Four scenarios, one question, twenty marks — and a Chief Examiner’s Report that names the exact mistake candidates keep making, sitting after sitting. This post walks through the real ICAG Advanced Taxation question, the full marking scheme, and the reading discipline that separates a strong answer from a partial one.
The Question, In Full
Part (a) presented Bubandushe, an NGO distributing rice to widows and orphans, that also runs paid training programmes for government institutions — asking whether it’s taxable and on what basis (8 marks). Part (b) presented Askona, a US-based (non-resident) trust distributing funds to two Ghana-resident beneficiaries — asking whether the distribution is taxable (4 marks). Part (c) gave a mining company’s production, revenue, and cost of production figures and asked for the royalty payable (2 marks). Part (d) asked what a stability agreement seeks to achieve for a mining company (6 marks).
The Worked Solution
Bubandushe’s core charitable income (distributing rice) is exempt under section 97(4) of the Income Tax Act, 2015 (Act 896) — but its training-fee income is business income, taxable under section 97(5), attracting corporate tax on the training income and withholding tax on qualifying supplier payments.
Askona’s distribution is taxable specifically because Askona itself is a non-resident trust — a resident trust paying resident beneficiaries would have been exempt; a non-resident trust paying resident beneficiaries is not.
The mining royalty is calculated purely on Revenue: 5% × GH¢10,000,000 = GH¢500,000 — production and cost of production are both irrelevant distractors here.
And a stability agreement exists to protect a mining company’s fiscal terms against adverse legislative change over the multi-decade life of its investment, letting the company commit long-term capital with confidence.
Exam Tip: The examiner’s own report states that royalty-rate mistakes repeat “almost every sitting” because candidates don’t read prior examiner reports. Reading last year’s report before you sit this year’s paper is some of the highest-yield revision time you can spend.
Conclusion
None of the four parts in this question shared a formula — but all four shared a demand for precision: split the NGO’s income correctly, apply the trust rule to the right party’s residence, use the right base for the royalty calculation, and answer what a stability agreement achieves rather than what it is. Four different traps, one underlying skill.
Ready to Go Deeper?
This topic is covered in full inside the Advanced Taxation revision kit, plus every past question video breakdown, at Passkoguru.
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