are allowances taxable in ghana:A Guide to Taxation and Allowances in Ghana

tieauthor2023/11/27 14:46:58

Allowances are a common feature of the working landscape, with employees often receiving compensation for various reasons, such as moving expenses, housing allowances, and travel reimbursements. However, the taxation of allowances in Ghana can be complex, as different types of allowances may be subject to different tax rules. This article aims to provide a guide to the taxation of allowances in Ghana, helping individuals and businesses understand their tax obligations related to allowances.

Taxation of Allowances in Ghana

Allowances in Ghana are generally subject to income tax, with the exception of a few specific allowances that are exempt from taxation. The following sections will discuss the taxation of various types of allowances in Ghana.

1. Salary and Wage Allowances

Salary and wage allowances are generally subject to income tax in Ghana. These allowances include basic salary, housing allowance, transportation allowance, and other similar compensation. Employees are required to declare these allowances on their income tax returns and pay income tax at the applicable rate.

2. Movements and Transport Allowances

Movements and transport allowances are usually subject to income tax in Ghana, with some exceptions. These allowances include travel allowances, relocation allowances, and other similar compensation. However, there are certain exceptions to the taxation of movements and transport allowances, such as allowances for official travels and military personnel.

3. Expenses Incurred by the Employer

Employer-paid expenses are generally not subject to income tax in Ghana. These expenses include costs incurred by the employer for the employee's use, such as office supplies, telephone bills, and other similar items. However, these expenses may be subject to other taxes, such as value added tax (VAT) or withholding tax.

4. Other Allowances

Certain other allowances may be subject to income tax in Ghana, depending on the specific circumstances. These allowances include allowance for family care, allowance for disability, and other similar compensation. However, these allowances are generally subject to a lower tax rate than salary and wage allowances.

Taxation of Other Income

In addition to the taxation of allowances, other types of income in Ghana may also be subject to income tax. These include wages, salaries, profits, dividends, and other forms of income. Income tax in Ghana is calculated using a progressive tax rate structure, with tax rates increasing as income levels increase.

Tax Filing and Payment

Taxes in Ghana are due by the end of the following month after the tax year ends on March 31. Individuals and businesses are required to file income tax returns using the online tax filing system operated by the Ghana Revenue Authority (GRA). The due date for the tax payment is usually 31 March of the following year.

The taxation of allowances in Ghana can be complex, and the rules may vary depending on the specific type of allowance. It is essential for individuals and businesses to understand the tax rules related to allowances in Ghana to ensure compliance and avoid unnecessary tax liabilities. For further assistance, it is recommended to seek professional advice from a tax consultant or accountant.