Agya Moses has been in employment at KNUST MSC Limited since 1 st April 2014 as Financial
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Question:
Agya Moses has been in employment at KNUST MSC
Limited since 1st 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:
- Provision of a well-furnished bungalow in respect of which he pays GHS 500 per month as rent by way of deduction at source.
- 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 8th January, 2021 in respect of 2020 Year of Assessment show the following unconsolidated allowances and benefits:
- Responsibility allowance of GHS 800 per month for which the company pays him cash.
- Utilities allowance per annum, GHS 7,200
- Risk allowance of 15% on basic salary and car maintenance allowance of GHS 3,600 for the year.
- Leave allowance of GHS 2,400 per annum.
- Watchman and a garden boy on salary of GHS350 and GHS400 per month respectively.
- Medical allowance per year GHS 4,800.
- Meals allowance of GHS 600 per month.
- Two house helps on GHS 380 wages each per month. The amount is paid to Agya Moses in cash directly by the company.
- Bonus of 30% of annual basic salary.
- Monthly Overtime allowance of GHS 1,000
- Unaccountable Entertainment allowance of GHS 6,000 a year.
Additional Information
- On 1st 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.
- He is married with five (5) children, three (3) of whom are in SHS, the rest are working.
- He is also responsible for the upkeep of four (4) aged relatives of his.
- 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
- His December, 2020 salary was paid on 4th 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:
- Basic salary
- Assessable income
- Chargeable income
- Tax liability
Provide comments where necessary.
Related Book For
South western Federal Taxation 2017 Corporations, Partnerships, Estates and Trusts
ISBN: 9781305874336
40th edition
Authors: William H. Hoffman, William A. Raabe , David M. Maloney, James C. Young
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