TEMA ACCOUNTANCY CENTRE: ICA PART 3: ADVANCED TAXATION- MOCK EXAMS 1

QUESTION 1 [ NOV 2012 Q1a]

a) Mr. Jonas Abudu, an aspiring Member of Parliament for the Adjenkotoku Constituency sold one
of his buildings for GHC75,000 to boost his campaign in March, 2012. He deposited
GHC50,000 in a fixed deposit and GHC25,000 in his current account all at the ABC Bank in
Accra. The cost of construction of the building in 2008 was GHC38,000. Apart from a fence
wall and iron gate constructed in 2009 at a cost of GHC8,000 no other development has been
made on the property. So much engrossed in his campaign activities, he requires you to deal
with the Ghana Revenue Authority on his behalf so that he can get his Tax Clearance Certificate.
Required: Outline your approach to address this request. (10 marks)
(b) (CIT Aug 2015 paper 12 Q2)
The Ghana Revenue Authority has decided, with respect to Corporate and Personal Income Tax, on a policy to
introduce self-assessment (instead of administrative assessment) for all taxpayers, including the small taxpayers.
You are required to explain to your clients the following:
i.

Three (3) Reasons why self assessment is preferable to administrative assessment

ii.

Ten (10) Determinants of voluntary compliance

iii.

Five (5) responsibilities of the Ghana Revenue Authority and five (5) obligations of the taxpayer for the
successful implementation of self assessment
(10 Marks)

QUESTION 2 (Nov 2012 Q5)

Kawado Company Limited, manufacturers of cotton wool for export only, commenced business on
st
th
1 February, 2009 and submitted its first set of accounts for the period ended 30 September, 2010.
Below are the details:GHC
Gross profit b/f
Add Dividend Received
Profit on sale of fixed assets

3,100
48,500

GHC
450,000
51,600

TEMA ACCOUNTANCY CENTRE: ICA PART 3: ADVANCED TAXATION- MOCK EXAMS 1

501,600
Less Expenses
Salaries and Wages
Directors Remuneration
Electricity and Water
Printing and Stationery

146,000
52,000
31,500
8,200

Notes to the accounts:

1.

Adverts and Publicity (23,700)

GHC

Adverts & Publicity

Telephone and Postage
Repairs & Maintenance (Plant & Equipment)
Repairs & Maintenance (Office & Equipment)
Insurance
Registration and Licence
Depreciation
Business Promotion and Entertainment
Legal Fees
Penalties and Fines
Net Profit
Radio and Television
Daily Graphic
Permanent signboard at entrance of factory
2.

Repairs & Maintenance (Plant & Equipment (60,000)

Installation of machine
General Maintenance
New standing generator

3.

Business Promotion & Entertainment (16,000)

Entertainment (Opening of factory)
Sample products to invited guests

4.

Legal Fees (8,000)

23,700
800
60,000
6,500
13,800
16,200
108,000
16,000
8,000
4,200

494,900
6,700
7,200
2,300
14,200
23,700
21,500
18,000
20,500
60,000

13,500
2,500
16,000
GHC
6,400
1,600
8,000

Formation of company
Litigation on plot of land
The companys business assets are made up as follows:

i.
ii.
iii.
iv.
v.
vi.

Types of Asset
Factory Building
Plant & Machinery
Generators
Office Building
Delivery Van
Toyota Pick-up

Date of Acquisition
January, 2009
March, 2009
June, 2010
May, 2009
September, 2009
April, 2010

Cost (GHC)
230,000
171,000
20,500
106,000
40,000
36,000

Required:
Compute the companys chargeable income for all relevant years.
15 marks

(a)

A person registered for VAT may take credit for input tax incurred in furtherance of his
business.

Required:
State the circumstances under which a VAT registered person will not be entitled to take credit for
input tax incurred for business purposes.
(5 marks)

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(b)

Describe what constitutes taxable supply of goods under the VAT Act 1998 (Act 248).
(5 marks)

(c)

State and explain the different rates of VAT currently in force.

ICAGP4.405
13

(8 marks)

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(d)

Under what circumstances will an expenditure incurred by a person engaged in

business be allowed as a deduction in the ascertainment of his business taxable
income?
(2 marks)
(Total: 20 marks)