- 4 Marks
Question
The determination of a person’s tax liability is in relation to the concept of “Year of Assessment” and “Basis Period”.
Required:
In relation to the statement above, distinguish between the concept of Year of Assessment and Basis Period as used in income taxation.
Answer
- Year of Assessment:
The Year of Assessment refers to the income tax year or the period in which taxes are levied or collected. In Ghana, the Year of Assessment follows the calendar year from January to December. - Basis Period:
The Basis Period is the specific time reference used to compute the assessable income of a person. It is a period not exceeding 12 months, although it can be shorter during commencement and cessation years of business operations. It is the timeframe within which income earned is assessed for tax purposes.
- Tags: Basis Period, Income Tax Act, Tax computation, Year of Assessment
- Level: Level 2
- Topic: Income Tax Liabilities
- Series: MAR 2024
- Uploader: Theophilus