UNIVERSITY OF PROFESSIONAL STUDIES, ACCRA (UPSA)
DEGREE PROGRAMME
Virtual (Online) Mid-Semester Examination
MID- SEMESTER EXAMINATIONS- 2022/2023 ACADEMIC YEAR
FACULTY OF ACCOUNTING & FINANCE
DEPARTMENT OF ACCOUNTING
LEVEL 300/400
BACT 305: TAXATION
Start Date: Sunday, Nov 27, 2022 (6am)
End Date: Sunday, Nov 27, 2022 (6pm)
INSTRUCTION(S):
ATTEMPT ALL QUESTIONS
All questions should be answered on the attached submission sheet and converted to pdf before
submitting. Submit a copy of your responses to your respective lecturer as shown below
S/N Lecturer Email address Group
1 John Amoh john.amoh@upsamail.edu.gh Acct 3 (Regular)
Acct 5 (Regular)
2 Eric Padi Nyabey nyabey.eric@upsamail.edu.gh Acct 1 (Evening)
Acct Top-up (Evening)
Admin 1,2,3 (Evening)
3 Timothy Ayamga timothy.ayamga@upsamail.edu.gh Admin 4 and 5 (evening)
Banking and finance regular
4 Liquenda Torgbor liquenda.torgbor@upsamail.edu.gh Acct 1 (Regular)
5 John McCarthy maccarthy.john@upsamail.edu.gh Acct 2 (Evening)
6 Saeed Salahudeen saeed.salahudeen@upsamail edu gh Acct 2 (Regular)
Acct (Weekend)
Admin 1,2,3 (Regular)
7 Price Yeboah Boateng prince.boateng@upsamail.edu.gh Banking & Finance (Evening)
8 Baba Ahamed Issah Ahamed.issah@upsamail.edu.gh Admin (Weekend)
9 Paul Muda muda.paul@upsamail.edu.gh Admin 4,5&6 (Regular)
QUESTION 1
a) Explain the following terms as used in the Value Added Tax Act 2013, (Act 870)
i. Exempt Supply
ii. Zero rated supply
iii. Relief Supply
iv. Taxable Supply
v. Value Added Tax Flat rate scheme
(10 marks)
b) Katanka Ltd is a VAT registered trader dealing in manufacturing and sale of canned fish.
Below is an extract from the books of the company for the month of February 2022.
Taxable supply (VAT exclusive) 650,000.00
Relief Supply 200,000.00
Exempt Supply 120,000.00
Taxable Inputs (VAT Inclusive) 696,937.50
Required:
i. Compute the total Value Added Tax and other related taxes payable or tax credit due to the
company for the month of February 2022.
(10 marks)
ii. If the company filed their VAT returns on 31st October 2022, state the penalty for late
filing of VAT returns and calculate the penalty due.
(5 marks)
Total: 25 marks
QUESTION 2
a) Enumerate five (5) payments which are exempted from withholding tax
(5 marks)
b) Obaa Yaa Moko is a taxpayer who was served with a provisional assessment containing an estimated
tax liability of GHS90,000 for the 2022 year of assessment on 2nd January 2022. She complained
that the current assessment is almost two times that of the previous year’s (i.e. GHS50,000) and this
makes it too outrageous and does not reflect the true state of affairs in her business. She therefore
decided to go to court to seek redress. On her way to court, she met you and discussed her problem
with you. As a student of taxation, what advice will you give to Obaa Yaa Moko.
(10 marks)
c) Baron Ltd is a manufacturing company located at Techiman. The following information is extracted
from the books of the company for the 2021 year of Assessment.
i. The company made a total loss of GHS200,000 during the year under review.
ii. After a tax audit carried out by officials of the Ghana Revenue Authority, it was detected that
the accountant committed a casting error which resulted in the overstatement of the total
expenses. Total expenses should have been GH¢580,000 instead of the GH¢680,000 stated.
iii. Salaries and Wages include a monthly of GH¢10,000 paid to the Managing Director’s son who
just completed his Mphil in Finance programme. Other senior members of staff with the same
qualification and experience are paid monthly salaries of GH¢9,000.
iv. Donations is made up of the following: PUC Scholarship Fund – GH¢10,000; Korle Bu
Children’s ward – GH¢25,000; Mamprugu District Assembly – GH¢25,000, Hassacres Football
Club – GH¢15,000
v. GHS40,000 of the premises was used for private activities of the Managing Director.
vi. The accountant confessed that GHS40,000 of the hospitality expenses were used for providing
lunch for the Managing Director.
vii. GH¢30,000 of the legal expenses was paid to a lawyer to defend the company for late payment
of tax.
viii. Repairs and maintenance include an amount of GH¢80,000 spent on providing air conditioners
for all the offices.
ix. The gross profit includes an amount of GH¢10,000 net dividend received
x. Capital allowance granted for the year amounts to GH¢50,000
xi. GHS50,000 of the office expenses were spent on customer loyalty promotions; one quarter was
used to purchase office stationery and the rest was spent on entertainment of private guests of
the Managing Director.
xii. The company has an unrelieved loss brought forward amounting to GH¢15,000
Required:
Determine the net tax liability of Baron Ltd for the 2021 year of Assessment.
(10 Marks)
Total: 25 marks
QUESTION 3
a) Asase Aban Limited commenced business October, 2015 to manufacture Office Farm inputs.
Accounts are made up to 31st March each year. The following depreciable assets were acquired
and put to use in the business.
S/N Asset Date of Purchase Amount
1 Factory Building October, 2015 600,000
2 Plant & machinery September, 2015 300,000
3 Toyota Hiace bus (DV 1450-15) December, 2015 210,000
4 Distribution Van (BS 1216-16) April, 2016 200,000
5 Office Equipment November, 2015 240,000
6 Furniture & Fittings February, 2017 300,000
7 Toyota saloon (GS 7845-17) July, 2017 280,000
8 Data Handling Equipment January, 2015 240,000
The Toyota Hiace bus was disposed off in June 2017 for an amount of GHS100,000.
Profits declared were as follows:
Period to 31-3-2017 – GHS864,000
Year to 31-3-2018 – GHS500,000
Required:
i. Compute the capital allowance claimable by the company for all the relevant years.
(10 marks)
ii. Determine the company’s chargeable income for all relevant years.
(5 marks)
b) Taxation of Individuals and businesses is based on their residence status. State the residence
rules with respect to:
i. Individuals
ii. Partnerships
iii. Companies
iv. Trusts
(10 marks)
Total: 25 marks
QUESTION 4
a) Paa Grant is a physically challenged person who was employed as Personnel manager for Jato Ltd
on 1st October 2018 and was placed on a salary scale of GHS126,000 X GHS8,600 – GHS195,000
per anum.
i. He was also awarded with a 400 litres deep freezer valued at GHS 8,000 for his outstanding
performance during the year under review.
ii. Paa grant was paid an annual bonus of GHS85,000 and an overtime allowance of GHS15,000.
He is entitled to a monthly responsibility allowance of GHS800 and an annual medical allowance
of GHS 9,000.
iii. He is married with five children attending recorgnised registered educational institutions in
Ghana and he also contributes 5.5% of his basic salary to the mandatory social security fund.
iv. The company provided him with a furnished accommodation from which a monthly deduction
of GH¢400 is made in respect of rent. He was also given a car and free fuel for both official and
private use.
v. He paid a mortgage interest of GH¢8,000 in respect of his own house under construction and
also contributed an amount of GHS8,000 towards his church’s annual harvest during the year
under review.
Required
Determine Paa Grant’s Chargeable Income for the 2022 year of assessment, showing clearly
the basic salary and other computations.
(18 marks)
b. Explain contract of service and contract for service stating 5 specific dichotomies between the
two phrases as used in Taxation
(7 marks)
Total: 25 marks
Tax schedule for 2022 year of assessment
CHARGEABLE INCOME RATE TAX
GHS % GHS
First 4,380 Nil –
Next 1,320 5 66
Next 1,560 10 156
Next 36,000 17.5 6,300
Next 196,740 25 49,185
Exceeding 240,000 30
Examiner: John Amoh
