COLA: Goverment Workers To Find Exact COLA Amount Here With And Without Taxation, According To Tax Rules. COLA was not taxed in 2014 but maybe not this time.

COLA: Goverment Workers To Find Exact COLA Amount Here With And Without Taxation, According To Tax Rules. COLA was not taxed in 2014 but maybe not this time.

Highlights

1. COLA was not taxed the last time it was paid in the year 2014.(History)

2. But what tax rate would it be taxed this time? Find out here

3. Since the agreement to pay was announced without information on whether it will be taxed or not, two simple ways to find your exact COLA amount with and without taxation have been illustrated here.

4. But first, how much will your exact COLA be if it is taxed? Find out because that is the exact amount that will be added to your salary.

5. There are no SSNIT contributions on COLA since COLA is not part of or it is not added to basic salary and SSNIT contributions are paid only on basic salary.

COLA With Taxation

1. Ghana’s income tax rate is a graduating one. Meaning each person’s income is divided into different brackets.

a. The first bracket is tax free.

b. The next bracket is 5%.

c. The next bracket is 10%

d. The next bracket is 17.5%.

d. The next bracket is 25%.

2. However, aside from the article 71 holders and the high level members of very few public institutions, the rest of the public sector has their last tax bracket falling within 17.5% tax. That is

a. Part of their income is not taxed

b. Part of their income is taxed at 5%

c. Part of their income is taxed at 10%.

d. And the last part is taxed 17.5%.

3. The implication of the tax brackets is that anytime a public worker’s salary is increased, that amount will fall within the 17.5% taxation bracket.

4. When you subtract tax (17.5%) from 100%, it will be 82.5%. (i.e 100% – 17.5% = 82.5%)

This means when COLA is taxed, your exact amount will be 82.5% of the 15% COLA.

That is, your exact COLA after taxation = 82.5% x (15% x basic salary)

COLA after taxation = 0.825 x (0.15 x basic salary) [The formula]

In the case of the worker whose basic salary is Ghc2000

The COLA after taxation = 0.825 x (0.15 x Ghc2000)

COLA after taxation = 0.825 x Ghc300

COLA after taxation = Ghc247.5

A. COLA Without Taxation

1. COLA before taxation is 15% of your basic basic salary (the first payment item on the payslip). That is multiply 15% (15÷100) x basic salary, which is the same as 0.15 x basic salary.

An example of someone with a basic salary of Ghc2000, will obtain a COLA without tax of (15÷100) x Ghc2000, which is the same as 0.15 x Ghc2000 = Ghc300.

Now that you know, you can budget appropriately backed by facts and figures.

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