TAX RELIEFS
Tax Reliefs are granted to encourage specified behaviour and actions.
Reliefs are granted to individuals or entities to reduce their tax burden.
To enjoy these benefits, one must apply for them.
Personal tax reliefs (upfront reliefs) available in Ghana for resident taxpayers include:
Marriage/Responsibility Relief:- This is granted to a resident who cares for his /her spouse or at least two children. The relief granted is GHS 1,200 per year.
Child Education Relief:- This relief is awarded to a resident who pays his or her child’s school fees. The relief covers a maximum of three children(biological or adopted), who attend any recognized registered educational institution in Ghana. Both parents cannot claim this relief for the same child /children. The relief is GH¢600 per child per year.
Old Age Relief:- This is granted to persons aged 60 years and above. The amount of relief granted is GH¢1,500 per year.
Disability Relief:- This is granted to persons with disability who receive income from business or employment and can prove to the satisfaction of the Commissioner-General that they are disabled. The relief is 25% of the disabled person’s income from business or employment.
Aged Dependent Relative Relief:- This is given to a resident individual who takes care of a relative who is sixty years old and above. The relief of GHS1,000 per year is granted to cover up to two relatives. The relief does not apply to a dependent spouse or child and two persons cannot claim this relief in respect of the same relative.
WHO QUALIFIES FOR TAX RELIEF?
Anyone who pays tax (salaried worker or business owner) and meets the listed conditions qualifies for tax relief.
- Married or taking care of at least two children.
- Paying for the education of his/her children/wards including adopted children.
- Is sixty years and above.
- Has a disability.
- Caring for aged parents. Mother, Father, Uncles, aunties etc.
OTHER PERSONAL RELIEFS
These can be accessed by filing your annual tax returns. They include:
- Training Relief is granted to a person undergoing skill training in a year. The amount of relief is GHS 2,000 a year.
- Mortgage Relief: this is given to cushion a taxpayer paying a mortgage on private property. It is mostly granted on the qualifying interest being paid on the mortgage.
INFORMATION REQUIRED FOR TAX RELIEF APPLICATION
- Your Full Name
- Your Mother’s Maiden Name
- Date of Birth
- Name of Employer
- Address of Employer
- Social Security Number
- Staff ID Number (for civil servants)
- Ghana Card Number
- Marital Status
- Name, date of birth, ghana card number and staff ID number of Spouse if married
- Name, Date of Birth and Name of Educational institution for up to three children.
- Certificate of Disability for PWDs (if applicable)
- Name, date of birth or age, and relationship of two aged dependents (if applicable).
Case Study:
Mr A’s monthly accessible income is GHS4,000. Let’s assume he is granted the listed reliefs:
- Marriage relief
- Child Education for 3 children
- Aged dependent relief for his mother and father.
Calculate his tax relief gains for the month.
Solution:
Computation of Tax (PAYE Without Tax Relief)
MONTHLY BAND | CUMM BAND | RATE | TAXÂ | CUMM. TAX |
                               402.00 |                     402.00 | 0% |                            –  |                                   –  |
                               110.00 |                     512.00 | 5% |                      5.50 |                             5.50 |
                               130.00 |                     642.00 | 10% |                   13.00 |                          18.50 |
                           3,000.00 |                 3,642.00 | 17.5% |                525.00 |                        543.50 |
                               358.00 |                 4,000.00 | 25% |                   89.50 |                        633.00 |
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Computation of Tax (PAYE After Reliefs)
- Calculation of Reliefs:
Marriage/Responsibility= 1,200 p.a
Child Education Relief   = 1,800 p.a (600×3)   Â
Aged Dependent Relief = 2,000 p.a (1,000×2)Â
Total Annual Relief        =1,200+1,800+2,000
Total Monthly Relief     = 5,000/12
                                           = 416.67
- Calculation of Accessible Income After Reliefs
                               4,000-416.67 =3,583.33
Computation of Tax (PAYE With Reliefs)
MONTHLY BAND | CUMM BAND | RATE | TAXÂ | CUMM. TAX |
                               402.00 |                     402.00 | 0% |                            –  |                                   –  |
                               110.00 |                     512.00 | 5% |                      5.50 |                             5.50 |
                               130.00 |                     642.00 | 10% |                   13.00 |                          18.50 |
                           2,941.33 |                 3,583.33 | 17.5% |                514.73 |                        533.23 |
Mr A’s Monthly Tax Relief Gain is:
Tax (without Relief) – Tax (After Relief)
= 633.00 – 533.23
=Â Â 99.77 per month
This translates to a total annual gain of  1,197.24 (99.97×12) cedis due to tax reliefs.
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