Trial Question 1

Agya Moses has been in employment at KNUST MSC

Limited since 1^st April 2014 as Financial Controller on a salary scale of GHS 24,000 GHS 12,000.00 GHS

120,000.

His service conditions include the following:

1. Provision of a well-furnished bungalow in respect of which he pays GHS 500 per month as rent by way of deduction at source.
2. Provision of a Land Cruiser Prado Vehicle with driver and fuel for both official and private purposes iii)Social Security & National Insurance Trust contribution of 7%

His Returns submitted to Ghana Revenue Authority (GRA) on 8^th January, 2021 in respect of 2020 Year of Assessment show the following unconsolidated allowances and benefits:

1. Responsibility allowance of GHS 800 per month for which the company pays him cash.
2. Utilities allowance per annum, GHS 7,200
3. Risk allowance of 15% on basic salary and car maintenance allowance of GHS 3,600 for the year. iv) Leave allowance of GHS 2,400 per annum.

5. Watchman and a garden boy on salary of GHS350 and GHS400 per month respectively.
6. Medical allowance per year GHS 4,800. vii) Meals allowance of GHS 600 per month.

viii)Two house helps on GHS 380 wages each per month. The amount is paid to Agya Moses in cash directly by the company.

9. Bonus of 30% of annual basic salary.
10. Monthly Overtime allowance of GHS 1,000 xi) Unaccountable Entertainment allowance of GHS 6,000 a year.

Additional Information

1. On 1^st January, 2019 he was given a car loan of GHS 10,000 to purchase a car for his wife at a simple interest rate of 15.0% per annum. The institution gives similar facility to any other customer at the rate of 28% but the statutory rate (Bank of Ghana Rate) is 25.0%. The loan is to be paid within the period of 24 months.
2. He is married with five (5) children, three (3) of whom are in SHS, the rest are working.
3. He is also responsible for the upkeep of four (4) aged relatives of his.
4. He is currently pursuing a Bachelor of Science degree in Accounting at KNUST where he incurred GHS 13,000 by way of educational expenses in 2020
5. His December, 2020 salary was paid on 4^th January 2021. However all allowances which are unconsolidated were paid in full during 2020 except those tied to the basic salary.

Required:

For the 2020 Year of Assessment, calculate his:

1. Basic salary
2. Assessable income
3. Chargeable income
4. Tax liability