How to calculate your 15% Cost of Living Allowance (COLA)
On 14th July, the government of Ghana approved a 15% Cost of Living Allowance (COLA) for public sector workers and if you are a public sector worker, you need to know how to calculate the 15% Cost of Living Allowance (COLA) even before it is paid at the end of July. Is the % COLA taxable? Keep reading for answers.
Per the communiqué released the 15% COLA, effective will commence effective 1st July. The COLA approval will help workers weather the storms of the current high prices of goods and services in the face of the upward trajectory of inflation and fuel prices.
Cola will not be paid at the end of July. It will be paid in August with July arrears. The reason is that CAGD had processed July salaries for validation at the time the negotiation was made.
Note that in Ghana, “All cash allowances for housing and entertainment are taxable” except where the payment is a repayment or reimbursement for expenses actually incurred exclusively on behalf of and for the benefit of the employer.
Although many allowances are taxable, COLA will not be affected by SSNIT and though almost all allowances are taxable in Ghana, no tax deductions are expected to erode your 15% COLA approved.
The approved 15% COLA is equal to public sector workers’ premium retention and this allowance which was approved for teachers some years ago is non-taxable.
Your COLA will be calculated using your base pay.
Your base pay is simply your income which the employer pays before adding other benefits and deducting taxes among others. It excludes other monetary payments such as Bonuses and Overtime pay received by employees. Simply put your main salary on which social security is calculated.
In Ghana, your Single Spine Salary (SSS) is considered your base pay.
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How to calculate your 15% Cost of Living Allowance (COLA)
Now, if your SSS is Ghs2250.00, this is how you will calculate the 15% Cost of Living Allowance (COLA)
SSS= Ghs2250.00
15% COLA = SSS or Base Pay x 0.15
15% COLA =Ghs2250 x 0.15
15% COLA = Ghs337.50
READ: GES must postpone vacation by two weeks due to COLA strike
This means you will be entitled to the 15% COLA of Ghs337.50 month after month effective from the end of July 2022 to December 2022.
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The amount will be added to your bay after all statutory deductions and loans on your account have been paid to arrive at your final take-home pay, which is also called the net pay. No matter what deductions are currently on your payslip, from July to December 2022, your take-home pay will increase by 15% COLA based on your SSS.
NEW UPDATE AFTER THE ABOVE ARTICLE WAS PUBLISHED
New information on whether COLA would be taxed or not and when the first COLA will be paid is out…READ to find out the latest update [First 15% COLA may not reflect until August 2022]
In a related development, COLA strike over, GES orders all staff to return to work
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Source: Edutainnews.com