Tax on Teachers Professional Development Allowance Legal
Many teachers in Ghana have raised concerns about the about 18% Tax on Teachers Professional Development Allowance paid to teachers by the government. A section of teachers have called on the leadership of teacher unions to negotiate well with the government on the payment of this professional allowance.
Pre Tertiary Education teachers at the basic and secondary school level seem to be disappointed in the amount that hit our accounts after the tax deduction. They are yet to come to terms with how they can be paid an allowance of GH 1200.00 and get a net allowance of between GH849.00 – GH866.00.
READ: Teachers Continuous Professional Development allowance paid
LATEST UPDATE: GES, Fair Wages: Teacher Professional Development Allowance Tax-Free
Teachers Professional Development Allowance and the Tax Law
GhanaEducation.Org has found out that the Ghana Revenue Authority Practice Note on Gains or Profits from Employment under the Income Tax Act, 2015 (ACT 896), Practice Note Number: DT / 2016 / 011 issued on 6th October 2016 spells out personal incomes that are taxable.
Section 4 subsection under 1a under the heading “General rules for taxation of income from employment a state that…
“The income shall be “the individual’s gains or profits from any employment for a Year of Assessment including allowances paid in cash or given in kind.”
Other subsections of this document which is in line with the tax law of Ghana states as follows
Practice Note on Gains or Profits from Employment 2
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b) The basis period for computation of income of an individual from employment for a Year of Assessment shall be the period in which the income was earned within the calendar year.
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c) In instances where employment commences on a date other than 1st January of a calendar year, the basis period for computation of the individual’s income from the employment shall be the period starting from the date of commencement of the employment and ending on 31st December of the same year.
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d) The individual shall account for tax on employment income on a cash basis and calculation of the tax payable shall be based on a twelve months period ending on 31st December each year.
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e) No expenses are allowed under employment income apart from (i) mortgage interest under subparagraph (3) of paragraph 4 of the sixth Schedule (ii) Contributions and donations to a worthwhile cause under Section 100 of the Act
This indicates that the allowances are taxable hence the tax deductions on the Tax on Teachers Professional Development Allowance.
However, another argument by teachers is that a monthly payment of Ghs100 as teachers’ professional development allowance would have reduced the tax component on the amount. Teachers have called the leadership of the various unions to go back to the negotiation table so that from the beginning of 2021, this allowance can be paid monthly.
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