ACCOUNTING TECHNICIANS SCHEME OF WEST …

1 NOTE: This is a work in progress. All topics in the syllabus are covered but editing for necessary corrections is in progress. Thanks. i PREPARING TAX COMPUTATIONS & RETURNS FOR ACCOUNTING TECHNICIANS SCHEME OF WEST AFRICA (ATSWA) STUDY PACK NOTE: This is a work in progress. All topics in the syllabus are covered but editing for necessary corrections is in progress. Thanks. ii CONTENTS CHAPTER ONE INTRODUCTION AND BACKGROUND TO TAXATION Contents .. ii Preface .. ix Acknowledgements .. xi Foreward .. xii Learning Objectives .. 1 Meaning of Taxation .. 1 Objectives of taxation .. 5 Principles of Taxation .. 7 Classification of Taxes.

2 8 Sources of Tax Laws .. 10 Summary .. 10 Revision Questions .. 11 CHAPTER TWO GENERAL ADMINISTRATION OF TAXES Learning Objectives .. 20 Structure of Tax Administration .. 20 Composition and Duties of Revenue Agencies in Nigeria .. 29 Tax Administration and Procudure in 34 Tax Collection .. 41 Objectives and Appeals .. 45 Offenses and Penalties Nigeria Position .. 49 Returns .. 52 Pre-Operation 55 Types of Assessment .. 55 Tax Clearance Certificate .. 57 Introduction to Ethical Issues .. 58 Payment of Minimum Tax in Nigeria .. 59 NOTE: This is a work in progress. All topics in the syllabus are covered but editing for necessary corrections is in progress.

3 Thanks. iii Structure of Tax Administration in Liberia .. 61 Summary .. 68 Revision Questions .. 68 CHAPTER THREE BASES OF ASSESSMENT Learning Objectives .. 72 Year of Assessment .. 72 Basis Period .. 72 Developments in the System of Assessment Basis Period .. 74 Commencement of Business The Position in Ghana .. 76 Cessation of Business The Position in Ghana .. 77 Cessation of Business The Position in Nigeria .. 77 Change in ACCOUNTING Date The Position in Ghana .. 77 Change in ACCOUNTING Date The Position in Nigeria .. 78 Summary and Conclusion .. 78 Revision Question .. 83 CHAPTER FOUR CAPITAL ALLOWANCES Learning Objectives.

4 87 Meaning and Purpose of Capital Allowances .. 87 Conditions For Granting Capital Allowances .. 87 Qualifying Plant Expenditure .. 88 Types of Capital Allowances .. 93 Capital Allowance Under Higher Purchase Transaction .. 97 Basis Period For Capital 98 Restriction on Capital Allowance Claimable .. 99 Terminal Capital Allowances .. 100 Replacement of Individual Plant and Machinery .. 100 Investment Allowance .. 100 Rural Investment Allowance .. 101 NOTE: This is a work in progress. All topics in the syllabus are covered but editing for necessary corrections is in progress. Thanks. iv Export Processing Allowance .. 101 Reconstruction and Investment Allowance.

5 101 Position in Liberia .. 105 Summary .. 105 Revision Questions .. 106 CHAPTER FIVE PERSONAL INCOME TAX Learning Objectives .. 109 Taxation of Income of Individual .. 109 Employment Income .. 110 Trade and Vocation Income .. 111 Distinction between Employment and Self-employed .. 112 Benefits in Kind .. 116 Allowable and Non-Allowable 116 Reliefs and Allowances .. 117 Pensions and Gratuities .. 126 Taxation of Income of Community and Families .. 127 Filing of Returns .. 127 Tax Income of Individual in Liberia .. 129 Summary .. 132 Revision Questions .. 132 CHAPTER SIX TAXATION OF INCOME OF PARTNERSHIPS Learning Objectives.

6 137 Introduction .. 137 Amalgamation of Partnership .. 138 Conversion into a Limited Liability Company .. 138 Taxation of Partnerships Under Ghana Tax law .. 139 Summary .. 143 NOTE: This is a work in progress. All topics in the syllabus are covered but editing for necessary corrections is in progress. Thanks. v Revision Questions .. 143 CHAPTER SEVEN COMPANIES INCOME TAX Learning Objectives .. 151 Categories of Assessment .. 151 Chargeable Profits and Tax Liability .. 153 Taxation of Export Free Zone Enterprises .. 165 Local Plants and Fabrication of Spare Parts .. 165 Information Technology Tax .. 165 Small Business Tax .. 165 Principle of Corporation Tax in Liberia.

7 166 Summary .. 166 Review Questions .. 167 CHAPTER EIGHT LOSS RELIEFS Learning Objectives .. 172 Current Year Loss Relief .. 172 Carrying Forward Loss Relief ..172 Limitation and Priority of Relief ..172 Treatment of Losses under Ghana Income Tax Law .. 173 Summary .. 175 Review Questions .. 175 CHAPTER NINE WITHHOLDING TAX Learning Objectives .. 181 Relevant Tax Authority .. 181 Withholding Tax Rates .. 182 Filing and Remittance of Withholding Tax Returns .. 184 NOTE: This is a work in progress. All topics in the syllabus are covered but editing for necessary corrections is in progress. Thanks. vi Treatment of Withholding Tax Receipts.

8 189 Advantages of Withholding Tax .. 189 Disadvantages of Withholding Tax .. 189 Withholding on Payment to Residents .. 190 Summary .. 192 Review Questions .. 192 CHAPTER TEN CAPITAL GAINS TAX Learning Objectives .. 196 Relevant Tax Authority .. 196 Administration .. 196 Artificial and Fictitious Transactions ..199 Exemptions and Reliefs .. 199 Computation of Chargeable Gains .. 199 Returns and Payment of Tax .. 203 Summary .. 204 Review Questions .. 204 CHAPTER ELEVEN VALUE ADDED TAX Learning Objectives ..209 Meaning and Application of Value Added Tax .. 209 Administration of Value Added Tax ..209 Registration of Vatable Persons.

9 210 Records and Accounts ..214 Submission of Tax Returns and Date of Payment of Tax .. 215 Recovery of Tax Due, Interest and Other Liabilities .. 215 Offences and Penalties .. 216 Goods and Services Exempted ..221 Computation of Value Added Tax .. 224 NOTE: This is a work in progress. All topics in the syllabus are covered but editing for necessary corrections is in progress. Thanks. vii The Method of Calculating VAT .. 227 Summary and Conclusion .. 232 Review Questions .. 233 Multiple Choice Questions .. 235 CHAPTER TWELVE EDUCATION TAX (For Nigerian Candidates Only) Learning Objectives .. 238 238 Assessment and Collection.

10 238 Rate and Payment .. 238 Offences and Penalties .. 238 Management and Administration .. 239 Composition of Board of Trustees .. 239 Functions of Board of Trustees .. 239 Areas of Activities to which funds could be disbursed .. 240 Disbursement of Funds .. 240 Summary .. 241 Review Questions .. 241 CHAPTER THIRTEEN GIFT TAX - (For Ghana Candidates Only) Learning Objectives .. 242 Meaning and Application of Gift Tax .. 242 Taxable Gifts .. 242 Gifts Exempt from Tax .. 243 Valuation \ of Taxable Gifts .. 243 Procedure Relating To Gift Tax (Filing of Returns) .. 244 Summary .. 244 Review Questions.