Introduction
The Chief Examiner’s report on the November 2023 Principles of Taxation paper says Question Three was “the most poorly answered,” that “less than 10% of the candidates passed” it, and that the details given were “very clear.” This article walks through that employment income question the way the marking scheme builds it, so you can see exactly where the ticks are.
What the Report Actually Said
The general comments are blunt: “It seems the candidates have been learning the principles of Taxation based on past questions instead of the syllabus and the law.” The paper had 324 candidates and a pass rate of 34.57%, down from about 59% in March 2023. The report also named topics candidates neglected: the Ghana National Pension Scheme, Tax Administration and Value-Added Taxation, adding that more attention to them would have lifted the pass rate above 50%.
The Scenario in Brief
Mr. Antitom, Chief Accountant at Nangode Ltd since 1 April 2020, earned a basic salary on a scale from GH¢60,000 rising GH¢10,000 a year. He received monthly cash allowances, an overtime allowance, a bonus of 25% of basic, furnished accommodation (he paid 5% of basic), and a vehicle with fuel for private and official use. He pays 5.5% of basic to the mandatory scheme and 10% to a voluntary scheme, is married with children, is physically challenged, and earned interest and dividends. The task: chargeable income for the 2022 year of assessment.
The Governing Principle
Employment income is built in layers. Cash first, benefits second, reliefs last, and each layer depends on the one before. The marking scheme spreads its twenty marks evenly across the lines using ticks, so completeness matters as much as accuracy.
The Build-Up, Line by Line
| Line | Working | GH¢ |
|---|---|---|
| Basic salary (2022) | 70,000 × 3/12 + 80,000 × 9/12 | 77,500 |
| Cash allowances | (4,400 + 6,600 + 8,200 + 4,200) × 12 | 280,800 |
| Bonus above 15% of basic | 25% × 77,500 − 15% × 77,500 | 7,750 |
| Overtime | 6,000 × 12 | 72,000 |
| Employer social security | 13% × 77,500 | 10,075 |
| Total cash employment | 448,125 | |
| Accommodation benefit | 10% × 448,125 − 5% × 77,500 | 40,937.50 |
| Vehicle and fuel (restricted) | 500 × 12 | 6,000 |
| Qualifying employment income | 495,062.50 | |
| Less reliefs | see below | (148,253.13) |
| Chargeable income | 346,809.37 |
Reliefs and deductions per the scheme: provident fund 10% × 77,500 = 7,750; social security employee 5.5% = 4,262.50 and employer 13% = 10,075; marriage responsibility 1,200; child education 2 × 600 = 1,200; disability allowance 25% × 495,062.50 = 123,765.63.
Where the Ticks Are
Because ticks are spread evenly, treat every distinct line as a separate mark. Show the salary apportionment. Show the bonus working. Show the 10% benefit base. Show the vehicle restriction. Name each relief separately. Add the one-line note that interest and dividends are not treated in this computation; the scheme awards a mark for it.
EXAM TIP: Write the build-up in the same order every time: basic, allowances, other cash, total cash employment, benefits, qualifying employment income, reliefs, chargeable income. A fixed order is your protection against a question that changes one input.
Conclusion
The examiner said anyone with an average grasp should have answered this. The gap is not intelligence. It is learning the law and the build-up, not the last answer. Practise this computation with three different salary scales and you will own it.
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