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 – April 2022 – L2 – Q2d – Pension Entitlement Calculation

Compute the monthly pension entitlement of Mrs. Akoto based on her salary and months of contribution.

Question

d) Mrs. Akoto has been engaged by Madane Ltd as the Marketing Manager for 30 years on an annual salary of GH¢20,000.
The following information relates to Mrs. Akoto:
i) Throughout her working life, she earned her best salaries from Madane Ltd.
ii) She has 408 months’ contribution to her credit.
iii) She retired on 31 March 2020 at the age of 60.

Required:
Compute her monthly pension entitlement.
(5 marks)

Answer

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Tags: Pension calculation, Pension entitlement, Pension Right, Retirement

Topic: Income Tax Liabilities, Pension Calculation
Series: APR 2022

PT – Nov 2023 – L2 – Q1a – Tax Administration

Outline the procedures for obtaining an extension for filing corporate tax returns.

Question

The Managing Director of Atadeka Ltd has been informed that you are undertaking a course in taxation at the Institute of Chartered Accountants, Ghana and has sought your advice on the procedures for extension of time to file the company’s Corporate Tax Returns.

Required:
Outline the procedures for extension of time to file tax returns to the Managing Director.

Answer

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Tags: Corporate Tax Returns, Tax Administration, Tax Filing
Level: Level 2

Topic: Tax Administration
Series: NOV 2023

PT – Nov 2023 – L2 – Q1b – Income Tax Liabilities

Compute tax payable for resident and non-resident individuals for the 2022 year of assessment.

Question

The information below relates to individuals who earned income in the 2022 year of assessment:
Resident individuals:
Mr. Agandi and Mr. Yonny are resident employees in Ghana. The chargeable income earned per annum by Mr. Agandi and Mr. Yonny amounts to GH¢300,000 and GH¢650,000 respectively.

Non-Resident individuals:
Mrs. Zindana and Mrs. Maleda are non-resident individuals. Mrs. Zindana and Mrs. Maleda have earned chargeable incomes to the tune of GH¢300,000 and GH¢650,000 per annum respectively.

Required:
Compute their respective taxes payable for the 2022 year of assessment.

Answer

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Tags: Income Tax, Non-Resident Individuals, Resident Individuals, Tax computation
Level: Level 2

Topic: Income Tax Liabilities
Series: NOV 2023

PT – Nov 2023 – L2 – Q1c – Overview of the Ghanaian Tax System and Fiscal Policy

State five functions performed by the Ghana Revenue Authority.

Question

Ghana Revenue Authority has been charged to perform certain functions as enacted by Ghana Revenue Authority Act, 2009 (Act 791).

Required:
State FIVE (5) functions performed by Ghana Revenue Authority.

Answer

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Tags: Ghana Revenue Authority, Tax Administration, Tax Functions
Level: Level 2

Topic: Tax Administration
Series: NOV 2023

PT – Nov 2023 – L2 – Q2b – Value-Added Tax (VAT), Customs, and Excise Duties

State five circumstances under which the Commissioner-General shall cancel VAT registration.

Question

State FIVE (5) circumstances under which the Commissioner-General shall cancel the VAT registration of a taxable person.

Answer

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Tags: Cancellation, Commissioner-General, VAT Registration
Level: Level 2

Topic: Value-Added Tax (VAT), Customs, and Excise Duties
Series: NOV 2023

PT – Nov 2023 – L2 – Q2c – Value-Added Tax (VAT), Customs, and Excise Duties

Determine whether a hostel facility and the supply of food and drinks are taxable.

Question

State whether the following are taxable or not and briefly explain your answer.
i) Hostel facility offered to candidates by the Commonwealth Hall of the University of Ghana for profit.
ii) The supply of food and drinks by Papaye to the Vice President of Ghana for the celebration of his birthday.

Answer

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Tags: Food Supply, Hostel Facility, Taxable Transactions, VAT
Level: Level 2

Topic: Value-Added Tax (VAT), Customs, and Excise Duties
Series: NOV 2023

PT – Nov 2023 – L2 – Q2d – Income Tax Liabilities

Explanation of defined benefit and defined contribution schemes in the Ghanaian context.

Question

Explain the following:
i) Defined benefit scheme
ii) Defined contribution scheme
(5 marks)

Answer

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Tags: Defined Benefit, Defined Contribution, Ghana Pension Scheme, Pension
Level: Level 2

Topic: Defined benefit scheme, Defined contribution scheme
Series: NOV 2023

PT – Nov 2023 – L2 – Q3a – Income Tax Liabilities

Computation of chargeable income for a physically challenged employee with various benefits and allowances.

Question

Mr. Antitom (physically challenged) was employed as a Chief Accountant of Nangode Ltd on 1 April 2020 on an annual basic salary of GH¢60,000 x 10,000 – GH¢100,000. He was entitled to the following monthly allowances and benefits:

Allowances & Benefits Monthly Amount (GH¢)
Responsibility Allowance 4,400
Professional Allowance 6,600
House Help Allowance 8,200
Utilities 4,200
Overtime Allowance 6,000
Provision of furnished accommodation by the employer for which he paid 5% of his basic salary.
Provision of vehicle and fuel by the employer for both official and private use.
Bonus payment amounting to 25% of his basic salary.
He contributed 5.5% of his basic salary to the Mandatory Pension Scheme and an additional 10% to a Voluntary Pension Scheme approved by the National Pension Regulatory Authority.
Married with 3 children, 2 in approved Senior High Schools in Ghana, 1 at the University of South Africa.
Earned interest of GH¢4,000 on a savings account with Kilma Bank.
Received a net dividend of GH¢20,480 from an investment with Enoga Securities.
Required:
Compute the chargeable income of Mr. Antitom for the 2022 year of assessment.
(20 marks)

Answer

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Tags: Benefits, chargeable income, Employment Income, Pension Contributions, Taxation of Allowances
Level: Level 2

Topic: Taxation of Employment Income
Series: NOV 2023

PT – Nov 2023 – L2 – Q4a – Income Tax Liabilities

Explanation of tax treatment of research and development expenses, contributions to worthwhile causes, and financial costs from derivatives.

Question

Your company has recruited five new employees, and the Director of Training has instructed you to explain certain provisions in the Income Tax Act, 2015 (Act 896) to them:

i) Research and development expenditure (3 marks)
ii) Contribution and donations to worthwhile causes (3 marks)
iii) Financial cost from derivatives (4 marks)

Answer

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Tags: Contributions, Donations, Financial instruments, Research and Development, Tax Deductibles, Tax law
Level: Level 2

Topic: Contributions, Financial Cost
Series: NOV 2023

PT – Nov 2023 – L2 – Q4b – Corporate Tax Liabilities

Computation of tax payable by a company after adjustments for depreciation, capital allowance, and brought-forward losses.

Question

Trincao Ghana, a branch of Trincao International, declared a loss of GH¢500,000 in 2020. Below are the extracts from the company’s returns for the 2022 year of assessment:
Items Amount (GH¢)
Net Profit as per Accounts 20,000,000
Depreciation 82,500
Loss from 2016 49,230
Capital Allowance Agreed with GRA 95,360
Corporate tax rate is 25%.

Required:
Determine the tax payable on profit by Trincao Ghana for the 2022 year of assessment.
(10 marks)

Answer

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Tags: Capital Allowance, Corporate Tax, Depreciation, Tax Liability, Taxable Profit
Level: Level 2

Topic: Capital allowance, Corporate Tax Computation, Depreciation
Series: NOV 2023

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 – April 2022 – L2 – Q2d – Pension Entitlement Calculation

Compute the monthly pension entitlement of Mrs. Akoto based on her salary and months of contribution.

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PT – Nov 2023 – L2 – Q1a – Tax Administration

Outline the procedures for obtaining an extension for filing corporate tax returns.

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PT – Nov 2023 – L2 – Q1b – Income Tax Liabilities

Compute tax payable for resident and non-resident individuals for the 2022 year of assessment.

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PT – Nov 2023 – L2 – Q1c – Overview of the Ghanaian Tax System and Fiscal Policy

State five functions performed by the Ghana Revenue Authority.

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PT – Nov 2023 – L2 – Q2b – Value-Added Tax (VAT), Customs, and Excise Duties

State five circumstances under which the Commissioner-General shall cancel VAT registration.

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PT – Nov 2023 – L2 – Q2c – Value-Added Tax (VAT), Customs, and Excise Duties

Determine whether a hostel facility and the supply of food and drinks are taxable.

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PT – Nov 2023 – L2 – Q2d – Income Tax Liabilities

Explanation of defined benefit and defined contribution schemes in the Ghanaian context.

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PT – Nov 2023 – L2 – Q3a – Income Tax Liabilities

Computation of chargeable income for a physically challenged employee with various benefits and allowances.

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PT – Nov 2023 – L2 – Q4a – Income Tax Liabilities

Explanation of tax treatment of research and development expenses, contributions to worthwhile causes, and financial costs from derivatives.

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PT – Nov 2023 – L2 – Q4b – Corporate Tax Liabilities

Computation of tax payable by a company after adjustments for depreciation, capital allowance, and brought-forward losses.

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