Accounting and Finance Issues

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VALCO WTR PROCESSING

ACCOUNTING AND FINANCE ISSUESVALCO WTR PROCESSING BASE PAY AND EXCEPTIONSEMPLOYEE TAX ISSUESPERSONAL FINANCIAL MANAGEMENT1VALCO WTR PROCESSINGBASE PAY AND EXCEPTIONSBASE PAYBase Pay information is fairly static and it is the responsibility of the Human Resource Department to determine and input this information into the system at the time the employee is newly engaged, promoted or when there are any general changes in employee conditions of service that also includes the adjustment of Base Pays.EXCEPTIONSThe second major input are the Exceptions. It is assumed that every regular employee works 8 hours a day and that works out to 40 hours every week. This is the standard number of hours that every employee is assigned by the system every week. However, if the employee does more or less than the standard hours, these will be captured by way of exceptions. For example if an employee does overtime for 4 hours on a particular day, these hours will have to be captured by the employees manager in the form of an exception. Similarly if an employee absents himself or herself from work without permission, the absence will be captured in the form of an exception.

CODE DESCRIPTIONS031 OVERTIME - ORDINARY032 1ST REST DAY O.T. - SATURDAY033 2ND.REST DAY O.T. - SUNDAY034 6TH DAY O.T 035 HOLIDAY WORKED SHIFT WORKER WORKS ON A HOLIDAY(2.1)036 HOLIDAY OFF- DUTY OFF DUTY BUT WORKS (3.1)037 HOLIDAY VACATION - DURING VACATION038 SWING 039 GRAVE

5CODE DESCRIPTIONS040 CALL A - RECALL FROM HOME AFTER WORK. 041 CALL B - RECALL FROM THE PARKING LOT042 HEIGHT A - POTROOM STACK 1ST STAGE 043 HEIGHT B - CAST HOUSE STACK044 HEIGHT C - VACUUM UNLOADER045 HEIGHT D - ALUMINA/COKE SILOS, 048 STACKED CONTAINERS 049 ROOF TOPS ALL BLDS IN PLANT

CODE DESCRIPTIONS050 CARB DUCT / CAST PITS - CONFINED SPACE - 051 DISCOMFORT A 052 DISCOMFORT B 304 ACTING ALLW SUPV 325 VACATION RELIEF 330 PERIOD PHYSICAL 335 SAFETY MEETING 336 UNION MEETINGS 343 MATERNITY LEAVE 345 ANNUAL LEAVE CODE DESCRIPTION 346 CASUAL/BEREAVEMENT LEAVE 347 SICK LEAVE 348 INPLANT MEDICAL 349 UN-EXCUSED ABSENCE 350 TRAINING 352 SUSPENSION 355 EXCUSED ABSENCE 356 PARTIAL ABSENCE CODE DESCRIPTIONS357 INDUSTRIAL INJURY 358 LATENESS 366 HOLIDAY PAY 369 CEDAC/ISO MEETING 370 BUSINESS PLAN MEETING 371 SAFETY TOUR 372 PAY BOOTH

CONTROLSUsers must be set up to be able to gain access to the ELKE menu on the AS400. AS400 passwords are confidential. They should not be shared with any other employees. If managers are proceeding on vacation, they should send an e-mail to MIS to set up whoever will be in their stead to perform the WTR entry function for the area/section.CONTROLSManagers are authorized to enter WTR for employees in particular cost centers. For example a manager in Plant Protection will be set up to enter exceptions for employees in Plant Protection. If an employee is transferred to another cost center, his/her manager in the previous cost center will not have access to his/her record. Managers will have to seek assistance from MIS if they get a message from the system that reads Employee not under this Manager.

May 26, 2011EMPLOYEE TAX ISSUES12May 26, 2011INTRODUCTION AND OVERVIEWAs citizens, we expect the state to satisfy our needs in the area of health, security, road infrastructure, social amenities etc. The state uses taxation as a tool to raise revenue, influence firms and individual decisions as well as international trade and relations to achieve this. It is therefore, important for us to appreciate the basic canons of taxation.

13May 26, 2011INTRODUCTION AND OVERVIEWWhat is tax?An involuntary financial burden laid upon persons;Legally by governmentWhether under the name of income tax, VAT, duty, excise, or other levies; and Administered by the Ghana Revenue Authority under the GRA Act, 2009 (Act791) & Local Authorities14May 26, 2011INTRODUCTION AND OVERVIEWIncome tax is one that is charged on the gains or profit accruing to an individual exercising employment in Ghana. The gains or profit from any employment of a person is deemed as accruing in or derived from Ghana to the extent that the employment is exercised in Ghana, regardless of the place of payment. Ghana practices source taxation, and the system of employment taxation is Pay As You Earn (PAYE), which is a graduated rate from 0 percent to 25 percent for residents and a 15 percent flat rate for non-residents.15May 26, 2011TAX LAWS AND GENERAL PRINCIPLESInternal Revenue Act,2000 Act 592 plus Amendments (L.I 1675,1803,1819).Sec 1 Imposition Of Income TaxSec 8(1)- A persons income from employment is that persons gains or profits from that employment.Sec 8(2) The gains or profits from employment of a person include any allowances or benefits paid in CASH or given in KIND to, or on behalf of that person from that employment, other than.16May 26, 2011MONTHLY TAX TABLETaxable Amt (GH)RateFirst 84.00 FreeNext 20.005%Next 60.0010%Next 1,186.0017.5%Exceeding 1,350.0025%17May 26, 2011BONUS TAXBonus payment should be taxed at 5% if it is within the lower of : (i)15% of the employees qualifying income from that employment for the year or(ii) 1,620 Currency Points (i.e. GH 1,620) Any amount in excess of this is added to the individuals income and taxed within the applicable brackets as above.Note: One (1) Currency Point is equivalent to GH 1.0018May 26, 2011Tax on Overtime (L.I.1675 amendedby L.I 1819)OVERTIME TAXQualifying Junior Employee is Defined as: Junior staff member whose salary is not more than GH 800.00 per month. First GH 120.00 @ 2.5% Next GH 280.00 @ 10% Exceeding GH 400.00 add to salary and tax at prevailing personal income tax rates.Any employee with a salary above GH800.00 is not legible for the concessionary rates above 19May 26, 2011Tax Reliefs: Personal Reliefs

Reliefs Granted UpfrontReliefs Granted upon Filing of ReturnsMarriage

Childrens Education

Disable

Aged ReliefAged dependent

Individual Undergoing Training

Life Insurance

20Taxable IncomeTaxable income is the portion of a persons assessable income that is subject to tax. Assuming a persons only source of income is from employment, then, his/her taxable income = Base pay + Allowances+ Elements of Benefits in kind Insurance cont. Personal Reliefs May 26, 2011May 26, 2011Example:Regular Pay 726.77Guaranteed wage 22.98 Overtime 320.99 Taxable swing 7.04 Non-tax swing 11.84 Grave 2.94 1st rest pay 114.20 Discomfort allow. 42.90Gen. upkeep 174.00 Gross Pay 1,423.66 22May 26, 2011Example (cont.)

OTHER INFORMATION:Child Educ. Relief 10.00Load: Educational Grant/Leave 112.4823May 26, 2011Example (cont.)

COMPUTATION OF TAXABLE INCOME:

(Base Pay+ Allowances +benefits in Kind - 5.5% SSNIT -5% Eosb - Personal Reliefs)

=(726.77+22.98+7.04)+42.90+(435.19-400)-41.24-37.49-10+112.48= 858.6324May 26, 2011Example (cont.)

REGULAR TAX COMPUTATION:1st 84.00 @ 0% = 0.00Next 20.00 @ 5% = 1.00 Next 60.00 @10% = 6.00Last 694.64 @ 17.5% = 121.56

Total Tax Payable:= 128.5625May 26, 2011Example (cont.)

OVERTIME TAX COMPUTATION:1st 120.00@ 2.5% = 3.00Next 280.00 @ 10% = 28.00

Total Overtime Tax Payable: = 31.00

26May 26, 2011Example (cont.)Gross income = 1,423.66SSNIT = (41.24) EOSB = (37.49)Tax (128.56+31.00) = (159.56)Other (Salary Adv., VEHOCS etc) = (50.00)Net Pay 1,135.37

27May 26, 2011Tax planningTax Avoidance Legal means of minimizing ones tax liabilityGood arrangement of ones financial affairs resulting in less payment of taxes (eg. educ. Grant/leave load, etc)Must be distinguished from tax evasion, an illegal means of minimizing tax liability such as under declaring income to pay less tax, etc

28May 26, 2011PERSONAL FINANCIAL MANAGEMENT29May 26, 2011INTRODUCTION Every body has goals or, at least, needs, wishes or dreams, in life. The accomplishment, satisfaction or fulfillment of these involves the expenditure of resources. However, since our income cannot afford us all the desires of our hearts, some needs have to normally be postponed or forgone. It entails decisions/choices that have wide implications in our lives. This is the crux of personal financial management how to utilize our finances to meet our needs today whilst not sacrificing that of tomorrow.

30Have Realistic ExpectationsNothing you do is going to change your financial situation overnight, but each time you make a sound financial decision, it will make a small difference. And every financial decision you make will impact your life over an extended period of time. It is important to keep an open mind about your personal finances and to stick to your financial goals.