Question

Mr. Seth Lartey is an Accountant with Asempa Brewery Limited on a basic salary of GHC5,410 per month. He is also entitled to a professional allowance of GhCl1,029. - His employer provides Mr. Lartey with furnished accommodation and a vehicle but fuels his car. He contributes to the Social Security Fund. Determine Mr. Lartey's monthly taxable pay. Determine his tax liability for January 2021 Determine his tax liability for September 2021

Answer 1

Mr. Seth Lartey's monthly taxable pay is GHC6,439. His tax liability for January 2021 is GHC374.60, and for September 2021, it is GHC415.80.

Step-by-step explanation:

To determine Mr. Lartey's monthly taxable pay, we sum his basic salary, professional allowance, and the taxable value of the provided benefits (furnished accommodation and vehicle). The taxable value of benefits is calculated based on the prescribed rates set by tax authorities. For January 2021, his tax liability is calculated using the applicable tax rate on the taxable pay. The tax liability for September 2021 is similarly computed.

The formula for monthly taxable pay is as follows:

`\[ \text{Monthly Taxable Pay} = \text{Basic Salary} + \text{Professional Allowance} + \text{Taxable Value of Benefits} \]`

For tax liability calculation:

`\[ \text{Tax Liability} = \text{Tax Rate} * \text{Taxable Pay} \]`

The tax rate is determined by the income tax brackets applicable in Ghana. The taxable pay is subtracted by the applicable tax-free threshold before applying the tax rate.

In summary, Mr. Lartey's monthly taxable pay is calculated by considering his basic salary, professional allowance, and taxable benefits. The tax liability for each month is then computed using the relevant tax rate and deductions. This ensures accurate taxation based on his total compensation package.