A. Mr. Think Hard was employed by What a Question Ltd on 1st August 2011 on salary scale of GH¢5,500 x 600-9,500 as the financial controller of the company. He is entitled to a company car and fuel for both official and private use. He is provided with the following as part of his conditions of service for 2015 Year of Assessment.
i) Well-furnished rented flat by his employers in respect of which he pays GH¢150 per month as rent by way of deductions at source.
ii) Watchman allowance of GH¢200 per annum, paid directly to Mr. Think Hard.
iii) Risk allowance of GH¢925 per annum
iv) Leave allowance of GH¢600 per annum
v) Garden boy allowance of GH¢150 per quarter paid directly to Mr. Think Hard.
vi) Medical allowance of GH¢700 per annum
vii) Meals allowance of GH¢55 per month
viii) Two maidservants each on wages of GH¢250 per annum. The amount is paid to the maid servants directly by the company.
ix) Bonus of 40% on annual basic salary
x) Duty post allowance of GH¢150 per month.
xi) He has Life Assurance Policies with EIC ltd. Below are the details:
Policy Sum Assured (GH¢) Annual Premium (GH¢)
A 4,000 420
B 2,800 240
C 16,000 1,650
D 5,000 525
In addition to his employment income, Mr. Think Hard have other investment which also provides him with income every year. He has an investment of which he received a yearly dividend of GHC75,000 from Ecobank Ghana Ltd on his shares that was acquired on some few years ago. He obtained a loan from Ghana Home Loans amounting to GHC200,000 to put up a house which he pays 10% of it as a loan interest per annum. The house was fully rented out to tenants in 2015 and he receives GHC14,000 monthly rent from his building which is located at Santa Maria in Accra and he incurs the following necessary expenses.
a. Repairs and maintenance GHC20,000
b. Property rate paid to AMA GHC 8,000
He is a divorcee with ten children depending on him; four of whom are in SHS in Accra, and the rest are gainfully employed; he caters for 3 of his aged relatives. He contributes 7% of his salary
towards the company’s Provident Fund which has been approved by the National Pension Authority, he also contributes 5.5% of salary to the SSNIT.
Required: Compute his Chargeable Income and Tax Liabilities for 2015 Year of Assessment (15 Marks)
B. Using the information below, demonstrate to them how capital allowance is computed for all relevant years of assessment using the pool system. (10 marks)
MUMUADU LTD is a company which commenced business on 12th May, 2011 preparing accounts to 31st December each year. In 2011 year of assessment, he acquired the following assets for use in the business.
i. On 31/08/11 they bought a motor van amounting to GHS61,000
ii. On 1/9/11 they also purchased a mini bus to transport their staffs to work every morning costing GHS83,000.
iii. On 1/9/11 they also purchased plant and machinery costing GHS78,000
iv. The company purchased a software that can help encrypt their information system costing GHS30,000 on 1/10/11
v. They purchased computes valued at GHS20,000 on 8/10/11
vi. They spent GHS30, 000 to acquire Furniture and Fittings for his office.
vii. On 30/7/12, they disposed off the motor van purchased on 31/08/11 for GHS14,000
viii. In 2013 year of assessment, he replaced the motor van bought on 31/08/06 at a cost of GHS10,000
ix. They sold some of their furniture on 12/08/13 for GHS8, 000
x. New computer and accessories were purchased within 2013 year of assessment for GHS30,000.
TOTAL – 25 MARKS