Accurate record-keeping is the cornerstone of effective tax planning. Even with good records, some deductions can slip through the cracks without a keen eye for detail or expert knowledge of Ghana's tax laws (Income Tax Act, 2015 (Act 896), and subsequent amendments and practice notes).
Here are some common tax deductions that businesses, particularly SMEs in Ghana, often overlook:
If you operate your business from home, a portion of your household expenses can be deductible. This applies if a specific part of your home is used exclusively and regularly as your principal place of business.
What to include: A pro-rata share of rent, mortgage interest, property rates, electricity, internet, water, and even maintenance/repairs directly related to the office space.
Key: You must calculate the percentage of your home used for business (e.g., based on square footage) and apply it to relevant expenses. Keep detailed records of all these bills.
Many businesses view these as high costs, but they are almost always fully deductible, as they are essential for your business's operations and compliance.
What to include: Fees paid to accountants, tax consultants (like TrustBooks Consult!), lawyers, auditors, business consultants, IT support specialists, and other advisors.
Why it's missed: Sometimes lumped under general administrative costs without proper categorization, or simply not thought of as a direct "production of income" expense.
Investing in yourself or your employees to improve skills directly related to your business can be a significant deduction.
What to include: Costs for seminars, workshops, professional development courses, certifications, and educational materials that enhance business-related knowledge or skills.
Why it's missed: Often seen as an operational cost rather than a specific tax write-off.
Beyond fuel, there are many costs associated with using a vehicle for business purposes or general business travel.
What to include: Fuel, maintenance, repairs, insurance, vehicle registration fees, and a portion of the vehicle's depreciation (through capital allowances). For travel, this includes flights, accommodation, and meals for legitimate business trips.
Key: Maintain a detailed logbook if using a personal vehicle for business, documenting mileage, dates, and purpose of each trip. Separate business and personal travel meticulously.
The cost of financing your business or managing your money is often deductible.
What to include: Bank service charges, ATM fees, overdraft fees, and interest paid on business loans, lines of credit, and even business credit cards.
Why it's missed: These small, frequent charges can accumulate and are often overlooked or not properly categorized. Interest on loans must be wholly, exclusively, and necessarily incurred in the production of income. (Note: There are specific limitations on the deductibility of financial costs other than interest, as per Section 16 of Act 896, so professional advice is crucial here).
Many businesses pay for resources essential to staying informed and connected within their industry.
What to include: Membership fees for professional organizations or trade associations, subscriptions to industry-specific magazines, journals, or online databases.
Why it's missed: Small, recurring payments that might not be flagged as tax-deductible during review.
All costs incurred to promote your business are generally 100% deductible.
What to include: Website development and hosting fees, social media advertising, print ads, radio/TV commercials, flyers, brochures, public relations costs, and even costs for promotional giveaways.
Why it's missed: Businesses often categorize these broadly without breaking them down for maximum deduction.
If you have customers who genuinely can't or won't pay you, those debts can be written off, but the GRA has specific requirements.
What to include: Debts from sales of goods or services that have become uncollectible.
Key: The GRA requires you to demonstrate that you've taken "all reasonable steps" to recover the debt and have a reasonable belief it will not be paid. This includes documented collection efforts.
While depreciation in your financial statements is an accounting entry, the GRA allows "Capital Allowances" as a tax deduction for the wear and tear of your business assets.
What to include: A percentage of the cost of assets like machinery, equipment, vehicles, computers, and buildings (excluding land) used in your business. The rates vary based on the asset class (e.g., 40% for computers, 30% for manufacturing plant & machinery, 10% for buildings).
Why it's missed: Businesses might confuse accounting depreciation with tax capital allowances, or simply not track their depreciable assets effectively.
Expenses incurred before your business officially opens its doors can often be deducted over a period.
What to include: Costs for market research, legal fees for incorporation, initial advertising, and employee training prior to commencing operations.
Why it's missed: Many new entrepreneurs don't realize these pre-operational costs are deductible, or they fail to keep proper records from the very beginning.
For any deduction, the golden rule is documentation, documentation, documentation. The GRA requires that all expenses are supported by:
VAT Invoices: For most taxable supplies, a valid VAT invoice is crucial for proving the expense and claiming deductions.
Receipts/Payment Vouchers: For other expenses, clear receipts or payment vouchers.
Contracts/Agreements: For services, rent, or significant purchases.
Bank Statements: To verify payments.
Logbooks: For vehicle usage.
Without proper records, the GRA can disallow your deductions, leading to higher tax liabilities and potential penalties.
Don't leave money on the table! Proactively identifying and properly documenting all eligible deductions is a fundamental aspect of sound financial management for your business in Ghana.
Are you confident you're claiming all the tax deductions your business deserves?
Contact TrustBooks Consult today for a comprehensive tax review. Our experts will help you uncover missed deductions, ensure compliance, and strategically optimize your tax position for maximum savings.
July 21, 2025 - BY Admin
