Introduction
A transparency note before we begin: today’s past question is sourced from a real, uploaded ICAG Advanced Taxation past paper rather than a CITG-branded one, because no CITG/ADIT past paper currently exists in our source library. Computing a partnership’s chargeable income through the add-back method, however, is core, examinable content across CITG, ADIT, and ICAG alike — all governed by the same Income Tax Act, 2015 (Act 896) — so the technique transfers directly to your paper.
The Question
Two partners, Takyi and Kuro, run a retail business; a third partner, Tawia, is admitted mid-relationship, and profits are then shared 3:2:1. Candidates were given the partnership’s full profit and loss account, with detailed notes behind each expense line, and asked to compute the partnership’s chargeable income for the 2023 year of assessment — plus a short discussion question on the challenges of tax reform in Ghana.
Reading the Trap
The examiner’s own report reveals the real story: this question is built entirely around one principle — no partner may benefit financially from the partnership — dressed up across a dozen ordinary-looking expense lines. Candidates who applied the rule consistently scored well. Candidates who applied it inconsistently, allowing some partner benefits through while catching others, lost marks across the board.
The Full Worked Answer
Starting from the net profit of GH¢798,000, twelve items must be added back: the court fine paid for the partnership’s own negligence (GH¢20,000); rent paid on Takyi’s private residence (GH¢156,000); depreciation (GH¢123,000); wages and salaries paid to the three partners themselves — Takyi, Kuro, and Tawia (GH¢486,000 combined); interest on capital paid to the three partners (GH¢80,000 combined); legal fees for acquiring a new company, being capital in nature (GH¢20,000); entertainment relating to the partners’ private enjoyment (GH¢270,000); sundry expenses that cannot be verified as business-related (GH¢270,000); the fine for late vehicle licence renewal (GH¢5,000); the landscaping and renovation cost, being capital in nature (GH¢180,000); and commission paid to an unidentified recipient plus commission paid to Takyi himself (GH¢80,000 combined). That’s a total of GH¢1,690,000 in add-backs, bringing adjusted profit before capital allowance to GH¢2,488,000. Deducting the GRA-agreed capital allowance of GH¢234,000 gives a confirmed profit for appropriation of GH¢2,254,000, exactly as marked in the official ICAG solution.
Applying the question’s own 3:2:1 profit-sharing ratio to that confirmed figure — a mechanical teaching step, not a figure quoted from the marking scheme, since the scanned answer key itself does not carry the individual apportionment through — gives Takyi GH¢1,127,000, Kuro GH¢751,333, and Tawia GH¢375,667 as their respective shares of partnership business income for the 2023 year of assessment, before personal reliefs and graduated tax rates are applied individually.
Exam Tip: Whenever a tax question involves a partnership, scan every expense line for a partner’s name attached to it — as an employee, a recipient of interest, a tenant, or a commission earner. If a partner’s name is attached, the default assumption is disallow and add back, unless the question gives you a specific reason otherwise.
Marking Scheme and Examiner Comments
Direct from the November 2024 Chief Examiner’s Report: “This question was on partnership. The question required reconstruction of the income of the partnership by adding back. Candidates must note that per the income tax laws, no partner is supposed to benefit from the partnership. Any benefit from the partnership must be added back. Interest on capital paid to the partners must be added back. Sundry expenses were allowed by most candidates. It was not allowable. Wages and salaries paid to the partners must be disallowed as well. Rent and rates paid for the partner was not allowable. Fines for late renewable of vehicle license was not allowable as well.”
Conclusion
This question rewards candidates who apply one consistent principle — no partner benefits from the partnership — across every single expense line, rather than catching some partner benefits and missing others. Master that consistency, and partnership adjusted-income questions become a source of reliable marks rather than a scattered guessing exercise.
Ready to Go Deeper?
This question type — and every other partnership and adjusted-income past question — is covered in full inside the Passkoguru Past Question Revision Kit. Get the revision kit at Passkoguru.
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