Tax Planning Opportunities for Sole Proprietorships:

1. Personal Reliefs:
   Sole proprietors, unlike limited liability companies, can claim personal reliefs to reduce their taxable income. These reliefs are available for various personal circumstances and include:
   • Marriage/Responsibility Relief: GH¢1,200 per year.
   • Children’s Education Relief: GH¢600 per child, up to a maximum of 3 children.
   • Old Age Relief: GH¢1,500 for individuals aged 60 years or older.
   • Disability Relief: 25% of the individual’s assessable income if they have a certified disability.
   • Training and Professional Development Relief: GH¢2,000 for training and upgrading skills.
     Limited liability companies do not benefit from these personal reliefs, which are designed to support individuals.
2. Exemption from Tax on Mortgage Interest:
   Sole proprietors can claim a deduction for mortgage interest paid on their residential property, provided it is their first property. This tax benefit is not available to limited liability companies, which cannot claim personal mortgage interest as a deduction.
3. Tax-free Withdrawals from Tier 3 Pension Scheme:
   Sole proprietors can make tax-free withdrawals from Tier 3 (voluntary) pension contributions after five years, or earlier under certain conditions (such as hardship due to COVID-19). Companies, on the other hand, are subject to corporate pension rules and cannot access such personal tax benefits.
4. Tier 3 Pension Contributions:
   Sole proprietors are eligible to contribute up to 35% of their declared income to a Tier 3 pension scheme, and the contributions are deductible for tax purposes. This provides an opportunity to reduce taxable income while saving for retirement. Limited liability companies do not benefit directly from these personal pension contributions and deductions.
5. Change in the Character of Income:
   Sole proprietors can change the character of their income through personal investments. For example, by investing in Treasury bills, a sole proprietor can enjoy tax-free interest income. This flexibility is not available to limited liability companies, as they are subject to corporate income tax rules.

Conclusion:
Sole proprietorships offer unique tax planning opportunities that are unavailable to limited liability companies. These opportunities, such as personal reliefs, mortgage interest deductions, pension contributions, and tax-free withdrawals, help sole proprietors reduce their tax liabilities. Limited liability companies, by contrast, are subject to corporate tax laws and cannot access these individual tax reliefs.