MSL Business School verified Ghana tax case

Daniel K. Bannor & 74 Others v Kwame Nkrumah University of Science and Technology (KNUST) & Another

The Court of Appeal held that the one-off contractual end-of-service benefits before it were taxable employment income, not tax-exempt statutory pensions.

Published by MSL Business School through TaxLawGH.

CourtCourt of Appeal, KumasiDecision2 July 2026Tax periodOne-off end-of-service benefits paid to retired KNUST employees; High Court judgment delivered on 5 July 2024Research statusPrimary court document reviewedCurrent-law statusReviewed 17 August 2026

Authority in context

Read the decision for the proposition the court actually resolved.

The decision is useful for distinguishing a statutory pension from a separately earned contractual end-of-service benefit and for the statutory effect of a practice note. It does not establish that every retirement-related payment is taxable: classification depends on the legal source, payment terms, pension framework and applicable Income Tax Act provisions. The judgment discussed the former practice-note provision in the Seventh Schedule to Act 896; the current administrative rules are in sections 100 to 102 of the Revenue Administration Act, 2016 (Act 915), under which a practice note binds the Commissioner-General until revoked but does not bind an affected person and cannot displace later inconsistent legislation.

Parties

appellants: Daniel K. Bannor and 74 other retired KNUST employees
respondents: Kwame Nkrumah University of Science and Technology and its Finance Officer/Director

Tax topics

Employment income
PAYE
Retirement benefits
Pensions
Ex-gratia payments
Practice notes

Material facts

The appellants retired after working for KNUST and received both periodic pension benefits and one-off end-of-service payments under the Unified Conditions of Service for Unionised Staff of Public Universities.
KNUST withheld tax from the one-off payments. The appellants sought declarations that the deductions were unlawful, repayment of the amounts withheld, interest and costs.
The High Court dismissed the action on 5 July 2024. It distinguished statutory pension benefits from the contractual end-of-service payments and held that the latter were taxable.
The appeal challenged the taxability finding and the treatment of a Commissioner-General practice note. The notice contained no omnibus ground, and the Court confined the appeal to the formulated grounds.

Questions before the court

Whether the trial court erred in holding that the appellants' end-of-service or ex-gratia benefits were taxable.
Whether the trial court erred in holding that the Commissioner-General's practice note was binding.

What the court held

The Court distinguished statutory pension benefits, which are paid within the pension framework and are tax-exempt, from the one-off contractual end-of-service payments proved in this case.
Although described as ex-gratia, the payments were earned contractual entitlements under the employees' conditions of service. They were retirement payments and gains or profits from past employment within the employment-income provisions considered by the Court.
KNUST was therefore entitled to withhold tax from the one-off benefits. The first ground of appeal failed.
A practice note binds the Commissioner-General until revoked but does not bind a person affected by the tax law. The trial court had not treated the note as binding on the appellants, and its interpretation was consistent with the legislation. The second ground also failed.
Arguments directed to matters outside the stated grounds were not properly open on an appeal that contained no omnibus ground.

Ratio decidendi

A one-off end-of-service payment earned under an employee's contractual conditions of service does not become a tax-exempt statutory pension merely because the parties call it ex-gratia or pay it on retirement. On the facts and provisions before the Court, it was taxable employment income arising from past employment, while the statutory pension remained exempt. A statutory practice note binds the Commissioner-General until revoked but does not bind the affected taxpayer or override the governing legislation.

Obiter

The Court described interpretive maxims such as expressio unius as aids rather than binding rules capable of displacing the words, context and purpose of the legislation.
The Court considered the label ex-gratia a misnomer for an earned contractual entitlement, but that observation does not determine the tax treatment of every payment bearing the same label.

Order

Appeal dismissed. The Court made no order as to costs.

Separate opinions

Patrick Kwamina Baiden JA and Ali Baba Abature JA agreed with the judgment of Dr Poku Adusei JA.

Procedural history

The retired employees sued KNUST and its Finance Officer/Director in the High Court for declarations, refund, interest and costs arising from tax withheld from their one-off end-of-service benefits. The High Court dismissed the claims on 5 July 2024 and struck out the second defendant. The employees appealed on two stated grounds; the Court of Appeal dismissed the appeal on 2 July 2026.

Later treatment

No later Supreme Court judgment, stay, variation or other public disposition involving this appeal was located in the official and publicly searchable sources checked through 17 August 2026. That bounded search does not prove that no further appeal, application or unpublished order exists.

Current-law relevance

Legislation considered

Constitution, 1992, article 199(3)
Income Tax Act, 2015 (Act 896), sections 4(2)(a)(v), 4(2)(a)(vi), 4(3)(c), 7(1)(d), 94 and 96, and the former Seventh Schedule practice-note provision
National Pensions Act, 2008 (Act 766), including section 89
Income Tax Regulations, 2016 (L.I. 2244), regulation 3(1)
Revenue Administration Act, 2016 (Act 915), sections 100 to 102, for the current practice-note framework

Scope and source notes

The Court distinguished statutory pension benefits from the one-off contractual end-of-service payments before it. The decision does not make every retirement-related receipt taxable.

MSL Business School research layer

Detailed TaxLawGH analysis

A structured reading of the verified facts, issues, reasoning, result, later treatment and limits of the decision.

The payment had to be classified by its legal source

The appeal could not be resolved by treating every amount paid at retirement as a pension. The Court examined how each benefit arose: the periodic pension came through the statutory pension system, while the additional one-off benefit came from the employees' contractual conditions of service.
That distinction was decisive. The constitutional and statutory pension exemptions protected the pension benefit, but they did not automatically extend to a separate contractual payment simply because it was made when employment ended.

Why the ex-gratia label did not control

The employees' conditions of service made the one-off payment an earned entitlement. The Court therefore considered ex-gratia an inaccurate label: the benefit was not a voluntary gift detached from the employment relationship.
Tax classification followed the substance and source of the payment rather than its label. Because the entitlement arose from service already rendered and the conditions governing employment, the Court treated it as a gain or profit connected with past employment.

Employment-income provisions applied to the benefit

The Court relied on provisions of Act 896 addressing payments for agreeing to employment conditions, retirement payments and gains or profits from past employment. Read together, those provisions brought the contractual end-of-service benefit into employment income on the facts before the Court.
The holding is not a rule that every payment received after retirement is taxable. A researcher must still identify whether a payment is a statutory pension, a benefit from a registered retirement fund, damages, a contractual terminal benefit or another category governed by a different provision or exemption.

Pension exemption remained distinct

Article 199(3), the pension exemption in Act 896 and the exemption for contributions and benefits within Act 766 formed the protected pension framework considered by the Court. The periodic pension received by the retirees fell on that side of the distinction.
The one-off contractual payment did not become part of that pension merely because the appellants referred to it as a pension benefit in their reliefs. The judgment therefore preserves the pension exemption while rejecting its extension to the separate benefit proved in this litigation.

Withholding followed the Court's classification

Once the one-off payment was classified as taxable employment income, the employer's withholding obligation followed under the employment-payment rules considered in the judgment. The Court consequently rejected the claim that KNUST had acted unlawfully by deducting tax.
This conclusion remains tied to the benefit and record before the Court. Employers should document the instrument creating each retirement payment, identify the relevant statutory category and apply any exemption before withholding rather than using a single treatment for all exit payments.

The legal effect of a practice note

The Court rejected the suggestion that the trial judge had treated the Commissioner's practice note as binding on the appellants. The statutory distinction was that a practice note bound the Commissioner-General until revoked but did not bind a person affected by the tax law.
That distinction continues under sections 100 to 102 of Act 915. A practice note has a defined statutory administrative effect and can promote consistent administration, but it is not legislation, does not bind the taxpayer and cannot prevail over a later inconsistent enactment.

Appeal grounds limited the Court's task

The notice of appeal contained two specific grounds and no omnibus ground. The Court therefore treated arguments outside those grounds, including attempts to reopen other findings or the position of the second defendant, as not properly available for determination.
The procedural point matters in tax litigation: a party must frame grounds that identify each alleged error to be challenged. Written submissions cannot silently enlarge a notice of appeal after the time and procedural safeguards governing an appeal have passed.

Authority, limits and present-day research use

This is a unanimous Court of Appeal judgment and is significant appellate authority on the classification before it. Its ratio should nevertheless remain connected to the proved contractual terms, the statutory provisions for the relevant period and the precise grounds decided.
Before applying the case, check the current consolidated text of Act 896, the pension framework, sections 100 to 102 of Act 915 and any later appellate treatment. A public-source search through 17 August 2026 found no later disposition, but that negative result is not proof that none exists.

Practical research points

Identify the legal instrument creating each retirement payment before deciding whether it is a pension, retirement-fund benefit or contractual end-of-service entitlement.
Do not allow a label such as ex-gratia, gratuity, severance or pension benefit to replace the statutory classification exercise.
Separate periodic pension benefits from additional one-off payments and test each component against the applicable employment-income and exemption provisions.
Employers should retain the conditions of service, retirement calculation, pension records and withholding analysis supporting the tax treatment adopted.
Use practice notes as statutorily recognised administrative guidance, but check the governing legislation and remember that the note does not bind the affected taxpayer.
Frame every intended appellate complaint in the notice of appeal; submissions cannot safely cure an omitted ground.
Check for a later Supreme Court appeal, stay or variation before treating the Court of Appeal result as the final litigation position.

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This case brief forms part of MSL Business School’s maintained legal-research resource for Ghanaian tax law.

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