Question

Question Description

b) Stella Akorfa retired from Stonebridge (UK) Limited has served the company for 20 years meritoriously. She relocated to Abuakwa in Kumasi, Ghana where she commenced business as a Security Consultant to honorable politicians. She rented out her house in the UK for a yearly rent of £10,000. She also maintained a healthy balance in her account with Gold Bank in London.

Her income for 2018 accounting year is as summarised below:

Consultancy Income (net of all taxes) GH¢70,000.

Dividend received from Success Company (Ghana) Ltd, a resident company at gross amount GH¢10,000.

Rent paid into her London bank account £9,000. Withholding tax amounting to £1,000 had been deducted.

Her London bank credited her account with a net of £4,500 bank interest. UK tax rate on interest is 10%.

Additional information:

The exchange rate is GH¢6 for £1.

Stella Akorfa does not contribute to social security in Ghana.

Required:

Compute her tax liability as an individual for the relevant year of assessment while granting her relief for double taxation under the Ghana/UK Double Taxation Agreement using the credit method. Use 2018 graduated tax rates.

Answer 1

From the given data,