Question Tag: Penalties

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  • 5 Marks

PT – Nov 2023 – L2 – Q1d – Income Tax Liabilities

Outline the sanctions imposed for failure to file tax returns.

Tax administration encompasses assessment, collection, and enforcement of taxes legally due to the state. The enforcement of tax obligations requires an imposition of penalties and interest charges for non-compliance.

Required:
State the sanctions for failing to file tax returns.

Where a person fails to file a tax return by the due date required, the Commissioner-General may appoint another person to prepare and file any information that the Commissioner-General may require, including information required by the return.

The Commissioner-General is required to assess the tax liability of the person as required, including by way of adjusted assessment, and for this purpose, may use any information in the possession of the Commissioner-General, including information obtained from the person appointed by the Commissioner-General.

A person who fails to file a tax return as required by a tax law is liable to pay a penalty of GH¢500 and a further penalty of GH¢10 for each day that the failure continues.

In the case of communication service tax, the penalty is GH¢2,000 and a further penalty of GH¢500 for each day that the failure continues.

A penalty imposed applies separately for a failure to file an estimate and a failure to file a tax return incorporating the final amount.

Where a person fails to submit the tax return four months after the imposition of the penalty for non-submission, the Commissioner-General may, in addition to the penalty imposed, prosecute the person to compel them to submit the return.

Interest:
The interest is 125% of the Bank of Ghana rediscount rate compounded monthly on the amount outstanding.

  • 4 Marks

PT – Nov 2020 – L2 – Q1e – Tax Administration

Explains steps to file tax returns for a sole proprietor and reasons for an adjusted assessment by the Commissioner-General.

Paa Tee is a sole proprietor and has not filed his tax returns for 2018 year of assessment as at April 1, 2019. He has approached you to file his tax returns for him and from all indications, he has paid all his taxes based on the self-assessment estimate.

Required:
i) What steps (if any) will you take to enable Paa Tee file his tax return and are there any financial implications in filing? (2 marks)
ii) What factors may give rise to an adjusted assessment by the Commissioner-General?

i) I would help Paa Tee apply for an extension if there are valid reasons for doing so, but the application must be made before the deadline of 30th April 2019. There is no financial implication if the filing is done on or before 30th April 2019, or if an extension is granted by the Ghana Revenue Authority.
(2 marks)

ii) The factors that may give rise to an adjusted assessment by the Commissioner-General are:

  • Failure to file a tax return.
  • Discovery of a case of fraud.
  • Willful default.
  • Serious omission.
  • 4 Marks

AT – Nov 2018 – L3 – Q4c – Tax administration

Explanation of the objectives and effects of tax amnesty on government revenue.

As part of tax administration, the government rolls out tax amnesty from time to time.

Required:
i) What does tax amnesty seek to serve? (2 marks)
ii) What are the effects of tax amnesty on revenue? (2 marks)

i) What does tax amnesty seek to serve?

  • Tax amnesty is a limited-time government offer that allows individuals or businesses that have failed to register, file returns, or pay taxes to regularize their tax obligations without facing penalties or criminal charges.
  • The primary goal of tax amnesty is to broaden the tax base, improve voluntary tax compliance, and encourage taxpayers to disclose hidden or undeclared income and assets, thereby increasing government revenue in the short term.

ii) Effects of tax amnesty on revenue:

  • Immediate revenue boost: Tax amnesty often results in a short-term increase in tax revenue as previously non-compliant taxpayers come forward to settle their outstanding liabilities without facing penalties.
  • Long-term compliance: Taxpayers who participate in the amnesty program may continue to comply with tax regulations in the future, contributing to sustained revenue collection over time. However, repeated tax amnesties may lead to a culture of tax avoidance, with some taxpayers delaying payments in anticipation of future amnesties.
  • 3 Marks

AT – Nov 2018 – L3 – Q3c – Tax administration

Recommendations for ensuring voluntary tax compliance under the Ghana Revenue Authority reforms

The Ghana Revenue Authority (GRA) has embarked on serious tax reforms to enable it to achieve its tax revenue targets year after year. As part of the reforms, it has been said that GRA should pursue voluntary tax compliance if it really wants to meet its revenue target.

Required:
Recommend THREE factors that are necessary to ensure voluntary tax compliance.

To achieve voluntary tax compliance, the following factors are essential:

  1. Simplified tax laws and procedures
    • Tax laws should be simple and easy to understand, and tax procedures should be straightforward. Simplifying tax filing and payment processes reduces complexity and encourages taxpayers to comply voluntarily.
  2. Taxpayer education and services
    • Taxpayers should be educated about their tax obligations and the benefits of paying taxes. The GRA should provide support services such as tax guidance, help centers, and online resources to assist taxpayers in meeting their obligations.
  3. Enforcement of penalties and sanctions
    • The imposition of penalties for non-compliance and stricter enforcement measures act as deterrents to tax evasion. Taxpayers will be more likely to comply if they are aware of the consequences of non-compliance.
  • 10 Marks

AT – Nov 2017 – L3 – Q4a – Tax administration in Ghana

Drafting a report on CST procedures for returns submission, payment, and dispute resolution.

SwissCom Ltd, a Swiss-based Information and Communication Technology company, is hopeful of investing in Ghana. The CEO of the company participated in a tax conference in Paris, France, and met Obodai of GoodLuck & Associates, a firm of Chartered Accountants in Ghana. He took the opportunity to discuss with Mr. Obodai SwissCom’s intention to invest in Ghana and contracted GoodLuck & Associates to brief him on the Communications Service Tax (CST) regime in Ghana. The CEO already understands what CST is and the enterprises that charge CST.

Required:
Draft a report in which you:
i) Indicate the procedures for submission of returns and payment of tax. Also, provide any penalties or sanctions if these are not done. (6 marks)
ii) Explain to the CEO any dispute resolution procedures available to him. (4 marks)

REPORT TO CEO SWISSCOM LTD ON COMMUNICATION SERVICE TAX (CST) PROCEDURES IN GHANA

i) Procedures for submission of returns and payment of tax, including penalties:

  • The Communications Service Tax (CST) is required to be paid by service providers in the communications industry.
  • Submission of Returns: The tax return must be submitted to the Commissioner-General no later than the last working day of the month immediately following the month to which the return relates, irrespective of whether or not tax is payable for the period.
  • Payment of Tax: Payment of tax due for the period should be made at the same time the return is submitted.
  • The Commissioner-General may require a person, whether acting on their own behalf or as an agent or trustee, to submit additional or other returns as prescribed by the Commissioner-General.
  • Penalties for Non-compliance:
    • A penalty of GH¢2,000 is imposed for late filing of returns, and an additional GH¢500 is charged for each day the return remains unsubmitted.
    • In cases of late payment of tax, a monthly interest of 125% of the Bank of Ghana statutory rate, compounded monthly, is charged on the unpaid tax.

ii) Dispute Resolution Procedures:

  • A person dissatisfied with a decision of the Commissioner-General may file an objection in writing within 30 days of being notified of the decision.
  • The objection must clearly state the grounds of the objection.
  • The Commissioner-General may grant an extension to file an objection if deemed necessary.
  • Preconditions for Filing Objections: Before the Commissioner-General entertains an objection, the taxpayer must pay 30% of the disputed tax and settle all other taxes due. However, the Commissioner-General may waive the 30% payment.
  • Response to Objection: The Commissioner-General is required to make a decision within 60 days, and if no decision is made within this period, it is considered that the objection has been disallowed.
  • A taxpayer dissatisfied with the decision on an objection may appeal to the Court within 30 days of receiving the decision.
  • Filing an appeal does not suspend the implementation of the objection decision.

(6 marks for part i, 4 marks for part ii)

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