Tax Reliefs Frequently Asked Questions
- What is tax relief?
Tax reliefs are allowances given to every taxpayer for certain responsibilities.
In Ghana, the government gives personal upfront relief for
- being married or Single/Widowed with a minimum of 2 children
- Having children in school
- Taking care of aged dependents
- Being a person with disability
- Who qualifies for tax relief?
Every person who pays tax, whether they are employed in the public or private sector.
- When is the best time to apply for tax relief?
To enjoy the full benefit of tax relief, one needs to apply for the relief at least 4 months before the start of a new year.
- How long does it take for the tax relief to take effect after applying for tax relief?
All things being equal, it takes between 2 and 3 months.
- How do you know the tax relief has been granted and paid?
When implemented, government workers see it on their payslips as “Tax Relief Gain”.
Taxpayers in the private sector receive a “Tax Relief Card”, usually referred to as pink cards, which they submit to their employers for implementation.
- How often does one receive tax relief once it starts reflecting?
Once it starts, it is expected to run until the end of the year (i.e. December).
- How much does one receive as tax relief?
This usually depends on lots of factors. These include the reliefs one qualifies for, the taxpayer’s basic income, etc.
- If one applies for the relief in the middle of the year, does he/she get arrears?
Depending on the period the tax relief was approved for, one can receive arrears. For example, if Tatenda’s approved relief is effective in January but receives the first payment in May, he would be entitled to arrears from January to April.
The arrears, however, take some time to be paid. There are some instances where the arrears are paid in the same month, and there are some instances where the arrears are paid in subsequent months, either in full or in instalments.
NO ONE HAS POWER OVER WHEN ARREARS ARE PAID.
- How many times can one apply for tax relief in a year?
Once every year.
- Do you have to pay back what you receive as tax relief someday?
No, if you used the proper channels to get the relief.
There have been instances where people have gone backdoor without an application to the requisite authorities to get tax reliefs.
The amounts received under such schemes are usually quite high, ranging from GHS300 and above for persons with no disability.
If the authorities become aware of this, beneficiaries are usually asked to pay back, and this is done by direct deduction from their pay.
Gladly, we go through the right channels for our tax reliefs, and so you would not have to ever worry about a situation like this.
- Apart from the personal upfront reliefs, are there other tax reliefs?
Yes. They are Education and Mortgage Relief.
Education relief is granted to a taxpayer who undergoes training to update his/her technical, professional or vocational skills. The Educational relief is 2000 Ghana cedis per year.
Mortgage Relief is granted based on the qualifying interest that an individual pays in a given year for their private residence.
These reliefs can be accessed by filing your annual tax returns.
- Are there any benefits of tax reliefs to applicants?
Yes.
Tax reliefs increase the amount of disposable income available to beneficiaries. This makes it possible to save, invest or spend to improve livelihood.
Also, increased disposable income could boost spending, which in turn stimulates the economy as a whole.
- Is the tax relief application a one-time thing?
No.
To enjoy it every year, one needs to apply for it every year.
The reason is that situations and responsibilities change over the years, and it will only be fair if changes are allowed.
- How is tax relief computed?
Tax reliefs are calculated based on qualifying responsibilities, and what one gets mostly depends on that and their basic salary.
What happens is that the granted reliefs are taken out of your taxable income before tax is applied. Ghana uses a tiered tax system for the calculation of Pay As You Earn (PAYE).
I will dedicate a whole article to how tax relief is computed soon.
You have more questions?
Reach out.
