The Commissioner-General of the Ghana Revenue Authority (GRA) wishes to inform the general public particularly paymasters, accountants, auditors and tax consultants that Regulation 28 of the Internal Revenue Regulations, 2001 Legislative Instrument (L.I 1675) which deals with
the taxation of overtime and bonus payment as amended has been further amended by the Internal Revenue (Amendment) Regulations, 2011 Legislative Instrument (L.I. 1997). Consequently, overtime and bonus payments will be taxed as follows:
A. OVERTIME PAYMENT
Where an employer makes a payment during a year of assessment to a qualifying junior employee for overtime work by that employee, and the payment for the overtime work to that employee
a) is up to 50% of the basic salary of the employee for the month, the employer shall withhold tax at the rate of 5% from the payment
b) is more than 50% of the basic salary of the employee for the month, the employer shall withhold tax at the rate of 10% from the payment.
B. BONUS PAYMENT
Where an employer pays a bonus to an employee during a year of assessment and the sum of the payment and other bonuses paid by the employer to the employee during the year
a) does not exceed 15% of the annual basic salary of the employee, the employer shall withhold tax from the gross amount of the payment at the rate of 5%;
b) exceeds 15% of the annual basic salary of the employee, the employer shall
i. add any excess above the 15% payments to the employment income of the employee for the year, and
ii. withhold tax from the payment in accordance with the income tax rates for resident individuals.
The amended tax rates for the taxation of overtime and bonus payments took effect from 25th November, 2011. The Commissioner-General requests all paymasters, accountants, auditors and tax consultants to take note and comply accordingly.