A Large number of workers, mostly those in the public sector, are being denied substantial amounts of money in tax relief simply because their employers are not filing their tax returns on their behalf as required by law to benefit from the package.
The essence of tax relief is to cushion workers with more responsibilities from their economic burden in line with the equity principle of taxation, but enquiries at the Ghana Revenue Authority (GRA) indicate that only a few employers are accessing the facility for the benefit of their employees.
Revenue administrators are, therefore, calling on workers to “wake up from their slumber” and claim their right for tax relief benefits from their employers.
The acting Head of Operations (IRS/Domestic Division) of the GRA, Mr James L. Anaman, told the Daily Graphic that although there were penalties for the delay in or non-filing of tax returns, it was better for workers to ensure that their employers filed their tax returns to enable them to enjoy tax reliefs.
Ghana’s tax law grants tax relief to workers in respect of marriage responsibility, education of children (maximum of three) and responsibility for parents and other aged dependants.
Furthermore, workers who suffer from disability are, under the law, supposed to enjoy 25 per cent of their income in tax relief annually, while those who undergo training (education) to update their professional, technical or vocational skills could also qualify for tax relief.
However, many workers appear to be ignorant about these reliefs although many of them shudder at the quantum of their monthly salaries that is slashed as income tax. Those who are aware of it complain about the cumbersome process of filing annual tax returns.
Mr Anaman admitted that hitherto the system was a bit cumbersome, especially where the IRS had to process tax return forms to effect payment of reliefs.
He, however, noted that under a new dispensation propelled by LI 1675, that responsibility had been ceded to employers, who are required to collect tax relief cards from the IRS on behalf of their employees for the purposes of granting tax reliefs upfront to them (employees).
Mr Anaman said having inputted employees’ data on the tax relief cards, the cards were then sent to the respective IRS district offices in whose operational area the organisation was located, for the calculation of the requisite relief benefits to the employees.
After the calculation, he said, the cards were returned to the organisation for it to be captured in the salary advice of workers for the payment of relief, adding that the payment of relief should reflect in the monthly salaries of workers instead of previously when the relief was given annually.
Mr Anaman said the process had even been made much easier now with the launch of a pay-as-you-earn (PAYE) software, which, upon installation, enables employers to calculate the tax relief benefit for their employees for upfront payment monthly.
He said apart from avoiding the long process of having to revert to the IRS for the calculation of the reliefs, the PAYE software had an in-built calculation mechanism for employers to do it on their own, making it easier and timely.
Unfortunately, only a few employers across the country are administering the facility to the benefit of their employees.
Mr Anaman said although failure to comply with the law attracted penalties, including fines and legal action against employers, it was in the best interest of employees to pursue the full compliance of the law.
He disagreed with a suggestion that the tax administrators were not doing enough to ensure compliance by employers under the law, saying “we are doing more than enough education”.
He said with resource constraint, the IRS had launched the PAYE software to make the process much easier, apart from organising seminars and workshops throughout the whole country, as well as television documentaries, to sensitise the public
to the new process.