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 2023 – L2 – Q5a – Withholding Tax Administration

Explanation of the obligations of a withholding agent under the Ghanaian tax system.

Question

The retention of tax by one person when making payment to another person regarding the obligations of a withholding agent is sometimes described as an easy way of tax administration.

Required:
Explain the obligations of a withholding agent.
(5 marks)

Answer

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Tags: Compliance, Filing Requirements, Ghana Revenue Authority, Tax law, Withholding Tax
Level: Level 2

Series: NOV 2023

PT – Nov 2023 – L2 – Q1d – Income Tax Liabilities

Outline the sanctions imposed for failure to file tax returns.

Question

Tax administration encompasses assessment, collection, and enforcement of taxes legally due to the state. The enforcement of tax obligations requires an imposition of penalties and interest charges for non-compliance.

Required:
State the sanctions for failing to file tax returns.

Answer

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Tags: Non-compliance, Penalties, Tax Administration, Tax Filing
Level: Level 2

Topic: Tax Administration
Series: NOV 2023

PT – Nov 2023 – L2 – Q5b – Value-Added Tax (VAT), Customs, and Excise Duties

Calculate the withholding tax payable for a contract including various levies and VAT.

Question

The cost of iron rods supplied by Akinto Steel Works Ltd to Oputu Construction Ltd is worth GH¢300,000 (inclusive of National Health Insurance Levy, Ghana Education Trust Fund Levy, COVID-19 Health Recovery Levy, and Value Added Tax).

Required:
Determine the Withholding Tax payable in respect of the contract for supplies. (5 marks)

Answer

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Tags: Contract for Supplies, COVID-19 Health Levy, Levies, National Health Insurance Levy, VAT, Withholding Tax
Level: Level 2

Topic: Withholding Tax Administration
Series: NOV 2023

PT – Nov 2023 – L2 – Q5c – Income Tax Liabilities

Define and distinguish between capital, depreciable, and investment assets under the Income Tax Act.

Question

Section 133 of the Income Tax Act, 2015 (Act 896) provides for the interpretation of capital assets, depreciable assets, and investment assets.

Required:
What are the distinguishing features of capital assets, depreciable assets, and investment assets under the above-mentioned legislation? (5 marks)

Answer

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Tags: Capital Assets, Definitions, Depreciable assets, Income Tax Act, Investment Assets
Level: Level 2

Topic: Corporate Tax Liabilities
Series: NOV 2023

PT – Nov 2023 – L2 – Q2a – Value-Added Tax (VAT), Customs, and Excise Duties

Define "Supply of Goods" and "Supply of Services" as per the VAT Act.

Question

There is imposed by the Value Added Tax Act, 2013 (Act 870) a tax to be known as the value added tax, which is to be charged on:
(a) The supply of goods or services made in the country other than exempt goods or services; and
(b) The import of goods or services other than exempt import.

Required:
i) What constitutes “Supply of Goods”?
ii) What constitutes “Supply of Services”?

Answer

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Tags: Supply of Goods, Supply of Services, Taxation, VAT
Level: Level 2

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

PT – Nov 2023 – L2 – Q5d – Income Tax Liabilities

Explain the tax treatment for the gift of a vehicle received by a business under the Income Tax Act.

Question

Bansey Enterprise received a vehicle from Unilever as the best distributor of Unilever products.

Required:
Explain to the Managing Director of Bansey Enterprise how to treat the gift of the vehicle for tax purposes. (5 marks)

Answer

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Tags: Business Gifts, Business Profits, Corporate Tax, Gift tax, Income Tax Act
Level: Level 2

Topic: Corporate Tax Liabilities
Series: NOV 2023

PT – Nov 2019 – L2 – Q5d – Pension and Retirement Benefits

Briefly explain the 3-Tier Ghana National Pension Scheme Mechanism.

Question

Explain briefly the 3-Tier Ghana National Pension Scheme Mechanism.
(5 marks)

Answer

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Tags: Ghana National Pension Scheme, Pensions, Social Security, Taxation
Level: Level 2

Topic: Overview of the Ghanaian Tax System and Fiscal Policy
Series: NOV 2019

PT – Nov2019 – L2 – Q5b – Taxation of Capital Gains

This question asks to explain the taxation rules on asset realisation upon the death of the asset owner.

Question

An individual may realise an asset on the death of another person, by way of transfer of ownership of the asset.

Required:
What are the taxation rules on such transactions?
(5 marks)

Answer

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Tags: Asset Realisation, Capital Gains, Death of Asset Owner, Tax Rules
Level: Level 2

Topic: Taxation of Capital Gains
Series: NOV 2019

PT – Nov2019 – L2 – Q5c – Income Tax Liabilities

This question asks to determine any tax payable and comment on the relevant tax implications of gifts received by Madam Okailey.

Question

Madam Okailey Armah, a prominent market queen and Philanthropist, was nominated Asafouakye of Namoale Traditional Area in Accra in January 2018. At her out-dooring in August 2018 as Naa Okailey Tsofatse II, she sat in state and received homage and gifts from her people, friends, and business associates. The following were the quantifiable gifts she received:
GH¢
Market Queens Association 1,000
Commercial Bank (Pick-Up) 5,000
Namoale Traditional Council 500
Father-in-Law 500
Anonymous admirer
1,000
A week after her out-dooring,
she made the following donations:
Osu Children’s Home Pick-Up Vehicle
GH¢
Children’s Hospital (Accra) 1,000
Weija Leprosarium 500
Children’s Ward Korle Bu (Assorted Biscuits) 200
Thanksgiving Offering (Freeman Memorial Church, Bukom) 200

Determine any tax payable and briefly comment on the relevant tax implications.
(5 marks)

Answer

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Tags: Gift tax, Gifts, Philanthropy, Taxation
Level: Level 2

Series: NOV 2019

PT – Nov2019 – L2 – Q5a – Taxation of Capital Gains

This question asks to compute the capital gains tax payable on the disposal of a land asset.

Question

Mamavi Dekey (Mamavi) purchased land in Ho in the Volta Region for a cost of GH¢200,000 in 2010. In 2011, she spent GH¢8,000 for grading the land. In March 2019, she spent another GH¢10,000 to reshape the land with the intention to sell it. Mamavi engaged Kobina Ebo, a Valuer, in June 2019 to value the land, and he charged GH¢2,000. In July 2019, she placed an advert at ‘Ho Bankoe FM’ on the sale of the land and paid GH¢1,000. In October 2019, she sold the land through an agent for GH¢300,000 to Kalika, and the agent’s commission was 2% of the sale value. Mamavi also paid GH¢600 for stamp duty and legal permit for conveyance of the land to Kalika.

Required:
Compute any tax payable.
(5 marks)

Answer

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Tags: Asset Disposal, Capital Gains, Land Sale, Tax computation
Level: Level 2

Topic: Taxation of Capital Gains
Series: NOV 2019

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 2023 – L2 – Q5a – Withholding Tax Administration

Explanation of the obligations of a withholding agent under the Ghanaian tax system.

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PT – Nov 2023 – L2 – Q1d – Income Tax Liabilities

Outline the sanctions imposed for failure to file tax returns.

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PT – Nov 2023 – L2 – Q5b – Value-Added Tax (VAT), Customs, and Excise Duties

Calculate the withholding tax payable for a contract including various levies and VAT.

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PT – Nov 2023 – L2 – Q5c – Income Tax Liabilities

Define and distinguish between capital, depreciable, and investment assets under the Income Tax Act.

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PT – Nov 2023 – L2 – Q2a – Value-Added Tax (VAT), Customs, and Excise Duties

Define "Supply of Goods" and "Supply of Services" as per the VAT Act.

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PT – Nov 2023 – L2 – Q5d – Income Tax Liabilities

Explain the tax treatment for the gift of a vehicle received by a business under the Income Tax Act.

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PT – Nov 2019 – L2 – Q5d – Pension and Retirement Benefits

Briefly explain the 3-Tier Ghana National Pension Scheme Mechanism.

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PT – Nov2019 – L2 – Q5b – Taxation of Capital Gains

This question asks to explain the taxation rules on asset realisation upon the death of the asset owner.

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PT – Nov2019 – L2 – Q5c – Income Tax Liabilities

This question asks to determine any tax payable and comment on the relevant tax implications of gifts received by Madam Okailey.

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PT – Nov2019 – L2 – Q5a – Taxation of Capital Gains

This question asks to compute the capital gains tax payable on the disposal of a land asset.

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