Question 1
a. It has been argued that gain is only made on a capital asset if the same is actually sold
at a price higher than its cost. The Income Tax Act, 2015 (Act 896) uses the word
‘Realisation of assets and liabilities’ for the computation of capital gain.
Required:
Explain vividly to a layperson what constitutes the realisation of an asset and the
various ways by which assets or liabilities may be realised under Act 896. (10 marks)
b. Mr Gakpo acquired a house at Dansoman in 2019 at GH¢260,000.00. He spent an
amount of GH¢44,000.00 to carry out some repair work in the house. In 2022, he
decided to sell the house. He, therefore, engaged a contractor to renovate the house to
attract buyers. He spent an amount of GH¢87,400.00 on the renovation. He also
engaged a sales agent who sold the house in June 2023 for GH¢520,000.00 but
charged a commission of 7.5% of the sale value.
Required:
i. Determine the gain (if any) Mr Gakpo made on the sale of the house.
ii. What are the tax implications of Mr. Gakpo’s transactions?
Question 2
a. Outline the conditions precedents for the grant of Capital Allowance in the
computation of a person’s income from business.
b. Classes 1 to 3 assets follow the pooling system in the computation of Capital
Allowance. Please explain what the pooling system is and how it operates.
c. Below is a list of depreciable assets used by Osei & Co. in the production of income
from business:
Floppy disk, Stores located at Adum, USB flash drive, HP laptop, Memory card,
EEPROM, Optical disc, pen drive, projector, BMW 5 Series, Hatchback, Zip drive,
Tractor, Truck, Forklift, Scooter, Autorickshaw, trailers, plant and machinery used for
manufacturing, excavator, two-story building at Adum, a duty post, iPhone 7 plus,
land situate at Suame, goodwill, trademark, motorcycle, licences, patents, copyrights,
Yacht, Ship, canoes, aircraft, Train, fittings and furniture, a shotgun and magnetic
tape.
Required:
In a tabular form, arrange the assets according to their respective classes, indicating
the depreciation rate and the method of computing Capital Allowance.
Question 3
Mr Beyuo is an employee of Adams Reality Ltd, a bakery firm with a basic salary of GH
¢128,500.00 annually. His condition of service includes the following: provision of a pick-up
for both official and private use and cash allowance of GH¢2000.00 each month for fuel,
provision of accommodation with furnishing at the business premises of the company for
which he pays 5% of his basic salary as rent to his employer. Other benefits available to him
are a bonus of GH¢24,000.00, accountable entertainment allowance of GH¢1,500.00 per
month, lunch allowance of 7.5% of the monthly basic per month, Risk allowance of GH
¢500.00 per month, Inconvenience allowance of 7.5% of the monthly basic per month, house
help allowance of GH¢400.00, duty post allowance of GH¢1,200.00 per month, utility
allowance of 15% of the annual basic salary. His employer awarded him a flat-screen TV
valued at GHS 5,500.00 for emerging as the best employee for the 2022 basis period. He sold
it to Akosua at GH¢4,325.00. He contributed 5.5% of his monthly salary towards the social
security fund.
Mr Beyuo is married with three (3) children, all in Junior High school. Mr Beyuo is a stickler
for the law and takes his duties imposed under the law seriously. However, he is handicapped
on tax matters and requests your assistance in understanding his tax obligations.
Required:
With the aid of the relevant tax provisions, explain the tax implications and treatment of the
various payments made to or by Mr Beyuo.
NB: No computation is required!
Question 4
a. Explain the difference between Normal and Compulsory Registration under the Value
Added Tax Act, 2013 (Act 870).
b. The purpose of Double Taxation Agreements is to ensure that the tax burden on
taxpayers is lessened and nothing more. Do you agree with this assertion? Give
reasons
c. Tax treaties concluded and incorporated into Ghanaian law are superior to domestic
tax legislation. Do you agree? Explain your answer
Question 5
a. Briefly discuss the various types of assessments under tax administration.
b. On 2 January 2023, Asiedu & Associates was served with notice of assessment by the
Ghana Revenue Authority, assessing it to tax GH¢20,000.00 for the 2022 year of
assessment. Asiedu & Associates disputes the assessment, claiming that per its record
and accounts, it is liable to pay GH¢10,000.00 as tax for the 2022 year of assessment.
The entity is contemplating challenging the decision of the Commissioner-General’s
assessment and has approached you to enlighten it on the procedure involved in
challenging tax decisions and the appeal procedures (if any) within the Revenue
Administration Act, 2016 (Act 915) as amended.
