Question Tag: Exemptions

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  • 10 Marks

PT – April 2022 – L2 – Q5a – Withholding Tax Administration

Explain four exemptions from withholding tax according to the Income Tax Act, 2015 (Act 896).

Although the scope of withholding tax covers employment, business, and investment income, not every income is subject to withholding tax in accordance with the Income Tax Act, 2015 (Act 896) as amended.

Required:
Explain FOUR (4) of these withholding tax exemptions.
(10 marks)

The following payments are exempted from withholding tax:

  • Premium paid to a resident insurance company.
  • Payment for the sale of goods which constitute trading stock of both the vendor and the purchaser.
  • Interest or dividend paid or credited to a holder or member on the investment in an approved unit trust scheme or mutual fund.
  • Interest paid to a resident financial institution.
  • Payments made to persons specifically exempted from tax.
  • Income or activity exempted from tax.
  • Payments that have been granted exemption from withholding tax by the Commissioner-General.
  • Dividend paid by a resident company to another resident company that controls directly or indirectly at least 25% of the voting power in the company paying the dividend. This does not include redeemable shares.
  • Cumulative contract sums of the supply of goods, services, and works not exceeding GH¢ 2,000.

(Any 4 points @ 2.5 marks each = 10 marks)

  • 4 Marks

PT – March 2023 – L2 – Q5b – Withholding Tax Administration

State the payments which are exempt from withholding tax.

A resident person shall withhold tax on payments of any dividends, interests, rent, royalties, natural resources, and payments with a source in the country.

Required:

State FOUR (4) payments to which withholding tax does not apply.
(4 marks)

The following payments are exempt from withholding tax:

  1. Payments by Individuals (Non-Business Related):
    Payments made by individuals unless made in the course of conducting a business are exempt from withholding tax.
  2. Interest Paid to Resident Financial Institutions:
    Interest payments made to resident financial institutions are not subject to withholding tax.
  3. Exempt Amounts:
    Payments that are considered as exempt amounts under the Income Tax Act are not subject to withholding tax.
  4. Contract Sum Not Exceeding GH¢2,000:
    Payments for the supply of goods, works, or services where the contract sum does not exceed GH¢2,000 for the year are exempt from withholding tax.

(Any 4 points @ 1 mark each = 4 marks)

  • 4 Marks

AT – Nov 2015 – L3 – Q1b – Business income – Corporate income tax

Circumstances under which shares are not considered chargeable assets for capital gains tax purposes.

Shares of a resident company are classified as chargeable assets under capital gains tax. Under what circumstances will shares not be described as chargeable assets under capital gains tax provision?

Shares are classified as chargeable assets under section 97 (1) (a) and (b). However, under the following provisions, shares are not classified as chargeable assets:

i. Securities (shares) of a company listed on the Ghana Stock Exchange during the twenty-five years after the establishment of the Ghana Stock Exchange. It was established in 1990. Section 97 (3) (a) of the Internal Revenue Act, 2000 Act 592.

ii. Also, realization involving the disposal of shares in the course of liquidation (section 96 (2) of the Internal Revenue Act 2000, Act 592, as amended).

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