GIFT TAX AND YOU

WHAT IS GIFT TAX?

This is the tax payable by you on the total value of taxable gifts received within a Year of Assessment.

WHAT IS A YEAR OF ASSESSMENT?

The Year of Assessment is from 1st January - 31st December of the same year.

WHAT IS TAXABLE GIFT?

A. Taxable gift means any of the following assets situated in Ghana:-

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,

C. an asset whether, situated in Ghana or out side 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, capitalized 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 enures for or to the benefit of a resident person.
Assets in (b) and (c) above means an asset referred to in (i) to (viii) of (a).

It is immaterial whether or not that person physically received the asset so long as the act, omission or transaction inured or inures to the benefit of that person.

ARE THERE EXEMPTIONS UNDER THE GIFT TAX?

Yes, there are exemptions under the Gift Tax.

AM I MANDATED TO REPORT A GIFT I RECEIVE?

Yes, if you receive a taxable gift, you should within thirty (30 days) of receipt of the gift, furnish the Tax Office with a return in writing, containing the following information:-

NOTE
No return is required where the value of taxable gift(s) does not exceed GH¢50. However, as soon as another gift is received within the same year of assessment that makes the total value of taxable gifts exceed GH¢50, a return must be furnished and the relevant tax paid. Any subsequent receipts of taxable gifts within the same year of assessment must be reported.

PAYMENT OF GIFT TAX

The return you furnish to the Tax Office must be accompanied with the tax due. The tax payable is 5% of the excess over GH¢50.

Example:
Asset                 Value                         Year of Assessment
Gift of Land        GH¢1,800               (1/1 -- 31/12/02)

Computation of Tax

Value of Gift:             GH¢1,800
Less: Tax Free               GH¢50
Chargeable Value     GH¢1,750

Tax payable thereon @ 5% GH¢87.50

NOTE
The GH¢50 tax free taxable gift is granted only once within the same year of assessment. Subsequent receipts of taxable gifts within the year are taxable at 5% without the deduction of the tax free GH¢50.

For example, if after the payment of the tax on the land in the example above, another taxable gift valued at GH¢600 is received, the tax on it will be GH¢30 (5% of GH¢600).

HOW IS THE VALUE OF THE GIFT DETERMINED?
The value of the taxable gift is the market value of the gift at the time of receipt.

THESE NOTES ARE FOR GUIDANCE ONLY
IF YOU HAVE ANY FURTHER ENQUIRIES, YOU MAY CALL AT THE NEAREST TAX OFFICE

ISSUED BY THE INTERNAL REVENUE SERVICE
FEBRUARY 2007