TAXATION QUESTION

ATTEMPT ALL QUESTIONS FROM THIS SECTION.

Report from their Operations:

Below is the Income Statement of CADE Company Limited, located in Techiman. The statement covers the year ended 31/12/2018.

	GH000	GH 000
Gross Profit		775,000
Other Income		10,000
		785,000
Less: Management Salaries	43,750
Income tax 1/1/2017	4,000
Hire of Equipment	18,125
Depreciation	3,500
Staff Salaries	21,250
Office Rent	9,000
Office Expenses	22,500
Casual Labour	9,250
Provisions for Bad debt	250
Vehicle Repairs	19,500
Business Promotions	5,000
Donations	11,375
Repairs of Factory Premises	28,500
Drawings	1,250
Bad Debts	73,750
Advertisements	1,500	(272,500)
Net Profit		512,500

Notes to the Accounts:

1. Donations consist of the following: Ampim Darkowaa Girls Football Club GH7,500,000, National Trust Fund GH125,000 and Bereaved members of staff GH3,750,000 as part of funeral policy approved by the board.
2. Business Promotions:
   1. Wedding reception for Directors wedding day GH3,250,000
   2. Cost of entertaining business partners GH1,750,000
3. Repairs to Factory premises: GH

1. Cost of New tiles for floor 16, 000,000
2. New gates for factory 10,000,000
3. Repair of cracks in the wall 2,500,000

4. Casual Labour is made up of Factory Hands and Wages of employees in Directors Private Property amounting to GH6,250,000 and GH3,000,000 respectively.
5. Vehicle Repairs includes cost of new engine of GH4,500,000, fuel & lubricants of GH8,750,000 and Tyres and Tubes repairs of GH6,250,000.
6. Office Expenses includes New personal computer and stationary amounting to GH18,750,000 and GH3,750,000 respectively.
7. Office rent paid of GH 9,000,000 represents two years rent
8. The written value of the companys chargeable assets as at 31/12/2017 were as follows:

1. Building (cost GH 6,250,000) NBV GH5,000,000
2. Motor Vehicles GH22, 500,000
3. Plant and Machinery GH7,500,000
4. Computers GH5,000,000

Sale of Property:

SSA Company Limited in 2016, built a two story building with four flats (two flats per floor) at Wenchi at a cost of GH 60,000.00. In the year 2017, owing to flooding caused by rainwater, he had to undertake repairs to the building which cost him 5% of the original cost of the building. Kakapeakaa has an insurance policy with SIC Ltd for his family and his building in the sum of GH2,000.00 and GH1,500.00 respectively. All premiums have been duly paid to that value. He decided to relocate from Wenchi to Kintampo and sold one floor to Dabidabi Construction Company Limited, who were working on the Techiman-Kintampo road for GH 75,500.00 on 2^nd August, 2018, through Realtime Estate Agency who were paid 2% of the sales price as commission.

Required:

0. 1. Determine CADEs Chargeable income for the 2018 year of assessment. (20 marks)
   2. (22 marks)
1. Calculate the Capital Gains Tax payable by SSA Company Limited, if any, on the disposal of his building.

b. If SSA Company Limited used GH48,000.00 out of the proceeds received from the sale of his building to acquire a building in Kintampo as envisaged by him, 1 December 2018, what would be the Capital Gains Tax payable by him, if any?

TAXATION QUESTION