Severance Pay Tax Exempt Analysis by Nana Eburako
As per the INTERNAL REVENUE ACT, 2000 (ACT 592), section 8 as Amended by the Internal Revenue (Amendment) Act, 2002 (Act 622), s.3] and the last Amendment with effect from 2012, Severance pay is not taxable
By this Act the following employment incomes are Tax-exempt
Reimbursement/discharge of an employee’s medical, dental, or health insurance expense where the benefit is available to all employees on an equal basis
Passage in and out of Ghana for the commencement and completion of assignment (employment) for a person recruited/engaged outside of Ghana, in Ghana solely for the employment and is not a resident of Ghana
Provision of accommodation by employer carrying on a timber, mining, building, construction, or farming business to employees at the place or site where the field operation is undertaken
Reimbursement/discharge of business expenditure incurred by the employee on behalf of the employer Severance pay
Night duty allowance to night shift worker not exceeding 50 percent of basic salary etc.
Severance pay to an employee is thus not taxable.
A severance package is pay and benefits an employee receives when they leave employment at a company.
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