Where are Ghana’s millionaires?
Nigerians, Zimbabweans, South Africans and Tanzanians all make an appearance on Forbes’ list of Africa’s richest people. But, considering the natural resources, which Ghana is blessed with, and the over 200% growth in the economy over the past 10 years, should Ghana not have some home-grown millionaires to boast of?
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If you are reading this, then you are probably a millionaire or one in the making (we all have the potential to be), and while you work hard to make sure Ghana makes an appearance on these millionaires lists, it is worthwhile paying attention to tax rules and available investment breaks to ensure your hard-earned fortune does not diminish unnecessarily as a result of non-compliance with the tax laws or engaging in tax-inefficient activities.
A simple review of allowable deductions provided for in Ghana’s tax laws can save you thousands of cedis a year in taxes.
For example, did you know you can deduct your home mortgage interest from your earnings before taxation? What about the fact that gains made from the sale of shares from companies listed on the Ghana Stock Exchange are exempt from capital gains tax?
Tax exemptions available
A detailed analysis of your employment, investment and business activities can ensure you are on the right course to claiming the right deductions and classifying your income appropriately.
Have you recently sold some investment property? Did you consider the legal and administrative fees associated with the transaction?
Your expensive investment advisor might be looking for the next big stock or fund but are you considering the related tax implications and incentives provided by the tax laws? The timing of deductions should play a role in your overall wealth and tax planning.
The variety of investments available to those with sufficient funds has exploded in recent years. Gone are the days of only being able to invest in property, individual equities and bonds. Real estate investment trusts (REITS), mutual funds, exchange traded funds (ETFs), and venture capital funds now give investors the ability to diversify their portfolio like never before and have access to the global markets.
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Cross-border investments and transactions that appear appealing can give rise to unexpected and complex tax reporting for taxpayers. The impact of foreign currency issues, double tax treaties, and investment holding vehicles all affect your wealth and being aware of your tax obligations is even more crucial in these instances.
It is essential that taxpayers and their advisors understand the implications and responsibilities of owning real and tangible property in multiple jurisdictions and claim associated tax benefits such as foreign tax credits, when entitled to do so.
Some lifestyle and unique investments like ownership of yachts, planes, classic cars and works of art come with unique tax issues. Tax-efficient ownership should be reviewed whenever you are planning for a new acquisition or you are thinking of selling.
Exemptions on charity
Charitable giving is good for the heart and soul but it is most effective when it is tax-efficient. Whether giving to a Ghanaian or non-Ghanaian on charity, it is important to understand if and when a tax benefit is allowed.
They say that the two inevitable things in life are death and taxes, and sometimes the two go together in the case of estate and inheritance tax considerations.
For Ghanaians who have built successful family businesses, the transfer of such businesses is never a simple process. It requires a series of intentional and well-coordinated planning efforts. Changes in leadership or ownership may affect the continuity of the business and should be approached with care; tax being just one of those many items that require considerable forethought.
The situation is the same for internationally mobile families with assets around the world. It is imperative that a global view is taken to wealth planning. Understanding the proper tax reporting disclosures, the use of trusts and other entities, impact of transfer taxes and the global tax implications of investments cannot be overemphasised.
Complex Ghanaian tax rules are further complicated when international tax matters are involved and for budding millionaires like all of us, the burden of compliance can be overwhelming.
“Knowledge is power,” goes the popular saying, and with the correct information and tools, no burden is insurmountable.
Want to know more? Let’s talk.
Writer’s email: ayesha.a.bedwei @gh.pwc.com.