Question

The following data relates to Sephakor Ltd for the month of April 2020.
Names of Employees Rates per hour (GHS) units of job Bonus (GHS)
Adusei Poku 30 30 760
Kwame Bekoe 25 40 430
Samuel Ato 40 45 440
Serwaa Akoto 45 35 550
James Obli 30 25 450
Additional information:
NB - It takes 4hours to complete a unit job
i) Income tax is 10%
ii) Rent allowance is 15% of basic wages
iii) Risk allowance is at 5% of basic
iv) The SSF contribution is 15%.
(vi)Provident fund contribution is 13% of basic
v) SSF & Provident fund are non-taxable deductions

You are required to prepare payroll for the month showing;
i. Basic wages
ii. Gross wages
iii. Total deductions
iv. Net wages
v. State the reasons why SSF & Provident Fund are non-taxable (2marks)
(Total 16marks)

Answer 1

Payroll for the month of April 2020

S. No	Name of Employee	Adusei Poku	Kwame Bekoe	Samuel Ato	Serwaa Akoto	James Obli
A.	Rates per hour (GHS)	30	25	40	45	30
B.	units of job	30	40	45	35	25
C	Basic Wages	900	1,000	1,800	1,575	750
D	Add: Bonus	760	430	440	550	450
E	Gross Wages ( C + D)	1660	1430	2240	2125	1200
F	Less: Rent Allowance (15% of basic wage)	135	150	270	236.25	112.5
G	Less: Risk Allowance (5% of Basic Wages)	45	50	90	78.75	37.5
H.	Less: SSF Contribution (15 % of basic wage)	135	150	270	236.25	112.5
I	Less: PF Contribution (13% of basic wage)	117	130	234	204.75	97.5
J.	Total Deductions (F+ G + H + I)	432	480	864	756	360
K.	Wages before Tax (E -J)	1228	950	1376	1369	840
L.	Income Tax (10%)	122.8	95	137.6	136.9	84
M	Net Wages (K-L)	1105.2	855	1238.4	1232.1	756

SSF and PF are non taxable upto certain limit. If that limit exceeds, then it would be taxable. As the PF and SSF do not exceed the limit, this is the reason that the both are non-taxable.