QUESTION TWO a. Tax administration in Ghana has seen a number of reforms since the 1940s, with the most recent being the integration of the Revenue Agencies to an Authority to act as a one stop shop as per the Ghana Revenue Authority Act, 2009 (Act 791). Ghana Revenue Authority (GRA) is operated under three divisions namely, Domestic Revenue Tax, Custom and Support Service of which each of them play an important roles in mobilizing revenue to Government of Ghana. During each fiscal year, Ghana Revenue Authority generates taxes revenue using both Source based-taxation and Resident based-taxation methods. The Revenues below represent Tax generated by Commissioner General of Ghana Revenue Authority for 2019 year of assessment. Use it to answer the questions that follow.

GH 000

Other International Trade Taxes 6,500

Excise duties 2,000

Valued Added Tax (VAT) 4,000

Import VAT 3,000

Property taxes 3,000

Vehicle Income Tax Stickers (VITS) 2,000

Petroleum Taxes 1,200

National Health Insurance Levy 2,000

Capital Gain Taxes 7,000

Export and Import Duties 19,000

Excise Tax Stamps 3,000

Corporate Taxes 2,000

PAYE 8,000

Communications Service Tax (CST) 4,000

Total Revenue 88,500

Required:

i. Outline the responsibility and structure of Domestic Tax Revenue Division (DTRD)

ii. Compute the total taxes collected by this Domestic Tax Revenue Division.

iii. Calculate the total taxes collected by Custom Division.

iv. Compute the total taxes collected by Support Service Division.

v. Evaluate how best GRA had been arranging its affairs to achieve low compliance and administrative cost.

b. ABC Ltd is a company under self-assessment and prepares accounts to 31st March each year. Its estimated chargeable income for the year 2016 was GH 1.2 million. However, the Companys Returns which were submitted to the Large Tax Payers Office at the VAT House on 1st April, 2017 showed a chargeable income of GH1.8 million. During this period, Bank of Ghana policy rate was constant at 24% per annum. ABC Ltd made its first installment payment on 31st March, 2016.

Required Compute the Interest payable by the company.

(Hint: Your answers should be in line with section 70 of Revenue Administration Act 2016 (Act 915))

QUESTION THREE Twist manufacturing Company Limited (Twist) stated operation on 27th May, 2018 and prepare accounts to 31st December each year. The following transactions took place.

i. In January, 2017, Twist acquired Nissan Patrol at the price of GH150,000 ii. In June, 2018, Twist acquired three Home-Used Laptops at GH 500 each, of which the Managing Director uses one of them for his personal business.

iii. In June, 2018 Twist rented factory building of which it pays annual rentals of GH 20,000. The rented building was constructed at the cost of GH 500,000. iv. In July, 2018, the engine of the Nissan Patrol was changed at a cost of 18,075. v. In August, 2018 Twist paid for Goodwill amounting to GH100,000 for 5 years.

vi. In March 2019, it exchanged the vehicle for office equipment. The value of the office equipment agreed with the owner was GH80,000.00. The exchange was deemed satisfactory to both parties and documentations were carried through.

vii. In April, 2019, the building was gifted to Twist manufacturing Company Limited and all the necessary documents were carrying through. The market value at the time of receipt was equivalent to the cost at which the building was constructed. Twist insured the office building with We care Insurance Company and paid monthly premium of 200 per month.

viii. In November, 2019, an explosion occurred in Twist Limited which destroyed the factory building completely. We care Insurance Company compensated Twist an amount of GH 245,000.

ix. Twist leased plant for 6 years in January, 2020 of which Twist will be paying an annual rental of GH120,000. The plant can be acquired outright for cash of GH450,000. The implicit interest rate of the lease is 10% and the expected useful life of the building is 7 years.

x. In February, 2020, office equipment was sold for a consideration of GH 54,000

Required:

i. Compute Capital Allowance for Twist manufacturing Company Limited for the relevant years of assessment in accordance with the third Schedule of Income Tax Act 896 (10 marks) (Note your computation should not exceed 2020 year of assessment)

ii. Provide notes to support your computation in (i) above.