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Personal Income Tax In Ghana

Income Tax is a tax levied on an individual’s total income, that is income from employment, business and investment.

It is obligatory to pay income tax if you are a sole proprietor or a person in partnership who earns Ghc391 monthly.

The Government of Ghana introduced the Income Tax Act, 2015, (Act 896), to provide for the imposition of income tax and other related taxes.

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An individual is expected to pay income tax on their chargeable income or on final withholding payment received during the year of assessment. However, an individual is allowed a deduction for foreign tax credit.

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Employment Income

A person’s income on employment is the profit he accrued from the employment for the year or during the year. It includes wages, salary,leave pays, fees, commissions, gratuities, overtime pay, bonuses and other allowances paid in cash or in kind.

Below are some expenses excluded from the calculation of employment income;

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  • Final withholding payment
  • Redundancy pay

Discharge of reimbursement of an expense incurred by an individual, or behalf of the employer that serves the proper business purpose of the employer.

Business Income

An individuals business income has to do with the profit he gets from his business for the year or during the year. It includes the following;

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  • Services fees, consideration received in respect of trading stock, a gain from the realization of assets and liabilities of the firms.
  • An amount derived as consideration for accepting a restriction on the capacity, of the person to conduct the business.
  • A gift received by the person in respect of the business.

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Below are amounts excluded from an individual’s business income calculations;

  • Exempt amounts
  • Final withholding payment
  • Any amount included in the person’s employment income.
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Investment Income

An individuals investment refers to the profit he gets from his Investment for the year or during the year.

It includes the following;

  • A gain from the realization of an investment asset
  • Dividend, interest, annuity, natural resource payment, rent and royalty
  • Any gift received in respect of the Investment among others.

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Below are amounts excluded from investment income calculations;

  • Exempt amounts
  • Final withholding payment
  • Any amount included in a person’s income from employment or business.

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