Subject: PRINCIPLES OF TAXATION

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PT- Nov 2024 – L2 – Q5d – Data Analytics in Taxation

Explain how data analytics can be used to detect tax evasion and provide examples of how GRA might use data analytics to enhance tax compliance.

Question

GRA’s use of data analytics has become increasingly important in identifying tax evasion and improving compliance.

Required:
i) Explain how data analytics can be used to detect tax evasion.
ii) Provide TWO examples of how GRA might use data analytics to enhance tax compliance.

Answer

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Tags: AI in Taxation, Data Analytics, Fraud Detection, Ghana Revenue Authority, Predictive Analytics, Tax Compliance, Tax Enforcement, Tax Evasion
Level: Level 2

Topic: Application of Information Technology in Taxation
Series: Nov 2024

PT – Nov 2024 – L2 – Q5c – E-Auditing and Tax Compliance

Explain e-auditing, its differences from traditional tax audits, and discuss advantages for taxpayers and tax authorities.

Question

The integration of Information Technology in tax administration has enabled the Ghana Revenue Authority (GRA) to adopt e-auditing processes, allowing for the remote examination of taxpayers’ records. Required:
i) Describe the process of e-auditing and how it differs from traditional tax audits.
ii) Discuss TWO advantages of e-auditing for both the taxpayer and the tax authority.

Answer

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Tags: Data Analytics, Digital Taxation, E-Auditing, Ghana Revenue Authority, Tax Compliance
Level: Level 2

Topic: Application of Information Technology in Taxation
Series: Nov 2024

PT – Nov 2024 – L2 – Q5b – Withholding Tax & VAT Calculation

Compute VAT and direct tax withheld on a taxable supply of medical consumables to a tax withholding agent.

Question

Charley Chemist LTD made a taxable supply of medical consumables amounting to GH¢750,000 exclusive of VAT and levies on 23 November 2023 to the University of Ghana Medical Centre. The University of Ghana Medical Centre is a withholding tax agent for both VAT withholding and Direct Tax withholding.

Required:
i) Compute the amount of VAT withheld by the University of Ghana Medical Center.
ii) Compute the amount of direct tax withheld by the University of Ghana Medical Centre.

Answer

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Tags: Direct Tax, Medical Supplies, Tax Agent, Tax Compliance, Tax computation, Tax deduction, VAT, VAT Withholding, Withholding Tax
Level: Level 2

Topic: Value-Added Tax (VAT), Customs, and Excise Duties, Withholding Tax Administration
Series: Nov 2024

PT – Nov 2024 – L2 – Q5a – Notification to Commissioner-General for Non-Resident Contracts

Requirements for notifying the Commissioner-General when a resident contracts a non-resident.

Question

For the purpose of withholding tax, the Income Tax Act, 2016 (Act 896) requires a resident person who enters into a contract with a non-resident person which gives rise to income from Ghana to notify the Commissioner-General within thirty (30) days.

Required:

State the items that must be detailed in the notification to the Commissioner-General.

Answer

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Tags: Commissioner-General Notification, Income Tax Act, Non-resident taxation, Tax Compliance, Withholding Tax
Level: Level 2

Topic: Tax Administration
Series: Nov 2024

PT – Nov 2024 – L2 – Q4c – Tax Treatment of Repairs and Renovations

Explains the tax treatment of repairs and renovations for businesses.

Question

Question:
Repairs are essential for maintaining the safety of a property, and renovation improves the overall functionality of a property.

Required:
What is the tax treatment of repairs and renovations?

Answer

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Tags: Capital allowances, Depreciation, Renovations, Repairs, Tax Deductibility, Tax Treatment
Level: Level 2

Topic: Corporate Tax Liabilities
Series: Nov 2024

PT – Nov 2024 – L2 – Q4b – Tax Implication of Gift under Income Tax Act

Advise on the tax implications of receiving a gift from a spouse under the Income Tax Act.

Question

Madam Tanaa is an employee of Tapoli Brewery Ghana LTD. Her husband, who is a retired staff of Tapoli Brewery LTD, gifted her a brand-new Toyota Camry costing GH¢270,000 on their 20th wedding anniversary. Madam Tanaa is worried about the tax implication of the gift and has approached you as a student learning tax at the Institute of Chartered Accountants, Ghana.

Required:
Advise Madam Tanaa on the tax implications of the gift of a Toyota Camry she received from her husband on their wedding anniversary, including the various options available to her.

Answer

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Tags: Gift tax, Income Tax, Spousal Gifts, Tax Exemptions, Tax Reliefs
Level: Level 2

Topic: Income Tax Liabilities
Series: Nov 2024

PT – Nov 2024 – L2 – Q4a – Chargeable Income Computation

Compute the chargeable income and tax payable for Amasa Architecture and Building LTD for the 2022 and 2023 years of assessment.

Question

Amasa Architecture and Building LTD has been in business for the past seven years. The following information relates to the company’s operations for the years ending 31 December 2022 and 2023.

DETAILS	2022 (GH¢)	2023 (GH¢)
Profit before tax	795,000	2,110,000
Provision for Depreciation	230,000	115,000
Donation to Manhyia Children Home (Approved by Social Welfare Department)	350,000	210,000
Donation towards 2023 Adae Kese Festival	105,000	150,000
Capital allowance agreed with the Ghana Revenue Authority	1,500,000	1,700,000
Withholding tax paid as contained in certificates received	10,000	25,000

Required:
Using the information provided above, compute the chargeable income and tax payable by Amasa Architecture and Building LTD for the years of assessment 2022 and 2023.

Answer

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Tags: Capital Allowance, chargeable income, Corporate Tax, Financial Statements, Tax adjustments, Tax computation
Level: Level 2

Topic: Corporate Tax Liabilities
Series: Nov 2024

PT – Nov 2024 – L2 – Q3b – Capital Gains Tax and Asset Realization

Tax computation on asset realization and understanding taxable capital assets.

Question

b) Kwamoso LTD sold the following assets to Mr. Badu on 18 May, 2023 for GH¢450,000 to settle a tax liability. Kwamoso LTD is not listed on the Ghana Stock Exchange.

Below are details of the assets:

Name of Asset	Cost (GH¢)	Net Book Value (GH¢)	Market Value (18 May 2023) (GH¢)	Market Value (31 Dec 2023) (GH¢)
Truck vehicle	750,000	480,000	320,000	350,000
Generator	60,000	29,400	8,400	8,000
Laptops	48,000	17,200	8,000	7,200

Required:

i) Compute the consideration received in respect of each asset realised.

ii) What constitutes capital assets in the context of capital gains tax in Ghana?

iii) Under what circumstance would there be a loss in the realization of a liability?

Answer

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Tags: Capital Gains, Market Value, Tax computation, Tax Liability, Taxable Assets
Level: Level 2

Topic: Taxation of Capital Gains
Series: Nov 2024

PT – Nov 2024 – L2 – Q3a – Tax Treatment of Employee Compensation

Explains the tax treatment of various types of employee compensation under the Income Tax Act, 2015 (Act 896).

Question

Describe the tax treatment of the following transactions in the context of the Income Tax Act, 2015 (Act 896).

i) Payment of GH¢2,500 salary for a casual worker in the month of Feb 2024.
ii) Payment of Bonus of GH¢32,000 to an employee with an Annual Basic salary of GH¢180,000.
iii) Payment of GH¢3,200 to a temporary worker in the month of July 2024.
iv) Payment of income to a non-resident employee in Ghana.
v) Redundancy payment to an employee.

Answer

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Tags: Bonus Taxation, Employee Compensation, Income Tax, Non-resident taxation, Redundancy
Level: Level 2

Topic: Income Tax Liabilities
Series: Nov 2024

PT – Nov 2024 – L2 – Q2e – Tax Audit and Under-declaration of Sales

Action to be taken regarding an under-declared sales revenue during a tax audit.

Question

You have been engaged as an Accounts Officer in Abokobi LTD. Sales of GH¢10,000,000 were inadvertently under-declared. A team from the Ghana Revenue Authority (GRA) is at your premises conducting an audit. The GRA Audit Team did not review the sales revenue. After the audit, you noted that the amount constituting the under-declaration of the sales was mistakenly credited to the suppliers’ account in the ledger.

Required:

Detail out your position on the above as to what action to take.

Answer

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Tags: Financial Ethics, Financial Reporting, Ghana Revenue Authority (GRA), Tax Audit, Tax Compliance, Tax Penalty, Tax Regulations, Under-declared Sales
Level: Level 2

Topic: Tax Administration
Series: Nov 2024

PT – Nov 2024 – L2 – Q2d – Withholding VAT Computation

Compute GETFund Levy, NHIL, COVID-19 Levy, output VAT, withholding VAT, and tax payable for a firm under the VAT scheme

Question

N&L Associates, an accounting firm, issued an invoice to a withholding VAT agent for GH¢250,000 (including VAT, GETFund Levy, NHIL, and COVID-19 Levy) for assurance services provided to a client in March 2024. These were the only services provided by the firm during the period, and payments are to be made within the same period.

Required:

i) Calculate the portion of the GETFund Levy, NHIL, and COVID-19 Levy that the agent must compute for the payment of the services rendered. (3 marks)
ii) Determine the output VAT to be reported on the accounting firm’s monthly VAT return.
iii) Compute the withholding VAT to be withheld if N&L Associates are VAT withholding agents.
iv) Calculate the tax payable by the accounting firm if the total input tax for the period amounts to GH¢7,200.

Answer

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Tags: Accounting Firms, Covid-19 Levy, GETFund Levy, NHIL, Output VAT, Tax computation, Tax Liability, Withholding VAT
Level: Level 2

Topic: Value-Added Tax (VAT), Customs, and Excise Duties
Series: Nov 2024

Principles of Taxation – Nov 2024 – L2 – Q2c – Withholding VAT Scheme

Explanation of the objectives of the Withholding VAT Scheme.

Question

One of the innovative measures introduced by the Ghana Revenue Authority (GRA) is the Withholding VAT Scheme, designed to enhance tax compliance.

Required:
Describe FOUR objectives of the Withholding VAT Scheme.

Answer

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Tags: Revenue Collection, Tax Administration, VAT Compliance, Withholding VAT
Level: Level 2

Topic: Tax Administration
Series: Nov 2024

PT – Nov 2024 – L2 – Q2a – Integration of Revenue Agencies into GRA

Explanation of the benefits resulting from the consolidation of revenue agencies into GRA.

Question

In 2009, the former revenue agencies (VAT, IRS, and CEPS) were consolidated into the Ghana Revenue Authority (GRA). This integration was anticipated to provide certain benefits to both taxpayers and the overall tax administration.

Required:

State FOUR benefits resulting from the integration of the revenue agencies into the GRA

Answer

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Tags: Ghana Revenue Authority, Revenue Agencies Integration, Tax Administration, Tax Compliance
Level: Level 2

Topic: Tax Administration
Series: Nov 2024

PT – Nov 2024 – L2 – Q1b – Tax Decisions and Objections

Explanation of tax decisions and conditions under which objections to tax decisions are valid.

Question

b) Tax decisions by the Commissioner-General can lead to tax disputes. The taxpayer can object to a tax decision. Objection constitutes an inalienable right a taxpayer can exercise in any tax administration environment.

Required:

i) When do we say that the Commissioner-General has taken a tax decision?

ii) State FOUR circumstances under which an objection to a tax decision is considered valid before the Commissioner-General can act on it.

iii) What are the options available to the Commissioner-General when he receives an objection from a taxpayer?

Answer

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Tags: Commissioner-General, Compliance, Tax Decisions, Tax Objection, Taxpayer Rights
Level: Level 2

Topic: Tax Administration
Series: Nov 2024

PT – Nov 2024 – L2 – Q1a – Monetary vs Fiscal Policy and Tools

Comparison of monetary and fiscal policy and identification of key monetary policy tools used in Ghana.

Question

a) Monetary policy and fiscal policy are two different tools that have an impact on the economic activity of a country. Policy adjustments and institutional safeguards are needed to ensure that the two policies remain firmly within the region of stability.

Required:

i) Distinguish between Monetary Policy and Fiscal Policy.

ii) State FOUR monetary policy tools used in Ghana.

Answer

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Tags: Central Bank, Economic Stability, Fiscal Policy, Government Spending, Monetary Policy, Taxation
Level: Level 2

Topic: Overview of the Ghanaian Tax System and Fiscal Policy
Series: Nov 2024

PT – April 2022 – L2 – Q1a – Income Tax Liabilities

Explain taxation principles for resident and non-resident individuals.

Question

a) Explain the taxation principles of the following:

i) Resident individual
ii) Non-resident person
(5 marks)

Answer

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Tags: Ghana tax system, Global income, Non-resident person, Resident Individual, Taxation principles

Topic: Resident and Non-Resident Taxation, Tax Administration
Series: APR 2022

PT – April 2022 – L2 – Q1b – Overview of the Ghanaian Tax System and Fiscal Policy

Justify the use of public debt as an alternative to taxation in Ghana's development agenda.

Question

b) The development agenda of a developing country like Ghana can only be brought to reality through the availability of funds. The two (2) main sources of government revenue are taxation and debt. In spite of the fact that taxation remains the most reliable source of government revenue for government plans, projects and programmes, it is said to be limited in its role and function in the economy.

Required:
Justify the use of public debt as an alternative to taxation.
(5 marks)

Answer

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Tags: Fiscal Policy, Government Revenue, Public Debt, Taxation alternatives

Topic: National Debt, Overview of the Ghanaian Tax System and Fiscal Policy
Series: APR 2022

PT – April 2022 – L2 – Q2a – Value Added Tax (VAT)

Describe activities under VAT that do not require meeting the threshold rule before registration is done.

Question

a) Meeting the threshold is a requirement for VAT registration. Others may come under voluntary registration. However, certain activities must be registered despite the above rules.

Required:
Describe activities under VAT, which do not require meeting the threshold rule before registration is done.
(9 marks)

Answer

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Tags: Auctioneer, Promoter of public entertainment, Threshold rule, VAT exceptions, VAT Registration

Topic: Tax Administration, Value-Added Tax (VAT)
Series: APR 2022

PT – April 2022 – L2 – Q2b – Value Added Tax (VAT)

Explain what constitutes the supply of services under the VAT Act 870 (Act 2013).

Question

b) What constitutes supply of services under the VAT Act 870 (Act 2013)?
(4 marks)

Answer

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Tags: Supply of Services, Taxable services, VAT Act, VAT on services

Topic: Taxation of Services, Value-Added Tax (VAT)
Series: APR 2022

PT – April 2022 – L2 – Q2c – Value Added Tax (VAT)

Explain what compulsory VAT registration entails under the VAT Act.

Question

c) What is Compulsory Registration under the types of VAT registration?
(2 marks)

Answer

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Tags: Compulsory registration, Ghana VAT Act, VAT enforcement, VAT Registration

Topic: Tax Administration, Value-Added Tax (VAT)
Series: APR 2022

Subject: PRINCIPLES OF TAXATION

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PT- Nov 2024 – L2 – Q5d – Data Analytics in Taxation

Explain how data analytics can be used to detect tax evasion and provide examples of how GRA might use data analytics to enhance tax compliance.

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PT – Nov 2024 – L2 – Q5c – E-Auditing and Tax Compliance

Explain e-auditing, its differences from traditional tax audits, and discuss advantages for taxpayers and tax authorities.

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PT – Nov 2024 – L2 – Q5b – Withholding Tax & VAT Calculation

Compute VAT and direct tax withheld on a taxable supply of medical consumables to a tax withholding agent.

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PT – Nov 2024 – L2 – Q5a – Notification to Commissioner-General for Non-Resident Contracts

Requirements for notifying the Commissioner-General when a resident contracts a non-resident.

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PT – Nov 2024 – L2 – Q4c – Tax Treatment of Repairs and Renovations

Explains the tax treatment of repairs and renovations for businesses.

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PT – Nov 2024 – L2 – Q4b – Tax Implication of Gift under Income Tax Act

Advise on the tax implications of receiving a gift from a spouse under the Income Tax Act.

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PT – Nov 2024 – L2 – Q4a – Chargeable Income Computation

Compute the chargeable income and tax payable for Amasa Architecture and Building LTD for the 2022 and 2023 years of assessment.

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PT – Nov 2024 – L2 – Q3b – Capital Gains Tax and Asset Realization

Tax computation on asset realization and understanding taxable capital assets.

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PT – Nov 2024 – L2 – Q3a – Tax Treatment of Employee Compensation

Explains the tax treatment of various types of employee compensation under the Income Tax Act, 2015 (Act 896).

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PT – Nov 2024 – L2 – Q2e – Tax Audit and Under-declaration of Sales

Action to be taken regarding an under-declared sales revenue during a tax audit.

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PT – Nov 2024 – L2 – Q2d – Withholding VAT Computation

Compute GETFund Levy, NHIL, COVID-19 Levy, output VAT, withholding VAT, and tax payable for a firm under the VAT scheme

Required:

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Principles of Taxation – Nov 2024 – L2 – Q2c – Withholding VAT Scheme

Explanation of the objectives of the Withholding VAT Scheme.

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PT – Nov 2024 – L2 – Q2a – Integration of Revenue Agencies into GRA

Explanation of the benefits resulting from the consolidation of revenue agencies into GRA.

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PT – Nov 2024 – L2 – Q1b – Tax Decisions and Objections

Explanation of tax decisions and conditions under which objections to tax decisions are valid.

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PT – Nov 2024 – L2 – Q1a – Monetary vs Fiscal Policy and Tools

Comparison of monetary and fiscal policy and identification of key monetary policy tools used in Ghana.

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PT – April 2022 – L2 – Q1a – Income Tax Liabilities

Explain taxation principles for resident and non-resident individuals.

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PT – April 2022 – L2 – Q1b – Overview of the Ghanaian Tax System and Fiscal Policy

Justify the use of public debt as an alternative to taxation in Ghana's development agenda.

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PT – April 2022 – L2 – Q2a – Value Added Tax (VAT)

Describe activities under VAT that do not require meeting the threshold rule before registration is done.

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PT – April 2022 – L2 – Q2b – Value Added Tax (VAT)

Explain what constitutes the supply of services under the VAT Act 870 (Act 2013).

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PT – April 2022 – L2 – Q2c – Value Added Tax (VAT)

Explain what compulsory VAT registration entails under the VAT Act.

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