QUESTION ONE Mr. Think Hard was employed by What a Question Ltd on 1st August 2011 on salary scale of GH5,500 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) ii) iv) V) vi) vii) viii) Well-furnished rented flat by his employers in respect of which he pays GH150 per month as rent by way of deductions at source. Watchman allowance of GH200 per annum, paid directly to Mr. Think Hard. Risk allowance of GH925 per annum Leave allowance of GH600 per annum Garden boy allowance of GH 150 per quarter paid directly to Mr. Think Hard. Medical allowance of GH700 per annum Meals allowance of GH55 per month Two maidservants each on wages of GH250 per annum. The amount is paid to the maid servants directly by the company. Bonus of 40% on annual basic salary Duty post allowance of GH150 per month. He has Life Assurance Policies with EIC ltd. Below are the details: ix) X) xi) Policy Sum Assured (GH) Annual Premium (GH) A 4,000 420 B 2,800 240 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 have 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 9:28 Smoke 2021 RESIT.pdf QUESTION TWO Below is the Profit and Loss Accounts of JUKO Enterprise, a sole trading business dealing in second hand women underwear in Accra for the year ended 31/08/06 submitted to the Commissioner of Internal Revenue on 19/12/06, . GHC GHC Gross Operating Profit 1.880,000 Profit on sale of assets 95,000 1.975,000 Less: General & Admin Expenses Salaries and wages 1,000,000 Rent 60,000 Insurance 54,000 Acquisition of Trade Mark 30,000 Research and Development 59,000 Painting of Premises $6,000 Loans to staff written offs 53,850 Advertisement 49,000 Staff welfare 103,000 Travelling and Transport Donations and subscription 65,200 Bad debt 40,000 Depreciation 81.500 1.732.650 Net Profit 242.350 80,000 The following notes relate to the accounts 1. Research and Development Expenditure: a Acquisition of new delivery van b. Staff Training Cost 28,500 31,000 20.500 28,500 70,000 33,800 2. Advertisement: a. Cost of neon sign b. Media adverts 3. Staff welfare: a. Refund of staff medical bills b. Cost of canteen equipment 4. Donations and subscription: a. Donation to the Ghana Heart Foundation b. Goods given gratis to customs officials c. Subscription to Ghana Sole Traders Association 5. Bad debt: a. General provision b. Specific bad debt 40,000 13,200 12,000 25,000 15,000 6. The business imported second hand goods worth GHC120,000 and sold all but at the time of the of the preparation of the accounts only GHC80,000 of the amount had been paid. This is reflected in the accounts. 7. Capital allowance is agreed as GHC65,240, REQUIRED. A. Compute the chargeable income and tax liability of JUKO Ent for 2006 year of assessment. ( (10 marks) B. Ghana Revenue Authority has embarked on comprehensive reforms geared towards "Voluntary Tax Compliance. Among the reforms include requesting tax payers to determine their tax liabilities and consequently the tax payable. This has roundly been criticized by some taxpayers as increasing cost of compliance or doing business. You have been engaged by the Ministry of Finance to help Ghana Revenue Authority educate taxpayers on these reforms. You are required to explain to taxpayers: i. Self-Assessment Tax Regime (4 marks) ii. Critically examine the benefits taxpayers stand to derive from Self-Assessment Regime that has become part of tax administration in Ghana (6 marks) QUESTION ONE Mr. Think Hard was employed by What a Question Ltd on 1st August 2011 on salary scale of GH5,500 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) ii) iv) V) vi) vii) viii) Well-furnished rented flat by his employers in respect of which he pays GH150 per month as rent by way of deductions at source. Watchman allowance of GH200 per annum, paid directly to Mr. Think Hard. Risk allowance of GH925 per annum Leave allowance of GH600 per annum Garden boy allowance of GH 150 per quarter paid directly to Mr. Think Hard. Medical allowance of GH700 per annum Meals allowance of GH55 per month Two maidservants each on wages of GH250 per annum. The amount is paid to the maid servants directly by the company. Bonus of 40% on annual basic salary Duty post allowance of GH150 per month. He has Life Assurance Policies with EIC ltd. Below are the details: ix) X) xi) Policy Sum Assured (GH) Annual Premium (GH) A 4,000 420 B 2,800 240 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 have 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 9:28 Smoke 2021 RESIT.pdf QUESTION TWO Below is the Profit and Loss Accounts of JUKO Enterprise, a sole trading business dealing in second hand women underwear in Accra for the year ended 31/08/06 submitted to the Commissioner of Internal Revenue on 19/12/06, . GHC GHC Gross Operating Profit 1.880,000 Profit on sale of assets 95,000 1.975,000 Less: General & Admin Expenses Salaries and wages 1,000,000 Rent 60,000 Insurance 54,000 Acquisition of Trade Mark 30,000 Research and Development 59,000 Painting of Premises $6,000 Loans to staff written offs 53,850 Advertisement 49,000 Staff welfare 103,000 Travelling and Transport Donations and subscription 65,200 Bad debt 40,000 Depreciation 81.500 1.732.650 Net Profit 242.350 80,000 The following notes relate to the accounts 1. Research and Development Expenditure: a Acquisition of new delivery van b. Staff Training Cost 28,500 31,000 20.500 28,500 70,000 33,800 2. Advertisement: a. Cost of neon sign b. Media adverts 3. Staff welfare: a. Refund of staff medical bills b. Cost of canteen equipment 4. Donations and subscription: a. Donation to the Ghana Heart Foundation b. Goods given gratis to customs officials c. Subscription to Ghana Sole Traders Association 5. Bad debt: a. General provision b. Specific bad debt 40,000 13,200 12,000 25,000 15,000 6. The business imported second hand goods worth GHC120,000 and sold all but at the time of the of the preparation of the accounts only GHC80,000 of the amount had been paid. This is reflected in the accounts. 7. Capital allowance is agreed as GHC65,240, REQUIRED. A. Compute the chargeable income and tax liability of JUKO Ent for 2006 year of assessment. ( (10 marks) B. Ghana Revenue Authority has embarked on comprehensive reforms geared towards "Voluntary Tax Compliance. Among the reforms include requesting tax payers to determine their tax liabilities and consequently the tax payable. This has roundly been criticized by some taxpayers as increasing cost of compliance or doing business. You have been engaged by the Ministry of Finance to help Ghana Revenue Authority educate taxpayers on these reforms. You are required to explain to taxpayers: i. Self-Assessment Tax Regime (4 marks) ii. Critically examine the benefits taxpayers stand to derive from Self-Assessment Regime that has become part of tax administration in Ghana (6 marks)