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 – May 2020 – L2 – Q1c – Tax Administration

This question outlines the conditions that must be met by a company before the Commissioner-General can make a determination on a tax objection.

Question

Knaah-Shormeh Ltd has to settle Ghana Revenue Authority on the following tax liabilities:

Tax Liabilities Amount (GH¢)
Custom duties 1,000,000
Withholding Tax Surcharge 80,000
Value Added Tax 500,000
Corporate Tax 100,000
Total Liability 1,680,000
Additional Information:

50% of the Value Added Tax relates to imports.
The above came about from an adjusted assessment through an audit conducted and a report submitted on 31 January 2019.
The company has engaged Miracle Consultants, a firm of Tax Practitioners, to help it object to the assessment, claiming it is excessive and erroneous based on its facts and circumstances.
Required:
What conditions must be met by Knaah-Shormeh Ltd before the Commissioner-General makes a determination on the objection? (8 marks)

Answer

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Tags: Corporate Tax, Ghana Revenue Authority, Tax Administration, Tax Objection
Level: Level 2

Topic: Tax Administration
Series: MAY 2020

PT – May 2020 – L2 – Q4b – Special considerations for taxation of gifts and capital allowances.

Calculation of the chargeable income for Stella-VD Ltd for the 2018 year of assessment.

Question

The Company’s assets include the following:

Type of Assets Date of Acquisition Cost (GH¢)
Factory Building 01/10/2017 300,000
Plant and Machinery 25/10/2017 171,000
Delivery Van 01/11/2017 50,000
Computers 01/10/2017 40,000
Furniture and Fittings 10/12/2017 150,000
Other Office Equipment 01/10/2017 200,000
Office Building 30/06/2018 500,000
Required:
Required:
a) Compute the appropriate capital allowance for 2017 and 2018 year of assessment. (8 marks)
b) Calculate the chargeable income of the company for assessment year 2018.
(12 marks)

Answer

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Tags: chargeable income, Corporate Tax, Income Statement, Tax computation
Level: Level 2

Topic: Chargeable Income, Corporate Tax Liabilities
Series: MAY 2020

PT – March 2023 – L2 – Q5d – Taxation of Capital Gains

Explain the transfer of an asset for no consideration under Section 45 of the Income Tax Act, 2015 (Act 896).

Question

Explain the transfer of asset for no consideration under section 45 of the Income Tax Act, 2015 (Act 896).

Answer

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Tags: Capital Gains, Income Tax Act, No Consideration, Taxation, Transfer of Assets
Level: Level 2

Topic: Taxation of Capital Gains
Series: MAR 2023

PT – March 2023 – L2 – Q5c – Taxation of Capital Gains

Explain what constitutes the realization of capital assets.

Question

What constitutes the realization of capital assets?

Answer

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Tags: Capital Assets, Capital Gains, Realization, Taxation
Level: Level 2

Topic: Taxation of Capital Gains
Series: MAR 2023

PT – March 2023 – L2 – Q5b – Withholding Tax Administration

State the payments which are exempt from withholding tax.

Question

A resident person shall withhold tax on payments of any dividends, interests, rent, royalties, natural resources, and payments with a source in the country.

Required:

State FOUR (4) payments to which withholding tax does not apply.
(4 marks)

Answer

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Tags: Exemptions, Income Tax, Withholding Tax
Level: Level 2

Topic: Withholding Tax Administration
Series: MAR 2023

PT – March 2023 – L2 – Q5a – Tax Administration

State the transactions that require the use of a Tax Clearance Certificate (TCC).

Question

In 2021, the Ghana Revenue Authority migrated fully to an online portal for the filing and payment of taxes. One process included in this migration was the obtainment of a Tax Clearance Certificate (TCC), which plays an important role in tax compliance.

Required:

State SIX (6) transactions that require the use of a TCC.

Answer

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Tags: Compliance, Tax Administration, Tax Clearance Certificate, TCC
Level: Level 2

Topic: Tax Administration
Series: MAR 2023

PT – March 2023 – L2 – Q3b – Income Tax Liabilities

Explain how part-time, temporary, and casual employment is taxed under the Income Tax Act.

Question

You are required to explain how the following are taxed in accordance with the Income Tax Act, 2016 (Act 896):

i) Part-time teaching/lecturing
ii) Part-time employment
iii) Temporary employment
iv) Casual worker

Answer

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Tags: Casual Employment, Income Tax, Part-Time Employment, Temporary Employment, Withholding Tax
Level: Level 2

Topic: Income Tax Liabilities
Series: MAR 2023

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

Explain the principles and computation of overtime tax under the Income Tax Act.

Question

Kaakyire, the Finance Director of Dwarf Ltd, is on a monthly basic salary of GH¢1,400. She was paid overtime amounting to GH¢500 during the month of April 2022.

Required:

i) State the principles underpinning the computation of overtime in accordance with the Income Tax Act, 2016 (Act 896).
(6 marks)

ii) State how her overtime will be taxed and compute the tax for the month of April 2022.
(6 marks)

Answer

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Tags: Income Tax, Overtime, Tax computation, Tax Principles, Withholding Tax
Level: Level 2

Topic: Income Tax Liabilities
Series: MAR 2023

PT – March 2023 – L2 – Q2d – Tax Administration

Explain the three-tier pension scheme under the National Pensions Act.

Question

Explain the three-tier pension scheme under the National Pensions Act, 2008 (Act 766).

Answer

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Tags: National Pensions Act, Pension Scheme, Taxation of Pensions, Three-Tier Pension
Level: Level 2

Topic: Tax Administration
Series: MAR 2023

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

Advise on deductibility rules of input VAT incurred before registration.

Question

Atakora Manufacturing Ltd is a company at Winneba that manufactures roofing sheets. The company has recently registered for VAT and is not sure about the treatment of its input VAT paid prior to VAT registration. The company has sought your guidance on how to treat input taxes paid prior to registration.

Required:

Advise the company on the deductibility rules of input VAT incurred by a company prior to VAT registration.

Answer

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Tags: Input VAT, Tax law, VAT Deductibility, VAT Registration
Level: Level 2

Topic: Value-Added Tax (VAT), Customs, and Excise Duties
Series: MAR 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 – May 2020 – L2 – Q1c – Tax Administration

This question outlines the conditions that must be met by a company before the Commissioner-General can make a determination on a tax objection.

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PT – May 2020 – L2 – Q4b – Special considerations for taxation of gifts and capital allowances.

Calculation of the chargeable income for Stella-VD Ltd for the 2018 year of assessment.

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PT – March 2023 – L2 – Q5d – Taxation of Capital Gains

Explain the transfer of an asset for no consideration under Section 45 of the Income Tax Act, 2015 (Act 896).

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PT – March 2023 – L2 – Q5c – Taxation of Capital Gains

Explain what constitutes the realization of capital assets.

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PT – March 2023 – L2 – Q5b – Withholding Tax Administration

State the payments which are exempt from withholding tax.

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PT – March 2023 – L2 – Q5a – Tax Administration

State the transactions that require the use of a Tax Clearance Certificate (TCC).

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PT – March 2023 – L2 – Q3b – Income Tax Liabilities

Explain how part-time, temporary, and casual employment is taxed under the Income Tax Act.

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

Explain the principles and computation of overtime tax under the Income Tax Act.

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PT – March 2023 – L2 – Q2d – Tax Administration

Explain the three-tier pension scheme under the National Pensions Act.

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

Advise on deductibility rules of input VAT incurred before registration.

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