Taxation of Capital Gains – Page 2

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 – April 2022 – L2 – Q5b – Taxation of Capital Gains

Explain the circumstances under which an asset is considered realised for taxation purposes.

Question

A gain made by a person from the realisation of an asset is the total amount of consideration received for the sale of the asset less the cost of the asset at the time of realisation.

Required:
When is an asset realised? (5 marks)

Answer

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Tags: Capital Gains, Realisation of Assets, Taxable Events

Topic: Realisation of Assets, Taxation of Capital Gains
Series: APR 2022

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 – 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

PT – May 2020 – L2 – Q5a – Taxation of Capital Gains

Computation of capital gains tax on the sale of a house by Papa Dekey in 2019.

Question

a) Papa Dekey purchased a house in the Madina area of Greater Accra Region in the year 2010 for GH¢400,000. The acquisition expenses incurred by the company amounted to GH¢50,000.

In June 2019, Papa Dekey sold the house for GH¢700,000 while the incidental expenses incurred were as follows:
Description GH¢
Agent’s Commission 10,000
Solicitors Fees 8,000
Advertising 3,000
Accountant’s Fees 10,000
Income Tax on Rent 6,000
Valuation Fees 20,000
Required:
Compute the Capital Gains Tax payable by Papa Dekey.
(5 marks)
Papa Dekey also sold for GH¢1,000,000 in September 2019, Ghana Government Securities
which cost GH¢800,000 in the year 2010. The incidental selling expenses amounted to
GH¢50,000 in respect of Government Securities.

Required:
Compute the Capital Gains Tax payable by Papa Dekey.

Answer

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Tags: Acquisition Expenses, Capital Gains, Property Sale, Tax computation
Level: Level 2

Topic: Taxation of Capital Gains
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 – July 2023 – L2 – Q5b – Taxation of Capital Gains

Calculate the capital gains tax payable on the sale of a warehouse with associated costs.

Question

Ann sold a warehouse on 13 June 2022 for GH¢640,000. The warehouse was purchased on 14 December 2020 for GH¢328,000 for investment purposes. Ann incurred the following:

Description	Amount (GH¢)
Legal fees	10,000
Accountant’s fees	15,000
Transfer tax	1,000

Required:
Calculate the tax payable.

Answer

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Tags: Asset Disposal, Capital Gains, Tax Calculation, Warehouse Sale
Level: Level 2

Topic: Taxation of Capital Gains
Series: JULY 2023

PT – May 2021 – L2 – Q5b – Taxation of Capital Gains

Explain the taxation rules for asset transfers to a spouse or former spouse during a divorce settlement or upon death.

Question

On the death or as part of a divorce settlement or bona fide separation agreement, an individual may transfer an asset to a spouse or former spouse.

Required:
What are the taxation rules on this arrangement?

Answer

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Tags: Asset Transfer, Capital gains tax, Death, Divorce, Separation
Level: Level 2

Topic: Taxation of Capital Gains
Series: MAY 2021

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

Explanation of the tax treatment for the realization of assets in the event of a merger, amalgamation, or reorganization.

Question

Explain the realization of an asset by way of merger, amalgamation, or reorganization under section 47 of Income Tax Act, 2015 (Act 896). (5 marks)

Answer

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Tags: Amalgamation, Asset Realization, Capital Gains, Income Tax Act, Merger, Reorganization
Level: Level 2

Topic: Taxation of Capital Gains
Series: DEC 2023

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

Calculation of capital gain on the realization of shares and the tax payable.

Question

Yaa Baby acquired shares in Adom Ltd as follows:

Date	Transaction	No. of shares	Share price	Value (GH¢)
01/02/19	Bought 1,000 shares	1,000	2.00	2,000
01/03/19	Bought 1,500 shares	1,500	2.50	3,750
01/06/20	Bought 2,000 shares	2,000	3.00	6,000
01/04/21	Bought 1,750 shares	1,750	4.00	7,000
01/12/21	Received rights issue (1 share for every 10 shares)	625	1.50	937.50
31/12/21	Sold 3,800 shares		6.00	22,800

Required:
Compute the capital gain on the realization and the tax payable. (5 marks)

Answer

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Tags: Capital gains tax, Income Tax Act, Share Sale, Tax computation, Tax law
Level: Level 2

Topic: Taxation of Capital Gains
Series: DEC 2023

PT – Aug 2022 – L2 – Q5c – Taxation of Capital Gains

Compute the capital gains tax on shares sold by Fortune in 2020.

Question

Fortune acquired shares in Obolo Company Ltd, a manufacturing company situated in Nsawam, and the following transactions took place:
i) He acquired 100,000 ordinary shares for GH¢115,600 on 14 March, 2020. He also acquired another 220,000 shares on 26 November, 2020 at a price of GH¢1.2 per share.
ii) On 24 December, 2020, he sold 235,000 shares for GH¢305,500 which attracted a sales commission of 1.5% of the sales value to the brokerage firm.
Required:
Compute the capital gains tax.

Answer

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Tags: Brokerage Fees, Capital Gains, Investment, Shares, Taxable Gains
Level: Level 2

Topic: Taxation of Capital Gains
Series: AUG 2022

PT – Nov 2021 – L2 – Q5c – Taxation of Capital Gains

Compute the appropriate tax for gifts received by Flowqueen for the 2020 year of assessment.

Question

Flowqueen, a sole proprietor of Freddy Ent, was adjudged the best distributor of Mino Ltd for the year 2020 and received the following gifts:

70 Inches Samsung LED valued at GH¢50,000 from Freddy Ltd.
Toyota saloon car worth GH¢80,000 from the clients of Freddy Ltd.

Her income from the business for the 2020 year of assessment amounted to GH¢120,000.

Required:
Compute the appropriate tax or taxes of Flowqueen for the 2020 year of assessment.

Answer

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Tags: Business income, Capital gains tax, Gift tax, Sole Proprietor, Tax computation
Level: Level 2

Topic: Taxation of Capital Gains
Series: NOV 2021

PT – Nov 2020 – L2 – Q5a – Taxation of Capital Gains

Compute capital gains tax payable on the sale of properties.

Question

Abena Morgan acquired two mansions (one at East Legon, Accra, and the other at Kwadaso, Kumasi) on 1 January 2010 at the cost of GH¢2,000,000 and GH¢11,500,000 respectively. Abena Morgan lives in the property at East Legon. On 10 March 2019, she used GH¢2,500,000 to convert part of this dwelling house into a self-contained flat and sold it to her younger brother for GH¢3,300,000.
The property at Kwadaso in Kumasi consists of two (2) detached bungalows, and she sold one of the bungalows to her elder sister for GH¢6,300,000, also on 10 March 2019.
The market value of the apartment sold to her younger brother at the time of sale was GH¢4,000,000, while the market price of the bungalow sold to her elder sister was GH¢8,750,000. She had used GH¢1,950,000 to refurnish the bungalow that was sold to her sister. The market price of the unsold bungalow on 10 March 2019 was GH¢11,000,000.

Required:
Compute the capital gains tax payable by Abena Morgan. (5 marks)

Answer

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Tags: Capital Gains, Property Sales, Real Estate, Taxation
Level: Level 2

Topic: Taxation of Capital Gains
Series: NOV 2020

PT – Mar 2024 – L2 – Q5b -Taxation of Capital Gains

Compute the tax payable by Atta Panin on the sale of shares.

Question

The following information relates to Atta Panin:

Required:
Compute the tax payable. (5 marks)

Answer

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Tags: Capital Gains, Investment income, Shares, Tax computation
Level: Level 2

Topic: Taxation of Capital Gains
Series: MAR 2024

Topic: Taxation of Capital Gains

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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 – April 2022 – L2 – Q5b – Taxation of Capital Gains

Explain the circumstances under which an asset is considered realised for taxation purposes.

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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 – 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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PT – May 2020 – L2 – Q5a – Taxation of Capital Gains

Computation of capital gains tax on the sale of a house by Papa Dekey in 2019.

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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 – July 2023 – L2 – Q5b – Taxation of Capital Gains

Calculate the capital gains tax payable on the sale of a warehouse with associated costs.

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PT – May 2021 – L2 – Q5b – Taxation of Capital Gains

Explain the taxation rules for asset transfers to a spouse or former spouse during a divorce settlement or upon death.

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

Explanation of the tax treatment for the realization of assets in the event of a merger, amalgamation, or reorganization.

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

Calculation of capital gain on the realization of shares and the tax payable.

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PT – Aug 2022 – L2 – Q5c – Taxation of Capital Gains

Compute the capital gains tax on shares sold by Fortune in 2020.

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PT – Nov 2021 – L2 – Q5c – Taxation of Capital Gains

Compute the appropriate tax for gifts received by Flowqueen for the 2020 year of assessment.

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PT – Nov 2020 – L2 – Q5a – Taxation of Capital Gains

Compute capital gains tax payable on the sale of properties.

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PT – Mar 2024 – L2 – Q5b -Taxation of Capital Gains

Compute the tax payable by Atta Panin on the sale of shares.

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