Adnan Adams Mohammed
The Ghana Revenue Authority as part of their mandate to educate citizens on tax policies, has elaborated on some tax incentives that individual citizens can take advantage of.
Among such is the personal tax relief system. The personal tax relief is an allowance given to a resident individual to reduce his or her tax burden.
GRA at a training event for selected journalists in Accra educated participants on the several tax policies being implemented by the Authority. As it called on eligible taxpayers to be compliant, it also urged taxpayers who qualify for the several tax incentives to apply for them.
“The Ghanaian tax policies are not only about taking money from people all the time, but it also gives incentives or reliefs such as the personal tax relief, right to challenge tax amounts through laid down channels, tax exemptions for businesses among others”, Dominic Naab said at the training.
As every government globally urges its citizenry to pay tax as part of their obligation in developing the nation, such payment places some sort of burden on the taxpayer. In order to lessen the burden of the taxpayer, some reliefs are granted by the government.
However, some tax experts have recommended that a computerized tax filing system should be implemented so that every Ghanaian can file the returns online to reduce the delays caused by paper filing. They also believe that tax policies over the years have not improved tax reliefs granted to taxpayers. In some jurisdictions, taxpayers enjoy bigger tax reliefs. It is hoped that government policies will pay attention to this area and revise the reliefs on an annual basis.
“The current process of applying for relief annually should also be automated. Indeed, when managed properly the tax relief system can help bring on board more taxpayers”, a tax official who spoke unofficially said.
Personal Tax Relief
In effort to help educate the citizens on the awareness of some of the reliefs, we will focus on personal tax reliefs.
Types of the Personal Tax Relief:
Upfront tax reliefs
Upfront tax reliefs are granted on a monthly basis to resident individuals and employees as opposed to an annual lump sum relief.
Below are the five upfront tax reliefs:
The Marriage/ Responsibility Relief
This relief is granted to a married man or woman who takes care of the spouse and two or more children. An unmarried person who takes care of two or more children can also apply for this relief. Individuals under this category are entitled to a relief of GH¢ 1,200 per year. Only one spouse (either the husband or wife) is entitled to this relief.
Child Education Relief
A resident individual who pays his or her child’s school fees is entitled to this relief. The relief is granted to a maximum of three children attending any recognized registered educational institution in Ghana. A child under this law includes an adopted child or ward. Only one parent can claim this relief in respect of the same child/children. Each child is entitled to an amount of GH¢600 yearly.
Disability Relief
Disability relief is an incentive for persons with disabilities who are self-employed or employees. This relief is limited to 25% of assessable income from employment and not investment income of individuals in this category.
Old Age Relief
Persons who are 60 years of age and above who earn taxable income are entitled to a relief of GH¢1,500 per year.
Aged Dependent Relative Relief
This relief is for residents who have a dependent relative who is 60 years old and above. The relief covers a maximum of two dependent relatives. However, the spouse or children of the dependant are not entitled to this relief. The relief is GH¢1,000 per year.
Other Reliefs
Educational relief
The educational relief is an amount of GH¢ 2000 that is granted yearly if an individual undergoes training to update his or her professional, technical or vocational skills/knowledge.
Mortgage relief
Mortgage relief is a tax relief that is based on the amount of qualifying mortgage interest that an individual pays on a private residence in a given tax year. The interest is only granted for a single residential building.
How to apply for a tax relief
To access these reliefs, a resident individual, who is a recognized taxpayer, must fill out a prescribed form called the Tax Relief Application Form to the Commissioner General of the Ghana Revenue Authority (GRA). Employers can also file the form on behalf of their employees. However, to benefit from other reliefs that are not upfront, taxpayers are required to file their annual tax return.
Procedure
The procedure for applying for tax relief begins with the filing of Income Tax Return Form 21 (IT Form 21) by the taxpayer. This form after completion is submitted to the commissioner of Ghana Revenue Authority. In addition, if the Taxpayer is an employee, the accountant at his/her
workplace completes and countersigns a tax deduction schedule Form (IT Form 21)
supplementary on behalf of the Taxpayer.
Ghana Revenue Authority officials go through all these forms to ensure the correctness of the computations on the IT Form 51 supplementary and also ensure the proper completion and accuracy of information provided on the IT Form 21. The procedure also involves the inspection of other documents deemed necessary.
However, a taxpayer after working for some time decides to apply for tax relief in a particular year, he/she is required to file tax returns for the six preceding years. This is to ensure that the taxpayer has consistently fulfilled his/her tax obligations and also to ascertain his/her source of income over the year.
The return forms thus, Income Tax (IT 21) and deduction schedule Form (IT 51), must be filed not later than three months after the end of the assessment year (Income Tax year). The annual return forms having been completed makes it possible for the calculation of total income and to ascertain the reliefs which may be claimed by the individual taxpayer. The declaration in each of the annual returns form must be duly signed and accompanied by accounts indicating other sources of income, except in the case of employees who have no other source of income and also the illiterate who are to make oral declaration of their income must swear an affidavit to that effect.
