Hampers Taxable

The approach of Christmas has brought another reminder that gifts, including Christmas boxes and hampers, beyond the value of GH¢50 are taxable.

The Internal Revenue Act, 2000 (Act 592) enjoins individuals to pay 10 per cent tax on the market value of gifts they receive, but over the years it has been extremely difficult for the Ghana Revenue Authority (GRA) to enforce the law because the tax regime is founded on voluntary compliance.

The GRA is, therefore, appealing to the good conscience of Ghanaians to declare the gifts they receive and pay tax on them.

The acting Head of Operations (IRS/Domestic Division) of the GRA, Mr James L. Anaman, told the Daily Graphic in Accra that anyone who voluntarily declared gifts received and paid tax on them would be considered as “a first- class citizen of the country”.

Presenting the 2011 Budget Statement to Parliament last month, the Minister of Finance and Economic Planning, Dr Kwabena Duffuor, had announced the intention of the government to increase the gift tax to be in tandem with general income tax.

The aim, according to the minister, was to avoid the shifting of capital gains to gift tax.

The GRA’s reminder on the payment of gift tax comes a few days ahead of the Christmas and New Year festivities, a period normally celebrated with the giving of enormous quantities of gifts.

Section 106 of Act 592, as amended, defines a taxable gift as “(a) any of the following assets situated in Ghana: (i) building of a permanent or temporary nature, (ii) land, (iii) shares, bonds and other securities, (iv) money, including foreign currency, (v) business and business assets, (vi) any means of transportation (land, air or sea), (vii) goods or chattels not included in sub-paragraph (vi), (viii) part of, or any right or interest in, to, or over any of the assets referred to in sub-paragraphs (i) to (vii)”.

The amended section further defines a taxable gift as “(b) an asset or a benefit, whether situated in Ghana or outside Ghana, received by a resident person as a gift by or for the benefit of that person, or (c) an asset, whether situated in Ghana or outside Ghana, received by or for the benefit of a resident person as a gift where the asset has been or is credited in an account or has been or is invested, accumulated, capitalised or otherwise dealt with in the name of or on behalf of or at the direction of that person, or (d) a favour in money or money’s worth or a consideration for an act or omission or the forbearance of an act or omission that ensures for or to the benefit of a resident person”.

The law, however, exempts gifts received “(a) by that person under a will or upon intestacy; (b) by that person from that person’s spouse, child, parent, aunt, uncle, nephew or niece; (c) by a religious body which uses the gift for the benefit of the public or a section of the public, or (d) for charitable or educational purposes”.

Apart from the gifts under exemption, the law requires a person who receives a taxable gift to, within 30 days of receipt, furnish the Commissioner of the Internal Revenue Service (IRS) with a return in writing containing information, such as the description and location of the taxable gift, the total value of the gift, how it is calculated and the tax payable on the gift, the full name and address of the donor of the gift and any other information required by the commissioner.

Mr Anaman acknowledged that Christmas was a period for showing love to one another, mostly in the form of giving gifts, but he noted that anyone who wished to discharge his or her civic responsibility of paying tax on gifts received was welcomed to the offices of the GRA.

He said the payment of tax was a civic responsibility and so people should not wait to be prompted before discharging that responsibility, adding that the spirit of the tax law was purely founded on voluntary compliance.

He said although people have not been complying with the law, the essence of keeping it on the statutes was to check the practice whereby people would declare their incomes as gifts just to avoid the payment of tax. Share Your Thoughts on this article Name Email Location Comments Graphic Ghana may edit your comments and not all comments will be published