The Ghana Revenue Authority (GRA) has stated that the passage of the legal instrument(LI) under the country’s Income Tax Act, 2015, Act 896 will clarify taxes that must be imposed on class one workers.
According to the GRA, all payments from employers to casual and temporal workers in Ghana for any work done is to be taxed by 5 percent.
Speaking to Citi Business News, the Deputy Commissioner in-charge of Policy and Programmes at the GRA Edward Gyamerah explained that the law will remove all challenges hindering the taxation of casual and temporary workers.
“The law is very clear, previously we had challenges to what rate should be applied to class one labour or the temporary labour. Some were of the opinion that tax on service should apply that is 7.5 percent, some were of the opinion that the graduated rate should apply,” he said. He stated that the LI has clarified that only 5 percent should be applied.
He explained that for a casual worker defined under the Labour Act, the tax rate that should be applied to the payment of the casual worker is 5 percent.
According to him, casual work comes under section 78 of the Labour Act, which means that employers must uphold 5 percent of money paid to casual labourers and pay same to the GRA.
“ If the person is a temporary worker which means his salary is determined for a certain period which normally is paid at the end of the month, they should be taxed in line with the standard provision i.e. you go to Section 1 and you use the individual rates to tax them,” he said. Mr. Gyamerah stated that the LI has also clarified five of the reliefs that could now be granted upfront.
“These include marriage and responsibility relief, child relief, old age relief, aged dependent relative relief and disability relief,” he said. He stated that unlike 5 months ago where workers applied for the tax relief card every year, workers can now apply and be granted the relief before filing tax returns.
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