Amendments to The Income Tax Act, 2015 (ACT 896) was published by the Daily Graphic on Thursday February 4, 2016. This comes shortly after utility tariff hikes, fuel prices hikes and increases in other withholding taxes. Fortunately, the new PAYE (which is also a withholding tax), does not increase the tax burden of the Ghanaian income earner. For salaried workers, it actually increases their Take Home salary, other things being equal ... and of course, this has always been the case whenever there's an amendment to the Income Tax Act, just that most Ghanaians were not so certain if the rates on each threshold will be maintained in these "perilous times". The nontaxable chargeable income was increased from GHS 132 to GHS 216, and even though the subsequent thresholds on the table above sees increases, the rates are maintained.
Consider this example ... Koo Manu was employed by Abrabo Y3 Hard Company Limited on February 14, 2015. In his appointment letter, his gross monthly salary was stated as GHS 5,310.40 (subject to deductions for SSNIT contributions and income taxes). Under the old Income Tax Act, Koo Manu's take home salary was GHS 4,000, with a tax burden of GHS 1,018.33. This new income tax means that Koo Manu's income tax has reduced to GHS 948.96 ... his new Take Home salary should then read GHS 4,069.37 on his February 2016 payslip! What this means for Abrabo Y3 Hard is the obvious; SAME wage bill, but a reduction in the monthly statutory payments to the Ghana Revenue Authority (GRA) on behalf of Koo Manu IFO PAYE.
Demand a payslip from your company's accountant today! Make sure you're seeing some upward adjustment in your Take Home and if you have doubts, send me an email and I shall calculate your new PAYE and Take Home for you (for free). Times are hard Chaley, make every pesewa count!