- 6 Marks
Question
All persons can carry over their losses, so far as it can be proven that it is a loss by the person making the claim. This was mooted at a seminar organised for a business community in some parts of Accra, the capital city of Ghana.
Required:
Explain the mechanism of carryover of losses.
Answer
Losses incurred by persons can be carried over for 3 years and for 5 years. The losses incurred in a particular year are deducted from the profit made before taxes are charged and paid or collected. Persons that can carry over their losses for 5 years include:
- Manufacturing
- Agro-processing
- ICT software development
- Tourism registered with Ghana Tourism Authority
- Farming
- Energy and power
- Petroleum operations
- Mining and mineral operations
All other businesses may carry over their losses for 3 years. Losses to be carried forward include capital allowances. Persons making business loss may deduct it from investment loss, but investment loss cannot be deducted from business loss. Under a change in underlying ownership, loss incurred under section 17 shall not be carried forward. Venture Capital Financing Company that incurs loss on the disposal of investment shall carry it over for 5 years. The losses must be determined in accordance with tax principles and certified by Tax Auditors of the Ghana Revenue Authority.
- Tags: Business income, Loss Carryover, Tax Relief
- Level: Level 3
- Topic: Business income - Corporate income tax
- Series: APR 2022
- Uploader: Joseph