TUTORIAL QUESTION – Employment Income
Seth Amanfo has been in employment at KNUST MBA 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:
i) Provision of a well-furnished bungalow in respect of which he pays GHS 500 per
month as rent by way of deduction at source.
ii) 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 8 th January, 2021 in respect of
2020 Year of Assessment show the following unconsolidated allowances and benefits:
i) Responsibility allowance of GHS 800 per month for which the company pays him cash.
ii) Utilities allowance per annum, GHS 7,200
iii) Risk allowance of 15% on basic salary and car maintenance allowance of GHS 3,600 for
the year.
iv) Leave allowance of GHS 2,400 per annum.
v) Watchman and a garden boy on salary of GHS350 and GHS400 per month respectively.
vi) Medical allowance per year GHS 4,800.
vii) Meals allowance of GHS 600 per month.
viii) Two house helps on GHS 380 wages each per month. The amount is paid to Seth in cash
directly by the company.
ix) Bonus of 30% of annual basic salary.
x) Monthly Overtime of GHS 1,000
xi) Unaccountable Entertainment allowance of GHS 6,000 a year.
Additional Information
i) On 1st January, 2019 he was given a car loan of GHS
50,000 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.
ii) He is married with five (5) children, three (3) of
whom are in SHS, the rest are working.
iii) He is also responsible for the upkeep of four (4)
aged relatives of his.
iv) He is currently pursuing a Master of Business
Administration degree in Accounting at KNUST
where he incurred GHS 13,000 by way of
educational expenses in 2020
v) His November and December, 2020 salaries were
paid on 4th January 2021. However, all allowances
which are unconsolidated were paid in full during
2020 except those tied to the basic salary.
The table below indicates the appropriate annual income tax band and rates applicable to the
chargeable income of resident individuals.
Annual Rates
Chargeable % Rate Tax Cum Chargeable Cum Tax
Income Income
GH¢ % GH¢ GH¢ GH¢
First 3,828.00 0 0.00 3,828.00 0.00
Next 1,200.00 5 60.00 5,028.00 60.00
Next 1,440.00 10 144.00 6,468.00 204.00
Next 36,000.00 17.5 6,300.00 42,468.00 6,504.00
Next 197,532.00 25 49,383.00 240,000.00 55,887.00
Exceeding 30
240,000.00
Required:
For the 2020 Year of Assessment, calculate his:
1. Basic salary
2. Assessable income
3. Chargeable income
4. Tax liability
