Agyemang Boateng has been working with Intellect Consult Limited (ICL) since 2010. At the beginning of January 2016, he was seconded to Accra Metropolitan Assembly (AMA) for a period of six months to be part of a team to spearhead a restructuring exercise and the review of the system of internal controls at the Revenue department of AMA.

Terms of the AMA engagement
ICL was to be paid a one-off settlement of GH¢10,000 at the completion of the engagement as well as reimbursement of monthly operational expenses incurred based on submission of the relevant invoices.

Agyemang’s only entitlements from AMA were the following monthly allowances:
Inconvenience Allowance           GH¢ 300
Extra Duties Allowance               GH¢ 200

Agyemang’s secondment to AMA did not in any way affect his salary and other entitlements from his employer, ICL, as these continued to accrue to him during the period of the secondment.

Agyemang’s earnings and entitlements from ICL for the year of assessment ended 31 December 2016 is as seen below:
.                                                          GH¢
Basic Salary                                     46,000
Bonus                                               9,500
Fuel allowance                               1,750
Entertainment allowance             7,500

Additional information:

• Agyemang stays in a fully furnished ICL bungalow at East Legon in Accra. ICL charges him a rent of GH¢150 per month.
• Agyemang makes use of ICL’s company vehicle, driver and fuel for official use only.
• On 1 January 2016, Agyemang successfully applied for a GH¢10,000 loan from his employer, ICL. His employer charged him interest of 2% per annum on the loan. During this period, Bank of Ghana policy rate was 15%. The loan was repayable within ten months.
• On 1 October 2016, Agyemang commenced part-time lecturing in Accounting at a local private Senior High School. He was paid monthly for his services and the total amount received for the three months ended 31 December 2016 was GH¢5,000 gross.

Agyemang’s other non-employment related income received during the year ended 31 December 2016 were:
.                                                                                                                              GH¢
Net royalties received for his Accounting text book                                    21,250
Gross local company dividends (Unquoted Company shares)                 13,000
Interest on Bank deposits from local financial institutions                       10,000
Gross lottery winnings 12,000

Required:
i) Calculate Agyemang’s taxable income for the year ended 31 December 2016.                                                       (10 marks)

ii) State AMA’s tax obligation when making the disbursement of GH¢10,000 to ICL.                                                (1 mark)

iii) What are the tax implications to Agyemang with respect to the following:        (2 marks)

• Part-time lecturing,
• Royalty,
• Dividends, and
• Interest on bank deposit.

iv) What is the tax implication of the loan taken by Agyemang?                                                                                   (1 mark)

b) Section 7(m) of the Income Tax Act, 2015 (Act 896) as amended indicates that ‘the income of an individual from employment in the public service of the government of a foreign country in Ghana is exempt from tax’.
Required:
Identify FOUR (4) conditions for granting such an exemption.                                                                                   (2 marks)

Kate Oppong, a physically challenged, works for the Ministry of Health as an eye surgeon and optician based at Komfo Anokye Teaching hospital in Kumasi. She dedicates most of her free time to her private practice, as well as writing books and articles for the Ghana Medical Journal. Kate is also part of the medical team for the local NGO and Sight Restoration, which is involved in cataract surgery for the disadvantaged members of society in remote rural areas.

Kate’s private practice is located in Kumasi and has a staff complement of six employees who are all full time workers. Kate only attends to the patients at her private practice strictly by appointment and her patient base has been steadily growing due to her experience and dedication.

In terms of her service contract with Sight Restoration, Kate is required to participate in all the cataract operations scheduled for the year. Her service contract is for a year, subject to renewal as and when donor support is available.Sight Restoration’s field staff, of which Kate is one, are paid a predetermined monthly salary plus an attendance allowance which is paid only after each cataract operation. The field staff is also entitled to a one-off representation allowance for participating in scheduled seminars.

Kate Oppong’s earnings and deductions for the year ended 31 December 2017 were:

Notes:
1) This amount is part repayment of the interest free personal loan of GH¢12,000 advanced to Kate on 1 January, 2017, repayable over two years. The Bank of Ghana interest rate for the year ended 31 December 2017 was constant at 20%.
2) This amount was fully expended towards the travelling costs for Kate and her minor son for his medical treatment in South Africa.
3) No employees tax (PAYE) or corporate income tax was paid in respect of the amounts paid to the employees of the private practice (including Kate) or the profits from the practice. This was because in Kate’s opinion her operations were ‘private’ and as such not subject to tax and also because she believed that she was already contributing her fair tax share from her other two employers.
4) Kate is a single parent and takes care of her single son in the senior high school. She also takes full responsibility of her aged mother.

Required:
i) State the Ghana Revenue Authority’s (GRA) requirements which have been breached by Kate Oppong and consequences of the breach based on the information given in note (3).                                                                                                      (5 marks)

ii) Calculate the taxable income of and income tax payable by Kate Oppong for the year ended 31 December 2017. Note: All computations should be rounded to a whole cedi.                                                                                                            (9 marks)

Mr. Osei Bobie, an amputee, was the Senior Accountant of Soroku Mine Company Limited (a mining company) for many years with a basic salary of GH¢54,000 per annum. He was entitled to a company vehicle, fuel and Driver.

He acted for the Director of Finance in March, April and May 2016, during which month his salary was raised to GH¢5,000 per month.
Mr. Osei Bobie was housed in the company lavishly furnished accommodation on the mine.

He was also entitled to the following monthly allowances:

• Professional allowance GH¢400
• Responsibility allowance GH¢500

Mr Osei Bobie resigned from Soroku Mine Limited on 30 June, 2016. He received the following on his resignation:

• He was allowed to take home the Company’s pick-up he was using valued at GH¢5,000.
• Cash Gifts from staff GH¢6,100.

On 1 August, 2016, he took up an appointment as Accounts Manager of Phinex Limited (a retailing company) on a salary of GH¢72,000 per annum. His other entitlements were agreed as follows:
Responsibility Allowance           –     GH¢150 per month
Cost of living Allowance            –     GH¢200 per month
Risk Allowance                            –     GH¢100 per month
Overtime pay                              –     GH¢250 per month
Bonus                                           –     GH¢1,500 in each December
Vehicle and fuel
Accommodation only

Mr. Osei Bobie finances the following insurance policies and also contributes to the Social Security and National Insurance Trust (SSNIT):
Insured                                Premium           Sum Assured
.                                                 GH¢                     GH¢
Mrs. Gameli (sister)                500                      4,000
Mr. Osei Bobie                      3,600                     35,000

Mr. Osei Bobie is not married but he is responsible for his three children who are all attending registered Senior High Schools. Mr. Osei Bobie supports his 72 year old grandmother with GH¢300 per month not withstanding her immense wealth. His grandmother depends entirely on him.

Required:
a) Compute the assessable income and tax payable of Mr. Osei Bobie for the year 2016.                                             (17 marks)

Mr. George Amoako, a self-employed single parent with two children attending a private University in Ghana trades as George Amoako Enterprise. He commenced business on 1st January 2016 and submitted the following extracts of his financial statements for the year ended 2016.

Required:
a) Determine the Chargeable Income of Mr. George Amoako for 2016 year of Assessment.                                         (10 marks)

b) Support your computations with relevant explanations.                                                                                                (5 marks)

c) Compute all Taxes payable.                                                                                                                                            (5 marks)

Mr. Frank Danso was employed by Ghana Trust Ltd on 1st September 2010 on salary scale of GH¢4,500 x 500-7,500 as the financial controller of the company. He is provided with the following as part of his conditions of service for 2014 Year of Assessment.
i) Well-furnished rented flat by his employers in respect of which he pays GH¢100 per month as rent by way of deductions at source.
ii) Watchman allowance of GH¢200 per annum, paid directly to Mr. Frank Danso.
iii) Risk allowance of GH¢905 per annum
iv) Leave allowance of GH¢500 per annum
v) Garden boy allowance of GH¢100 per quarter paid directly to Mr. Frank Danso.
vi) Medical allowance of GH¢680 per annum
vii) Meals allowance of GH¢50 per month
viii) Two maidservants each on wages of GH¢200 per annum. The amount is paid to the maid servants directly by the company.
ix) Bonus of 40% on annual basic salary
x) Entertainment allowance of GH¢400 a year ( accountable)
xi) Duty post allowance of GH¢100 per month.
xii) He has Life Assurance Policies with EIC ltd. Below are the details:
Policy                     Sum Assured (GH¢)                    Annual Premium (GH¢)

A                                    4,000                                                  420
B                                    2,800                                                  240
C                                    16,000                                               1,650
D                                    5,000                                                  525
xiii)He is entitled to a company car and fuel for both official and private use.
xiv) He has two wives and ten children; four of whom are in SHS in Accra, and the rest are gainfully employed; he caters for 3 of his aged relatives.
xv) 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.

TAX RATES :

Required:
a) Compute his tax liabilities for 2014 Year of Assessment using 2014 rates.                                                                 (15 marks)

b) Determine his take home pay for the 2014 Year of Assessment.                                                                                   (5 marks)