• Black Facebook Icon
  • Black Twitter Icon
  • Black LinkedIn Icon

© 2018 by RDK Consulting

October 25, 2016

October 19, 2016

Please reload

Recent Posts

#Self Assessment

October 25, 2016

1/3
Please reload

Featured Posts

#Self Assessment

October 25, 2016

In order to engage tax payers and also to create the space for companies to determine their estimated chargeable income which is in concert with their financial performance, the Ghana Revenue Authority (GRA) introduced self assessment.

 

Under this regime, tax payers are required to estimate their chargeable income for the financial year and spread the payment of the tax on quarterly basis.

 

Interestingly, due to cash flow constraints and other considerations, most tax payers under estimate their chargeable income from the outset and do not often keep close eye on the submission of revised estimate of chargeable income to GRA which reflects their profitability outlook as the year wears on.

 

 

May I stress that there are penalties if your estimated chargeable income falls below certain threshold at the end of the year of assessment.

 

Paragraph 51(1) of the seventh schedule of Income Tax Act 2015, states that where the estimate or revised estimate of tax payable by a taxpayer with respect to chargeable income tax for a year of assessment under section 122 is less than ninety percent of the correct amount, subparagraph 2 provides that the tax payer is liable to pay interest on the tax due for the period, from the date the first installment for the year of assessment is payable until the date by which the person files a return of income for the year of assessment under section 124.

 

 

Subparagraph (3) of paragraph 51 indicates that, the amount of interest that a taxpayer shall pay for each period is calculated as one hundred and twenty five percent of the statutory rate, compounded monthly, and applied to the difference between:

(a) ninety percent of the total amount that would have been paid by way of installments during the year of assessment to the start of the period had the estimate of the person equaled the correct amount; and

(b) the amount of income tax paid by installments during the year of assessment to the start of the period.

 

You may agree with me that this is an avoidable tax expense as the Income Tax Act permits you to submit revise estimates with supporting documents before the due date of the installment payment.

 

May I advise that after the third quarter ending 30 September 2016, you work closely with your tax consultant on revise estimate if necessary, to forestall penalties.

Share on Facebook
Share on Twitter
Please reload

Follow Us
  • Facebook Basic Square
  • Twitter Basic Square
  • LinkedIn Social Icon