief
Level: Level 2

Topic: Personal Income Tax
Series: NOV 2018

AT – NOV 2018 – L3 – Q2C – Business income – Corporate income tax, Tax administration in Ghana

Calculate taxable income and tax payable for an individual with multiple income sources, and identify tax compliance issues for a private practice.

Question

c) Kate Oppong, a physically challenged, works for the Ministry of Health as an eye surgeon and optician based at Komfo Anokye Teaching hospital in Kumasi. She dedicates most of her free time to her private practice, as well as writing books and articles for the Ghana Medical Journal. Kate is also part of the medical team for the local NGO and Sight Restoration, which is involved in cataract surgery for the disadvantaged members of society in remote rural areas.

Kate’s private practice is located in Kumasi and has a staff complement of six employees who are all full time workers. Kate only attends to the patients at her private practice strictly by appointment and her patient base has been steadily growing due to her experience and dedication.

In terms of her service contract with Sight Restoration, Kate is required to participate in all the cataract operations scheduled for the year. Her service contract is for a year, subject to renewal as and when donor support is available.Sight Restoration’s field staff, of which Kate is one, are paid a predetermined monthly salary plus an attendance allowance which is paid only after each cataract operation. The field staff is also entitled to a one-off representation allowance for participating in scheduled seminars.

Kate Oppong’s earnings and deductions for the year ended 31 December 2017 were:

Notes:

This amount is part repayment of the interest free personal loan of GH¢12,000 advanced to Kate on 1 January, 2017, repayable over two years. The Bank of Ghana interest rate for the year ended 31 December 2017 was constant at 20%.
This amount was fully expended towards the travelling costs for Kate and her minor son for his medical treatment in South Africa.
No employees tax (PAYE) or corporate income tax was paid in respect of the amounts paid to the employees of the private practice (including Kate) or the profits from the practice. This was because in Kate’s opinion her operations were ‘private’ and as such not subject to tax and also because she believed that she was already contributing her fair tax share from her other two employers.
Kate is a single parent and takes care of her single son in the senior high school. She also takes full responsibility of her aged mother.

Required:

i) State the Ghana Revenue Authority’s (GRA) requirements which have been breached by Kate Oppong and consequences of the breach based on the information given in note (3). (5 marks)

ii) Calculate the taxable income of and income tax payable by Kate Oppong for the year ended 31 December 2017. Note: All computations should be rounded to a whole cedi. (9 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Benefits in kind, Corporate Tax, Employment Income, NGO income, PAYE, Personal income tax, Private practice income, Tax Compliance
Level: Level 3

Topic: Business income - Corporate income tax, Tax administration in Ghana
Series: NOV 2018

TAX – May 2021 – L1 – SB – Q3 – Personal Income Tax (PIT)

Definitions and explanations related to the taxation of employment income as per the Personal Income Tax Act.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Employment, Itinerant Workers, Personal income tax, Tax Compliance, Tax Penalties
Level: Level 1

Topic: Personal Income Tax
Series: MAY 2021

TAX – May 2019 – L2 – Q3b – Personal Income Tax (PIT)

Identify the tax authority for Mr. Muhammed and calculate his income tax liability based on salary and deductions.

Question

Required:
(i) Identify the relevant tax authority to which he will be subjected to tax. (2 Marks)
(ii) Compute his personal income tax liability for the relevant assessment year. (6 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Life Assurance Premium, Pension Contribution, Personal income tax, Relevant Tax Authority
Level: Level 2

Topic: Personal Income Tax
Series: MAY 2019

TAX – Nov 2018 – L2 – SA – Q1a – Personal Income Tax (PIT)

Calculate the personal income tax payable by Dr. Ogungbemi for the relevant year of assessment.

Question

The following details were provided:

Salary: January 1 – July 31, 2017: N420,000 per month
New employment: N4,800,000 per annum
Pension income, effective August 1, 2017: N840,000 per annum
Transport allowance (new employment): N120,000 per annum
Rent allowance (new employment): N720,000 per annum
Contributions to national housing fund and contributory pension fund scheme at 2½% and 7½% of gross income, respectively
Rental income received (gross):
- July 19, 2015: N240,000
- December 1, 2015: N120,000
- July 4, 2016: N360,000
- December 4, 2016: N420,000
Dr. Ogungbemi is married and has four children. All except one, aged 20 years, are still in school.
Dr. Ogungbemi has a life assurance policy with a sum assured of N7,500,000 and an annual premium of N460,000. His aged parents live with him, and neither of them has an income.

Required:
Compute the personal income tax payable by Dr. Ogungbemi for the relevant year of assessment.

Answer

Find Related Questions by Tags, levels, etc.

Tags: chargeable income, Gross Income, Personal income tax, PIT Computation, Tax Relief
Level: Level 2

Topic: Personal Income Tax
Series: NOV 2018

AT – NOV 2018 – L3 – Q2C – Business income – Corporate income tax, Tax administration in Ghana

Calculate taxable income and tax payable for an individual with multiple income sources, and identify tax compliance issues for a private practice.

Question

Kate Oppong’s earnings and deductions for the year ended 31 December 2017 were:

Notes:

This amount is part repayment of the interest free personal loan of GH¢12,000 advanced to Kate on 1 January, 2017, repayable over two years. The Bank of Ghana interest rate for the year ended 31 December 2017 was constant at 20%.
This amount was fully expended towards the travelling costs for Kate and her minor son for his medical treatment in South Africa.
No employees tax (PAYE) or corporate income tax was paid in respect of the amounts paid to the employees of the private practice (including Kate) or the profits from the practice. This was because in Kate’s opinion her operations were ‘private’ and as such not subject to tax and also because she believed that she was already contributing her fair tax share from her other two employers.
Kate is a single parent and takes care of her single son in the senior high school. She also takes full responsibility of her aged mother.

Required:

i) State the Ghana Revenue Authority’s (GRA) requirements which have been breached by Kate Oppong and consequences of the breach based on the information given in note (3). (5 marks)

ii) Calculate the taxable income of and income tax payable by Kate Oppong for the year ended 31 December 2017. Note: All computations should be rounded to a whole cedi. (9 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Benefits in kind, Corporate Tax, Employment Income, NGO income, PAYE, Personal income tax, Private practice income, Tax Compliance
Level: Level 3

Topic: Business income - Corporate income tax, Tax administration in Ghana
Series: NOV 2018

Question Tag: Personal income tax

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TAX – May 2021 – L1 – SB – Q3 – Personal Income Tax (PIT)

Definitions and explanations related to the taxation of employment income as per the Personal Income Tax Act.

TAX – May 2019 – L2 – Q3b – Personal Income Tax (PIT)

Identify the tax authority for Mr. Muhammed and calculate his income tax liability based on salary and deductions.

TAX – Nov 2018 – L2 – SA – Q1a – Personal Income Tax (PIT)

Calculate the personal income tax payable by Dr. Ogungbemi for the relevant year of assessment.

AT – NOV 2018 – L3 – Q2C – Business income – Corporate income tax, Tax administration in Ghana

Calculate taxable income and tax payable for an individual with multiple income sources, and identify tax compliance issues for a private practice.

TAX – May 2021 – L1 – SB – Q3 – Personal Income Tax (PIT)

Definitions and explanations related to the taxation of employment income as per the Personal Income Tax Act.

TAX – May 2019 – L2 – Q3b – Personal Income Tax (PIT)

Identify the tax authority for Mr. Muhammed and calculate his income tax liability based on salary and deductions.

TAX – Nov 2018 – L2 – SA – Q1a – Personal Income Tax (PIT)

Calculate the personal income tax payable by Dr. Ogungbemi for the relevant year of assessment.

AT – NOV 2018 – L3 – Q2C – Business income – Corporate income tax, Tax administration in Ghana

Calculate taxable income and tax payable for an individual with multiple income sources, and identify tax compliance issues for a private practice.

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TAX – May 2021 – L1 – SB – Q3 – Personal Income Tax (PIT)

Definitions and explanations related to the taxation of employment income as per the Personal Income Tax Act.

You're reporting an error for "TAX – May 2021 – L1 – SB – Q3 – Personal Income Tax (PIT)"

TAX – May 2019 – L2 – Q3b – Personal Income Tax (PIT)

Identify the tax authority for Mr. Muhammed and calculate his income tax liability based on salary and deductions.

You're reporting an error for "TAX – May 2019 – L2 – Q3b – Personal Income Tax (PIT)"

TAX – Nov 2018 – L2 – SA – Q1a – Personal Income Tax (PIT)

Calculate the personal income tax payable by Dr. Ogungbemi for the relevant year of assessment.

You're reporting an error for "TAX – Nov 2018 – L2 – SA – Q1a – Personal Income Tax (PIT)"

AT – NOV 2018 – L3 – Q2C – Business income – Corporate income tax, Tax administration in Ghana

Calculate taxable income and tax payable for an individual with multiple income sources, and identify tax compliance issues for a private practice.

You're reporting an error for "AT – NOV 2018 – L3 – Q2C – Business income – Corporate income tax, Tax administration in Ghana"

TAX – May 2021 – L1 – SB – Q3 – Personal Income Tax (PIT)

Definitions and explanations related to the taxation of employment income as per the Personal Income Tax Act.

You're reporting an error for "TAX – May 2021 – L1 – SB – Q3 – Personal Income Tax (PIT)"

TAX – May 2019 – L2 – Q3b – Personal Income Tax (PIT)

Identify the tax authority for Mr. Muhammed and calculate his income tax liability based on salary and deductions.

You're reporting an error for "TAX – May 2019 – L2 – Q3b – Personal Income Tax (PIT)"

TAX – Nov 2018 – L2 – SA – Q1a – Personal Income Tax (PIT)

Calculate the personal income tax payable by Dr. Ogungbemi for the relevant year of assessment.

You're reporting an error for "TAX – Nov 2018 – L2 – SA – Q1a – Personal Income Tax (PIT)"

AT – NOV 2018 – L3 – Q2C – Business income – Corporate income tax, Tax administration in Ghana

Calculate taxable income and tax payable for an individual with multiple income sources, and identify tax compliance issues for a private practice.

You're reporting an error for "AT – NOV 2018 – L3 – Q2C – Business income – Corporate income tax, Tax administration in Ghana"

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