- 5 Marks
Question
Flowqueen, a sole proprietor of Freddy Ent, was adjudged the best distributor of Mino Ltd for the year 2020 and received the following gifts:
- 70 Inches Samsung LED valued at GH¢50,000 from Freddy Ltd.
- Toyota saloon car worth GH¢80,000 from the clients of Freddy Ltd.
Her income from the business for the 2020 year of assessment amounted to GH¢120,000.
Required:
Compute the appropriate tax or taxes of Flowqueen for the 2020 year of assessment.
Answer
Computation of Tax for Flowqueen
Step 1: Gift Tax Calculation
The total value of gifts received by Flowqueen in 2020 is:
Alternatively, if the gifts are treated as part of Flowqueen’s income, her total taxable income becomes GH¢250,000 (GH¢120,000 + GH¢130,000), and the relevant taxes would apply to the entire amount.
- Tags: Business income, Capital gains tax, Gift tax, Sole Proprietor, Tax computation
- Level: Level 2
- Topic: Taxation of Capital Gains
- Series: NOV 2021
- Uploader: Theophilus