Edwin was appointed managing director of Fashion Solutions ltd on a basic salary of GH 20,000 a
Question:
Edwin was appointed managing director of Fashion Solutions ltd on a basic salary of GH¢ 20,000 a year with effect from 1st January 2012.
The contract provided for an annual increase of 20% each year.
In addition, he was entitled to the following allowances:
GH¢
a) Medical allowance 4,000
b) Entertainment allowance 2,000
c) Responsibility allowance 3,000
d) Bonus 30% of basic salary
The company provided him with a soft furnished accommodation for which GH¢ 350 is deducted from source every month. He is also provided with a car with free supply of fuel for official use.
Edwin contributes 5.5% to the social security scheme and the employer also contributes 13.5% of his basic pay.
Edwin lives with two (2) wives and four children who are in approved basic schools in Germany.
He has two Life Insurance Policies with the following details:
Company Maturity Annual Premium
GH¢ GH¢
Nsem Assurance (1) 80,000 2,450
Kowtow (2) 45,000 4,740
He received a loan of GHS 10,000.00 at a rate of 10% payable within 24 months. Assume that the statutory rate is 25% p.a.
He donated GH¢ 5,000 to Ghana Heart Foundation during the year.
GH¢ 200 monthly deduction is made at source for his mortgage interest.
Special retirement package of which he contributes 10% of basic salary, which the company pays 10% of his basic salary.
Required
(a) Compute the chargeable income of Godwin for the 2012 year of assessment.
(b) determine his (take home ) pay for the 2012 year of assessment.
Tax Rate
GH¢ %
First 1,200 0
Next 420 5
Next 1,104 10
Next 23,196 17.5
Exceeding 25920 25
Expert Answer:
Financial Accounting and Reporting
ISBN: 978-0273744443
14th Edition
Authors: Barry Elliott, Jamie Elliott
