Tax relief is a legally approved allowance intended to reduce one’s taxable income and thereby lessen the tax burden. It is intended to cushion the effect of tax on the individual and to make it bearable for him or her to pay the tax. Since tax reliefs have as an objective to lessen the tax burden of the taxpayer, governments all over the world have come out with different tax relief schemes. Ghana’s government is no exception to this. Unfortunately, this scheme which is supposed to lessen the tax burden has not been taken advantage of by taxpayers in Ghana, according to the Minister of finance of Ghana.
Meanwhile, employees are aware of the tax relief schemes available to employees in Ghana, only that few have accessed or claimed from the scheme before.
Governments all over the world depend on all manner of revenues from different sources to run the economy. Among the revenues relied upon by governments is income from tax. Taxation is defined as any system that compulsorily ensures the surrender of control of an entity’s private goods and or services to enable a government in the provision of public goods and
Since the tax is seen as a burden to taxpayers, they find different ways and methods to avoid and if possible, to evade tax. As a result, one of the strategies that governments use in attracting taxpayers to pay their full tax is through the introduction of tax reliefs. The tax relief strategy is to help reduce the tax burden on the individual taxpayer. At the same time, it induces the taxpayer to file returns which helps to disclose all earnings of the employee which may not have been captured for tax purposes since some of the reliefs are not automatic.
Tax relief is therefore defined as an approved deductible allowance intended to reduce taxable income and thereby lessening the tax burden of the taxpayer. The tax reliefs are given by the government to help reduce the tax liability of the individual taxpayer through a reduction in the assessable income of those who qualify. The reliefs are granted on annual basis. According to Sarpong, et al. (2011), the reliefs do not relate to the type of income earned but wholly depend on the status of the individual. Thus, these reliefs are available to all individuals and not restricted to employees only.
There are three categories of tax relief according to Ghana Revenue Authority (GRA).
These are personal reliefs, relief from double taxation, and rollover relief. This piece only focuses on personal reliefs enjoyed by employees who earn employment income. This is because; the employees who earn employment incomes suffer tax deduction at source; thus, their employers are required by law (Internal Revenue Act, 2000, Act 592) to deduct the tax before the employees are paid their salaries or wages.
The personal reliefs available to employees according to Section 39 of Act 592 are: marriage/responsibility, disability, old age, child education, aged-dependent, cost of training/self-improvement, social security and life assurance.
These reliefs have been divided into upfront reliefs, and those granted upon filing of returns. Reliefs granted upfront are marriage, child education, disabled and aged relief. CLICK HERE TO DOWNLOAD THE TAX RELIEF FORM
On the other hand, reliefs granted upon filing of returns are, aged dependency relief, individual undergoing training and life insurance.
According to the Minister of Finance and Economic Planning of the Republic of Ghana in 2012 indicated that it has been observed that many individual taxpayers are not taking advantage of the tax relief scheme, therefore, this piece therefore seeks to enlighten taxpayers in Ghana towards the tax relief scheme.