Income Tax Exemptions

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Income Tax Exemptions

Income Tax Exemptions are the amounts that are reduced or removed from Income amounts because they are exempt from taxation. These exemptions are to be outlined during filing.

Exempt amounts include:

Salary, allowances, facilities, pension and gratuity of the President;
Income directly connected to the Government or local authorities’ activities;
Income of a non-commercial public corporation;
Pension;
Income of a cocoa farmer from cocoa; or

Other types of income that are exempt from taxes:

Gain from life insurance when the proceeds are paid by a resident insurer;
The income of a non-resident person from a business that operates ships or aircraft, if the Commissioner-General is satisfied that an equivalent exemption is granted by that person’s country of residence to persons resident in Ghana;
A dividend paid to a resident company by another resident company when the company receiving the dividend controls at least 25% of the voting power in the company paying the dividend. This exemption does not apply to certain special industries;
Interest or dividend on an investment paid or credited to a holder or member of an approved unit trust scheme or mutual fund;
Interest and gains realised by a non-resident person on bonds issued by the government of Ghana;
Gains from the realisation of GSE- listed securities;
Income of an approved unit trust or mutual fund; and
Income of an approved Real Estate Investment Trust.
Any other exemption granted by law.

Deductions

An expense is deductible if it is wholly, exclusively and necessarily incurred by the person in the production of the business or investment income for the year.

A deduction shall be disallowed for an expense that is of a capital nature.

An expense that is of a capital nature includes an expense that secures a benefit that lasts for more than twelve (12) months.

Allowable Deductions

Allowable deductions include the following:

Interest incurred by a person in borrowing money or in the production of income;
Trading stock;