.Mr. Frempong, an amputee and a widower with four children all of whom are attending secondary schools in Ghana.

He was employed by Hans mining company as a mining engineer on 1^st September, 2000 on a salary scale of GH¢ 120,000 x GH¢6,000 - GH¢ 150,000.

His service conditions include the following allowances:

i)            7.5% of his salary as duty rent allowance.

ii)           15% as responsibility allowance

iii)          2.5% as risk allowance

iv)          accountable entertainment allowance of GH¢ 2,000 per annum

v)           He was provided with fully furnished accommodation at the mining site

vi)          He was provided with vehicle with fuel for both official and private use

vii)         He contributed 5% of his salary towards the social security funds

viii) He engaged in part-time teaching at Tarkwa school of mines and was paid a total of ¢ 20,400 net of 15% with holding tax in 2007 year of assessment

ix)          He earned interest of GH¢19,225 on his investment in Government Treasury Bills and savings with unique trust financial services.

x)           He also engaged in trading activities which earned him an agreed chargeable income with the GRA of GH¢ 28,125 in 2007 year of assessment. He paid GH¢4,000 tax to GRA on his trading activities for 2007 year of assessment.

x)           His employers deducted a tax of GH¢24,855 from his salary and paid to GRA for 2007 year of assessment.

Required

Compute Mr. Frempong’s Tax Liability for 2007 year of assessment

Annual Individual Tax Rate Scheme (2007)

INCOME                                          RATE                                 AMOUNT

    GH ¢                                                                                          GH ¢

First                                                    2,400                                                nil                                                      -

Next                                                 2,400                                                5%                                                    120

Next                                                 12,000                                             10%                                                  1,200

Next                                                 79,200                                             17.5% 13,860

Exceeding                                       96,000                                             25%

Answer rating: 100% (QA)

ANSWER To calculate Mr Frempongs tax liability for the year 2007 we need to determine his total taxa... View the full answer