Topic: Capital allowance

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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.

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

PT – May 2020 – L2 – Q4a – Capital Allowance and tax reliefs

Computation of capital allowance for Stella-VD Ltd for the 2017 and 2018 years of assessment.

Question

Stella-VD Company Limited, manufacturers of fruit juice for local consumption, commenced business on 1/10/2017, with an accounting year-end at 31 December. The company submitted its accounts for 2017 and was assessed accordingly. The company submitted its tax returns for the 2018 year of assessment to the Ghana Revenue Authority on 30/04/2019. Below are the details:

iii) Staff Welfare

Staff Medical Bills: 3,700
Safety Wear for Staff: 10,500
Canteen Equipment purchased on 30/11/2018: 12,000
iv) Donation and Subscription

Goods given as Gratis to Customs Officials: 13,000
Donation of Goods to SOS Children Village: 10,000
Subscription to Association of Ghana Industries: 5,000
v) Wages and Salaries

Old Staff: 120,000
Fresh Graduates employed by Stella-VD Ltd: 26,000
Fresh Graduates constitute 0.9% of the total workforce
vi) Other Income

Compensation from a Customer for Cancellation of Sale Order: 8,000
Compensation for Loss of Trading Stock of the Company: 10,000
Compensation for Cancellation of Purchase Order by Supplier: 5,000
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:
a) Compute the appropriate capital allowance for the 2017 and 2018 years of assessment.
(8 marks)

Answer

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Tags: Capital allowances, Corporate Tax, Depreciation, Fixed Assets
Level: Level 2

Topic: Capital allowance, Corporate Tax Liabilities
Series: MAY 2020

AT – Nov 2018 – L3 – Q5a – Petroleum operations, Capital allowance

Computation of tax payable for a petroleum company, including adjustments for financial gains, costs, and capital allowances.

Question

The following is relevant for the operation of AB Ltd, operating in the upstream petroleum sector for the 2017 year of assessment:

Details	$
Revenue	100,000,000
Cost	80,000,000
Profit	20,000,000

The following additional information forms part of the above:

The revenue includes financial gain from swaps of $1,000,000.
The financial cost of $1,200,000 was added to the cost.
The cost includes depreciation of $200,000.
Research and development (R&D) of $100,000 was added to the cost of operation.
Revenue on 20,000 barrels of oil sold was added to revenue. The price used on the 20,000 barrels was $70 in its tax returns, but the agreed price is now $67, certified by the Petroleum Unit of the Ghana Revenue Authority.
Written down value (WDV) as of 31/12/2016 was $1,800,000 after granting capital allowance the second time as of 2016 year-end. This information is yet to be adjusted.

Required:
i) Compute the tax payable. (6 marks)
ii) Comment on the deductibility of financial cost in petroleum operations. (2 marks)

Answer

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Tags: Capital Allowance, Financial Costs, Petroleum taxation, Tax computation, Taxable Income
Level: Level 3

Topic: Capital allowance, Petroleum operations
Series: NOV 2018

TF – May 2018 – L3 – Q2a – Capital Allowance

Calculate the capital allowances and chargeable income of Sekyiwaa Annam Industries Ltd for the year 2017.

Question

Sekyiwaa Annam Industries Limited manufactures personal hygiene soaps and related products at their factory in Takoradi. The company commenced business operations on 1 April 2016 and had an assessed loss of GH¢150,200 for the period ended 31 December 2016.

The company recorded a net profit of GH¢762,800 for the year ended 31 December 2017 after taking into account the following transactions in the income statement:

Gross rental income of GH¢180,000 received from the leasing of one wing of the office building. The rental income portion constitutes 10% of the office building.
Net interest received on bank deposits from Ghana Commercial Bank of GH¢10,028. Withholding tax of 8% has been deducted.
The registration of Trademarks at a total cost of GH¢75,000 in respect of the Company’s personal hygiene soaps that is to last for 10 years. The research and development expenses incurred in connection with these soaps amounted to GH¢15,000 and the company intends to expense it. The legal costs incurred to complete the registration of the Trademark was GH¢5,000.
A donation of GH¢120,000 worth of furniture was made to a local government-assisted school as part of the Company’s corporate social responsibility program, which was duly acknowledged by Ghana Education Service (GES).
Depreciation of fixed assets of GH¢57,000.
Replacement of two motor vehicle engines costing GH¢51,000.
Exceptional costs amounting to GH¢150,000 as a result of the production manager sustaining an injury while working on one of the production lines in the factory. GH¢35,000 of the costs relate to a payment made to the production manager as severance pay. GH¢110,000 was used to acquire additional computers. The remaining GH¢5,000 of the costs represent fines imposed by the Factory Inspectorate Department of the government following the incident.
Purchases of a Computer Server for accounting and human resource needs at a cost of GH¢20,000.
Additional Information:
Details of the Company’s other fixed assets, at cost, are provided below. These were all acquired/constructed during the year to 31 December 2016:

Asset Cost (GH¢)
Factory Building 800,000
Plant and Machinery 510,000
Office Building 420,000
Furniture and Office Equipment 60,000
Motor vehicles (Goods Vans) 130,000
Computers 30,000

Required:
i) Calculate the capital allowances claimable by Sekyiwaa Annam Industries Limited for the year ended 31 December 2017 using all the available information.
(8 marks)

ii) Calculate the chargeable income of Sekyiwaa Annam Industries Limited for the year ended 31 December 2017 and the tax payable.
(6 marks)

Answer

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Tags: Capital Allowance, chargeable income, Corporate Tax, Manufacturing, Taxable Income
Level: Level 3

Topic: Business income - Corporate income tax, Capital allowance
Series: MAY 2018

AT – April 2022 – L3 – Q4 – Capital allowance | Business income – Corporate income tax

Calculate capital allowance and chargeable income for Joefel Company Ltd. Explain sources of revenue from upstream petroleum operations in Ghana.

Question

a) Joefel Company Ltd, manufacturer of fruit juice for local consumption commenced business on 1 October 2019, with accounting year-end at 31 December each year. The company submitted its accounts for 2019 and was assessed accordingly. The company submitted its tax returns for 2020 year of assessment to the Ghana Revenue Authority on 30 April 2021. Below are the details:

Additional information:
1) Advert and publicity
Radio and television 3,300
Newspaper advert 2,400
Permanent signboard at the company’s entrance in 2020 18,000

2) Installation of plant and others
Installation of plant 21,500
Heavy duty Generator bought in 2019 to support Plant and Machinery 20,500
General maintenance before the use of the plant 18,000

3) Staff Welfare
Staff medical bills 3,700
Safety wear for staff 10,500
Canteen Equipment purchased on 30 November 2020 12,000

4) Donation and Subscription
Goods given as gratis to customs officials 13,000
Donation of goods to SOS Children Village 10,000
Subscription to Association of Ghana Industries 5,000

5) Wages and Salaries
Old staff 120,000
Fresh graduates employed by Joefel Company Ltd. (Fresh graduates
constitute 1% of total workforce) 26,000

6) Other Income
Compensation from a customer for cancellation of a sale order 8,000
Compensation for loss of trading stock of the company 10,000
Compensation for cancellation of purchase order by supplier 5,000

Note 2) above has not been included in the plant and machinery acquired.

Required:

a
i) Compute the appropriate capital allowance for 2019 and 2020 years of assessment.
(8 marks)
ii) Calculate the chargeable income of the company for the 2020 year of assessment.
(6 marks)
b) Explain of the following sources of revenue accruing to the Government of Ghana from the upstream petroleum operations in Ghana:
i) Royalty.
ii) Carried Interest.
iii) Additional Interest.
iv) Additional Oil Entitlement.
(6 marks)

Answer

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Tags: Additional Interest, Additional Oil Entitlement, Capital Allowance, Carried Interest, chargeable income, Petroleum Operations, Royalty
Level: Level 3

Topic: Business income - Corporate income tax, Capital allowance
Series: APR 2022

AT – Aug 2022 – L3 – Q4 – Capital Allowance

Calculation of capital allowances, provisional tax, chargeable income, company tax, and additional tax liability for Zimbo Ltd for the year ended 31 December 2021.

Question

Zimbo Ltd (Zimbo) specialises in the manufacture of personal hygiene soaps and related
products at their factory in the industrial area of Accra. Zimbo commenced business operations
on 1 April 2020 and had an assessed loss of GH¢112,000 for the period ended 31 December
2020 attributable to large start-up costs in the first period of trading.
Turnover for the year ended 31 December 2021 amounted to GH¢1,980,000 of which
GH¢700,000 relates to export sales. Zimbo is trying to increase its turnover from export sales
through participation in foreign market trade fairs as well as other marketing campaigns. The
gross profit margin for the year ended 31 December 2021 was 60%.
Zimbo recorded a net profit of GH¢315,000 for the year ended 31 December 2021 after taking
into account the following transactions:

Additional information:
i) The gross rental income earned was from leasing one wing of the head office building. The
wing constitutes 10% of the entire building.
ii) The registration of three trademarks, ‘Cleanex’, ‘Perfect’ and ‘Alfresh’ at a total cost of
GH¢30,000 in respect of Zimbo’s personal hygiene soaps that is to last for fifteen years. The
market research expenses incurred in connection with the development of these soaps
amounted to GH¢65,000.
iii) The donation was made to a local government assisted school as part of Zimbo’s corporate
social responsibility programme.
iv) GH¢25,000 of the marketing cost was incurred when the export market Development Manager
attended two trade conventions and one trade mission as part of Zimbo’s efforts to increase its
export sales. The trade mission was duly approved. The remaining GH¢63,000 of costs were
incurred in marketing Zimbo’s soaps to foreign markets.
v) GH¢28,000 of the general costs was incurred in underpinning the office building to strengthen
its foundations against sinking.
vi) The compensation cost was as a result of the production manager incurring an injury while
working on one of the production lines in the factory. The Production Manager was rendered
incapacitated as a result of the incident. Zimbo settled out of court. GH¢250 000 of the costs
relate to a payment made to the Production Manager in full settlement of the case. GH¢50,000
of the GH¢250,000 out-of-court settlement was paid in order to prevent the Production
Manager from setting up a similar business in competition with Zimbo. The remaining
GH¢40,000 of costs represent fines imposed by the Factory Inspectorate Division following
the incident. The production line was also condemned as a result.
vii)The interest paid was incurred in respect of Zimbo’s GH¢200,000 overdraft facility.
GH¢100,000 of the facility was applied towards recurrent expenditure while the other
GH¢100,000 of the facility was applied towards the cost of a new showroom.
viii) Ghana Revenue Authority considers 40% of other expenses to be prohibited for tax purposes.
ix) Zimbo’s projected taxable income for the year ended 31 December 2021 was GH¢360,000.
The Accountant remitted the provisional tax for the three quarterly payment dates (QPDs) on
time but, due to the pressures of year-end work, forgot to submit the return for the final QPD.
The Accountant also omitted the brought forward assessed loss from his computations of the
provisional tax.
x) During the year, a showroom was constructed in close proximity to Zimbo’s factory building.
The showroom is used to display the soaps from the factory as well as for storage purposes
pending shipment to various destinations. The showroom was constructed at a total cost of
GH¢100,000 and was wholly funded by Zimbo’s overdraft facility. The showroom was
brought into use on 1 August 2021. Zimbo has made all tax appropriate elections in connection
with the showroom.
xi) Details of Zimbo’s other fixed assets are provided below. These were all acquired/constructed
during the year to 31 December 2020:

Required:
a) Calculate the capital allowances claimable by Zimbo for the year ended 31 December 2021,
assuming all favourable elections are made. (6 marks)
b) Calculate the provisional tax which should have been paid by Zimbo for the year ended 31
December 2021, clearly indicating the due dates and the respective tax amounts. (3 marks)
c) Calculate the chargeable income and company tax payable by Zimbo for the year ended 31
December 2021. (10 marks)
Note: Your calculations should assume that the provisional tax paid was as calculated in
part b) of the question.
d) Compute any other tax liability apart from the company tax. (1 mark)
(Total: 20 marks)

Answer

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Tags: Business income, Capital Allowance, chargeable income, Provisional Tax, Rental Tax
Level: Level 3

Topic: Capital allowance
Series: AUG 2022

AT – NOV 2021 – L3 – Q3 – Business income – Corporate income tax | Capital allowances

Compute taxable income and tax payable for Partey Ltd after business restructuring involving transfer of assets to employees and disposal of assets.

Question

Partey Ltd (Partey) produces flour and various soup powders, and the company is considered as a priority company. On 1 January 2019, Partey owned two refineries in Accra (Weija and Mamprobi) and a refinery in Takoradi. Each refinery comprises building, plant and equipment and a warehouse, all of which were owned by Partey.

Partey has been having financial difficulties and, on 1 February 2019, engaged the services of a business consultant to recommend a survival plan for the company. Unfortunately, staff morale was very low when the business consultant was engaged because their salaries were six months in arrears.

The business consultant’s recommendations were agreed and implemented in the year ended 31 December 2019 as follows:

i) The Takoradi refinery was transferred to the employees at market value to be operated as independent business ventures. The inventory in the warehouse was included in the transfer.

ii) The Weija refinery was disposed off, together with all its related fixed assets, to fund Partey’s future business operations and pay off part of the arrears of salaries due to the employees. The employees at this refinery were all reassigned elsewhere. The inventory at the warehouse, valued at cost, was given to the employees as final settlement of their salaries in arrears.

Both the disposal of the Weija refinery and the transfer of the Takoradi refinery to their employees were made on 30 March 2019.

Details of the fixed assets disposed and transferred are:

Partey’s statement of profit or loss for the year ended 31 December 2019 in respect of
Mamprobi is as follows:

Notes:
i) This amount represents Partey’s ordinary sales for the year.
ii) Included in the cost of sales is the total value of inventory at cost transferred to the
employees (in accordance with the business consultant’s recommendations) on 30 March
2019. No other adjustments were recorded regarding this inventory transfer.

Required:

a) Outline the tax consequences for Partey due to the transfer of the fixed assets and inventory to the employees on 30 March 2019, stating when any taxes should be paid. (4 marks)

b) Assess the tax implications:

i) When the proceeds from the realisation of depreciable assets exceed the written down values? (1.5 marks)

ii) When the proceeds from the realisation of depreciable assets are less than the written down values? (1.5 marks)

c) Calculate the taxable income of Partey for the year ended 31 December 2019. (8 marks)

d) Explain how shareholders of a company are taxed? (5 marks)

Answer

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Tags: Asset transfers, Business restructuring, Capital allowances, Corporate tax computation
Level: Level 3

Topic: Business income - Corporate income tax, Capital allowance
Series: NOV 2015

AT – MAR 2024 – L3 – Q4 – Business Income – Corporate Income Tax | Capital Allowance

Covers capital allowance computation, tax rules on long-term contracts, and chargeable income calculation.

Question

Finstruct Ltd has been awarded an airport terminal project. The project started on 1 January 2022 for a contract sum of GH¢60,000,000. The construction of the airport is to be completed on 31 December 2023.

Finstruct Ltd has a financial year ending on 31 December each year. On 31 December 2022, the accounts appropriate to the airport contract contained the following:

Cost Item	GH¢
Cost of construction materials	25,500,000
Direct wages of construction staff	22,100,000
Hire of special equipment	300,000
Cost of soil test	100,000
Purchase of fuel and lubricants	750,000
Consultancy services	135,000

Additional information:
i) Materials costing GH¢340,000 sent to the site were returned to the company’s warehouse.
ii) Materials sent to the site worth GH¢675,000 were still unused at the construction site as of 31 December 2022.
iii) Finstruct Ltd pays some of its workers the first week of the ensuing month after the end of the current month. GH¢57,000 is still owed for wages as of the close of the year 2022, and this was not included in the accounts.
iv) A bill amounting to GH¢45,000 was submitted late by Finstruct Ltd, and as of 31 December 2022, the bill had not yet been paid. This was not included in the accounts.
v) It is estimated that the cost to complete the project as of 31 December 2022 should be GH¢8,265,180.
vi) The following details are available on assets of Finstruct Ltd:

Required:
a) Compute the capital allowance for Finstruct Ltd for the year 2022. (6 marks)
b) Explain the tax rules on long-term contracts and compute the percentage of contract completion of the project. (4 marks)
c) Compute the chargeable income of Finstruct Ltd for the year ended 31 December 2022. (10 marks)

Answer

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Tags: Capital allowances, chargeable income, Construction Contracts, Corporate Taxation, Long-Term Contracts, Tax computation
Level: Level 3

Topic: Business income - Corporate income tax, Capital allowance
Series: MAR 2024

AT – Nov 2015 – L3 – Q2a – Capital allowance

Explaining the conditions under which the Ghana Revenue Authority grants capital allowances.

Question

Capital allowance is an incentive granted to all persons in business and investment. They are, however, granted upon fulfillment of certain conditions.

Required:
Explain fully the conditions under which GRA may grant Capital Allowance to a person.

Answer

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Tags: Capital Allowance, Corporate Taxation, Depreciable assets, Tax Incentives
Level: Level 3

Topic: Capital allowance
Series: NOV 2015

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

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

PT – May 2020 – L2 – Q4a – Capital Allowance and tax reliefs

Computation of capital allowance for Stella-VD Ltd for the 2017 and 2018 years of assessment.

Question

Staff Medical Bills: 3,700
Safety Wear for Staff: 10,500
Canteen Equipment purchased on 30/11/2018: 12,000
iv) Donation and Subscription

Goods given as Gratis to Customs Officials: 13,000
Donation of Goods to SOS Children Village: 10,000
Subscription to Association of Ghana Industries: 5,000
v) Wages and Salaries

Old Staff: 120,000
Fresh Graduates employed by Stella-VD Ltd: 26,000
Fresh Graduates constitute 0.9% of the total workforce
vi) Other Income

Answer

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Tags: Capital allowances, Corporate Tax, Depreciation, Fixed Assets
Level: Level 2

Topic: Capital allowance, Corporate Tax Liabilities
Series: MAY 2020

AT – Nov 2018 – L3 – Q5a – Petroleum operations, Capital allowance

Computation of tax payable for a petroleum company, including adjustments for financial gains, costs, and capital allowances.

Question

The following is relevant for the operation of AB Ltd, operating in the upstream petroleum sector for the 2017 year of assessment:

Details	$
Revenue	100,000,000
Cost	80,000,000
Profit	20,000,000

The following additional information forms part of the above:

The revenue includes financial gain from swaps of $1,000,000.
The financial cost of $1,200,000 was added to the cost.
The cost includes depreciation of $200,000.
Research and development (R&D) of $100,000 was added to the cost of operation.
Revenue on 20,000 barrels of oil sold was added to revenue. The price used on the 20,000 barrels was $70 in its tax returns, but the agreed price is now $67, certified by the Petroleum Unit of the Ghana Revenue Authority.
Written down value (WDV) as of 31/12/2016 was $1,800,000 after granting capital allowance the second time as of 2016 year-end. This information is yet to be adjusted.

Required:
i) Compute the tax payable. (6 marks)
ii) Comment on the deductibility of financial cost in petroleum operations. (2 marks)

Answer

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Tags: Capital Allowance, Financial Costs, Petroleum taxation, Tax computation, Taxable Income
Level: Level 3

Topic: Capital allowance, Petroleum operations
Series: NOV 2018

TF – May 2018 – L3 – Q2a – Capital Allowance

Calculate the capital allowances and chargeable income of Sekyiwaa Annam Industries Ltd for the year 2017.

Question

The company recorded a net profit of GH¢762,800 for the year ended 31 December 2017 after taking into account the following transactions in the income statement:

Asset Cost (GH¢)
Factory Building 800,000
Plant and Machinery 510,000
Office Building 420,000
Furniture and Office Equipment 60,000
Motor vehicles (Goods Vans) 130,000
Computers 30,000

Required:
i) Calculate the capital allowances claimable by Sekyiwaa Annam Industries Limited for the year ended 31 December 2017 using all the available information.
(8 marks)

ii) Calculate the chargeable income of Sekyiwaa Annam Industries Limited for the year ended 31 December 2017 and the tax payable.
(6 marks)

Answer

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Tags: Capital Allowance, chargeable income, Corporate Tax, Manufacturing, Taxable Income
Level: Level 3

Topic: Business income - Corporate income tax, Capital allowance
Series: MAY 2018

AT – April 2022 – L3 – Q4 – Capital allowance | Business income – Corporate income tax

Calculate capital allowance and chargeable income for Joefel Company Ltd. Explain sources of revenue from upstream petroleum operations in Ghana.

Question

Additional information:
1) Advert and publicity
Radio and television 3,300
Newspaper advert 2,400
Permanent signboard at the company’s entrance in 2020 18,000

2) Installation of plant and others
Installation of plant 21,500
Heavy duty Generator bought in 2019 to support Plant and Machinery 20,500
General maintenance before the use of the plant 18,000

3) Staff Welfare
Staff medical bills 3,700
Safety wear for staff 10,500
Canteen Equipment purchased on 30 November 2020 12,000

4) Donation and Subscription
Goods given as gratis to customs officials 13,000
Donation of goods to SOS Children Village 10,000
Subscription to Association of Ghana Industries 5,000

5) Wages and Salaries
Old staff 120,000
Fresh graduates employed by Joefel Company Ltd. (Fresh graduates
constitute 1% of total workforce) 26,000

Note 2) above has not been included in the plant and machinery acquired.

Required:

Answer

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Tags: Additional Interest, Additional Oil Entitlement, Capital Allowance, Carried Interest, chargeable income, Petroleum Operations, Royalty
Level: Level 3

Topic: Business income - Corporate income tax, Capital allowance
Series: APR 2022

AT – Aug 2022 – L3 – Q4 – Capital Allowance

Calculation of capital allowances, provisional tax, chargeable income, company tax, and additional tax liability for Zimbo Ltd for the year ended 31 December 2021.

Question

Answer

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Tags: Business income, Capital Allowance, chargeable income, Provisional Tax, Rental Tax
Level: Level 3

Topic: Capital allowance
Series: AUG 2022

AT – NOV 2021 – L3 – Q3 – Business income – Corporate income tax | Capital allowances

Compute taxable income and tax payable for Partey Ltd after business restructuring involving transfer of assets to employees and disposal of assets.

Question

The business consultant’s recommendations were agreed and implemented in the year ended 31 December 2019 as follows:

i) The Takoradi refinery was transferred to the employees at market value to be operated as independent business ventures. The inventory in the warehouse was included in the transfer.

Both the disposal of the Weija refinery and the transfer of the Takoradi refinery to their employees were made on 30 March 2019.

Details of the fixed assets disposed and transferred are:

Partey’s statement of profit or loss for the year ended 31 December 2019 in respect of
Mamprobi is as follows:

Required:

a) Outline the tax consequences for Partey due to the transfer of the fixed assets and inventory to the employees on 30 March 2019, stating when any taxes should be paid. (4 marks)

b) Assess the tax implications:

i) When the proceeds from the realisation of depreciable assets exceed the written down values? (1.5 marks)

ii) When the proceeds from the realisation of depreciable assets are less than the written down values? (1.5 marks)

c) Calculate the taxable income of Partey for the year ended 31 December 2019. (8 marks)

d) Explain how shareholders of a company are taxed? (5 marks)

Answer

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Tags: Asset transfers, Business restructuring, Capital allowances, Corporate tax computation
Level: Level 3

Topic: Business income - Corporate income tax, Capital allowance
Series: NOV 2015

AT – MAR 2024 – L3 – Q4 – Business Income – Corporate Income Tax | Capital Allowance

Covers capital allowance computation, tax rules on long-term contracts, and chargeable income calculation.

Question

Finstruct Ltd has a financial year ending on 31 December each year. On 31 December 2022, the accounts appropriate to the airport contract contained the following:

Cost Item	GH¢
Cost of construction materials	25,500,000
Direct wages of construction staff	22,100,000
Hire of special equipment	300,000
Cost of soil test	100,000
Purchase of fuel and lubricants	750,000
Consultancy services	135,000

Answer

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Tags: Capital allowances, chargeable income, Construction Contracts, Corporate Taxation, Long-Term Contracts, Tax computation
Level: Level 3

Topic: Business income - Corporate income tax, Capital allowance
Series: MAR 2024

AT – Nov 2015 – L3 – Q2a – Capital allowance

Explaining the conditions under which the Ghana Revenue Authority grants capital allowances.

Question

Capital allowance is an incentive granted to all persons in business and investment. They are, however, granted upon fulfillment of certain conditions.

Required:
Explain fully the conditions under which GRA may grant Capital Allowance to a person.

Answer

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Tags: Capital Allowance, Corporate Taxation, Depreciable assets, Tax Incentives
Level: Level 3