QUESTION $1$

a$)$ It is the opinion of some people that borrowing by government may be better option in some cases than imposition of taxes as taxes have the potential of creating resentment and upheavals during a period of economic difficulties.

Required:

i$)$ What is public debt?

ii$)$ Critically examine Public debt as an alternative to Taxation and its positive and negative effects on the economy of Ghana.

b$)$ In line with best practices, the Ghana Revenue Authority is mandated to encourage voluntary Tax compliance to shore up revenue. This, among others includes responding to taxpayers$$ requests promptly.

Required:

i$.$ Explain briefly the terms Practice Notes, Private Ruling, and Class Rulings.

ii$.$ State the relevance of Class ruling and Private Ruling

QUESTION $2$

a$.$ XYZ Ltd runs a business with a basis period from January to December each year. The following information is relevant to its business operations for $2020$ year of assessment. Chargeable Income from business operations GH$40,000.$ The chargeable income was arrived at after the following adjustments were made: Financial cost incurred on hedged transactions GH$150,000.$ Financial gain from hedged transactions GH$60,000.$ Required:

i$)$ Compute the financial cost to be allowed in $2020$ year of assessment.

ii$)$ Advise management on the above results.

b$.$ State and explain the following in accordance with as Section $8(2)$ of the Income Tax Act, $2015($Act $896)$ as amended.

i$.$ Excluded expenditure

ii$.$ Domestic expenditure

iii. Mention three general rules for the allowability of business expenses in accordance with the Income Tax Act, $2015($Act $896)$ as amended.

c$.$ The Commissioner$-$General of the Ghana Revenue Authority expects persons conducting business with Related Parties to ensure that the transaction is at arm$$s length.

Required: Explain the arm$$s length principle in tax transactions.