Question Tag: Companies Income Tax

Search 500 + past questions and counting.

  • Filter by Professional Bodies

  • Filter by Subject

  • Filter by Series

  • Filter by Topics

  • Filter by Levels

  • 8 Marks

ATAX – May 2017 – L3 – Q6b – Corporate Tax Compliance and Reporting

Compute the Companies Income Tax liability for small businesses using the small business rate and explain the computations.

You have been provided with the following information in respect of THREE small businesses:

You are required to:
i. Compute the Companies Income Tax liability for each of the companies for the relevant assessment year, using the small business rate. (3 Marks)
ii. Give reasons for your computations. (5 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "ATAX – May 2017 – L3 – Q6b – Corporate Tax Compliance and Reporting"

  • 30 Marks

ATAX – May 2017 – L3 – Q1 – Overview of Advanced Taxation

Explain tax concepts and calculate Companies Income Tax due for Rex Pharmaceuticals.

You are the Tax Controller of Rex Pharmaceuticals (Nigeria) Limited having its Head Office in Ketu, Epe Local Government of Lagos State.

In the past three years, the company had been subjected to taxes by different Revenue Authorities within Lagos State and indeed, the entire country.

Apart from the Companies Income Tax, the issue of Withholding Tax is an area where the company’s management is very much concerned. The Managing Director is worried that this multiplicity of taxes is taking its toll on the company’s financials.

The company is already facing myriads of problems ranging from outrageous cost of capital which had led to increase in cost of production and attendant decrease in profit. The company’s goods are becoming uncompetitive, compared to imported goods. The long-term effect is either reduction in workforce or relocation to a more favorable economic climate.

The Managing Director summoned you to his office and among the issues raised at the meeting were:

(i) as a corporate body, the company ought not to be subjected to multiplicity of taxes beyond the Companies Income Tax;
(ii) the jurisdiction of the tiers of Government in imposition and collection of taxes;
(iii) the Withholding Tax;
(iv) the Pay As You Earn as it affects the staff; and
(v) the Capital Gains Tax.

You have also been informed of the following:

  1. The company’s technical agreement with the foreign Head Office and the need to remit funds;
  2. The Non-Executive Directors;
  3. The Non-Resident directors are to receive N2,500,000;
  4. Centralization of staff PAYE deductions;
  5. Dividend payment to shareholders in different parts of the country. Those resident in Kogi are to receive N375,000;
  6. Land for a factory in Abuja purchased from Alhaji Garuba Maito who resides in Kano;
  7. Rex Pharmaceuticals received N4,500,000 as Net dividend from an associated company Laiketop Limited for the year ended September 30, 2014. In the Audited Financial Statements of Rex Pharmaceuticals for the year ended December 31, 2015, a dividend of N9,500,000 was proposed. Out of this amount, N3,500,000 was from dividend received from Laiketop Limited while the balance was from a Total Profit of N22,500,000 from other trading activities;
  8. At present, out of the thirty employees in Abuja, five are resident in Suleja, Niger State.

Required:

(a) Explain briefly the following:
i. Capital Gains Tax
ii. Withholding Tax
iii. Double Taxation Treaty
iv. Multiple Taxation (12 Marks)

(b) Discuss measures put in place by the government to reduce cases of multiple taxation. (6 Marks)

(c) State the arms of government empowered by the Constitution to legislate on tax matters. (6 Marks)

(d) Determine the Companies Income Tax due from Rex Pharmaceuticals Limited for the year ended December 31, 2015. (6 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "ATAX – May 2017 – L3 – Q1 – Overview of Advanced Taxation"

  • 40 Marks

ATAX – May 2021 – L3 – Q1 – Taxation of Companies

Computation of CIT and TET for 2017-2019, advisory on AfCFTA impacts on trade, and evaluation of Country-by-Country Reporting obligations.

DIY Limited was incorporated on June 12, 2010, and commenced commercial activities on October 1, 2011.
The primary activities of the company are the manufacture, distribution, and sale of solar panels for domestic use. DIY Limited has its main factory in Daura, Katsina State, Northern Nigeria, and distributors in Kaduna, Abeokuta, Onitsha, and Ilorin.

Extracts from the company’s audited financial statements for 2016 to 2018 are as follows:

Note:

  • 20% of “other overheads” represent depreciation and amortization for each year.
  • Capital allowances for the respective years represent 150% of depreciation and amortization.

Chief Musa Jugula (MJ), the owner and founder of DIY Limited, owns 70% of the shares of the company while the remaining 30% shares are currently held by his three children and two wives.

Chief MJ is considering expanding into Ghana, exploring either a branch or a subsidiary model. He is also interested in the African Continental Free Trade Area agreement and its implications compared to the ECOWAS region.

Forecast financial performance for 2021 to 2023:

Required:

a. Compute the Companies Income Tax (CIT) and Tertiary Education Tax (TET) payable by DIY Limited for 2017 to 2019 years of assessment and comment on any issues you consider as enablers or hindrances to investment promotion in Nigeria. Assume a tax written-down value of qualifying capital expenditure (QCE) of ₦230 million, unutilized losses of ₦28 million, and capital allowances brought forward of ₦50 million for the 2017 year of assessment.

b. As the Managing Partner of Poknos & Co, write a brief advice to Chief Musa Jugula about the African Continental Free Trade Area agreement and how the treaty compares to that of Economic Community of West African States (ECOWAS) region from the perspective of trade in goods. Your advice should cover both opportunities and challenges that may arise from the implementation of the African Continental Free Trade Agreement. (10 Marks)

c. Advise with reasons:
i. If DIY Limited is liable to prepare and submit Country-by-Country Reports (CbCR). (5 Marks)
ii. The relevant tax authority where the Country-by-Country Reports (CbCR) should be submitted, assuming it is applicable to the company. (5 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "ATAX – May 2021 – L3 – Q1 – Taxation of Companies"

  • 20 Marks

AT – May 2024 – L3 – SB – Q3 – Double Taxation Reliefs and Credits

Calculation of double taxation relief and tax liabilities for Lagode Nigeria, including implications of double taxation treaties.

Lagode Nigeria Limited, based in Lagos, Nigeria, commenced operations as a manufacturer of indigenous fabrics in 2013. Products are sold to wholesalers and retailers in Nigeria and to Africans in diaspora, particularly during annual holiday periods. A market survey in 2018 revealed a lack of local Nigerian fabric manufacturers in North America, prompting the company to establish Kuramo Incorp. in Ottawa, Canada, which began operations in January 2020.

The operating results for both locations for the year ended December 31, 2022, are as follows:

Description Lagos, Nigeria (N’000) Ottawa, Canada (N’000)
Gross turnover 180,200 330,800
Less: Expenses
– Cost of materials 72,100 162,320
– Wages and salaries 18,050 42,120
– Finance costs 1,400 3,150
– Miscellaneous 4,600 5,270
– Depreciation 5,760 8,750
– Share of head office expenses 25,600 16,040
– Foreign tax paid – 18,900
Total expenses 127,510 256,550
Net profit 52,690 74,250

Additional Information:

  1. Ottawa branch is a wholly owned Nigerian company.
  2. Miscellaneous expenses are allowable for tax purposes.
  3. Capital allowances agreed with Nigerian tax authorities:
    Location Capital Allowance (N’000)
    Lagos operations 6,800
    Ottawa operations 9,900
  4. The exchange rate for Canadian operations is fair.
  5. No double taxation agreement exists between Nigeria and Canada.

Required:
In accordance with the provisions of the Companies Income Tax Act Cap. C21 LFN 2004 (as amended), you are to: a. Compute the double taxation relief (if any) available to the Nigerian company

(9 Marks)
b. Advise on the tax liabilities of the Nigerian company for the relevant assessment year (9 Marks)
c. Comment on the implications of double taxation agreements on withholding tax deductions by a company resident in a country:
(i) With no double taxation agreement with Nigeria

(1 Mark)
(ii) With double taxation treaty with Nigeria (1 Mark)
Total: 20 Marks

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "AT – May 2024 – L3 – SB – Q3 – Double Taxation Reliefs and Credits"

  • 15 Marks

AT – May – 2018 – L3 – SC – Q6 – Companies Income Tax (CIT)

Tax computation for Obi Airlines Limited operating in Ethiopia, including Total Profits and tax liabilities in Nigeria for income sourced from Nigeria.

Chief Bonny Chizaram is the Chairman/CEO of Chizaram group of companies. The conglomerate operates in several states of Nigeria, with business interests in supply of building materials, transport, and banking.

In 2012, under the Chairman’s directive, the group decided to diversify its business into some African countries by establishing Obi Airlines Limited, incorporated in Ethiopia.

On May 25, 2016, as Chief Chizaram was in the executive lounge of Murtala Mohammed International Airport, Lagos, awaiting departure, he met his long-time friend and business colleague, Chief Roger Menkiti, who is also an entrepreneur.

During their discussion, Chief Menkiti expressed interest in understanding the benefits of investing in Ethiopia, with concerns about Companies Income Tax and Tertiary Education Tax payable in Nigeria if he started an airline business in Ethiopia.

The financial results of Obi Airlines Limited for the year ended December 31, 2015, are as follows:

Description Amount (₦)
Income from passenger flights on other routes 213,668,750
Income from cargo loaded into aircraft on other routes 218,280,000
Income from passenger flights from Nigeria 54,401,275
Income from cargo loaded into aircraft from Nigeria 49,938,180
Total Income 536,288,205
Deduct:
Depreciation 1,974,125
Staff salaries 14,373,968
General provision 215,050
Other expenses 579,913
Total Deductions 17,143,056
Net Profit 519,145,149

Additional Information:

  1. Capital allowances were agreed with the relevant authority at 110% of the depreciation charged.
  2. Other expenses include disallowable expenses amounting to ₦425,000.

Required:

As the Tax Consultant, prepare computations showing:

a. Total Profits of Obi Airlines Limited for Nigerian tax purposes. (12 Marks)
b. Companies Income Tax Liability for the relevant year of assessment. (2 Marks)
c. Tertiary Education Tax Liability. (1 Mark)

(Total 15 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "AT – May – 2018 – L3 – SC – Q6 – Companies Income Tax (CIT)"

  • 15 Marks

AT – May 2018 – L3 – SB – Q4b – Double Taxation Reliefs and Credits

Calculate the final tax liability for Oduifa Construction Ltd., considering foreign income and double taxation relief.

Engineer Kole Ahmed manages a wholly owned Nigerian engineering outfit – Oduifa Construction Company Limited, based at Ikeja and incorporated in February 2010.

Given the challenging economic environment in Nigeria and inconsistent government policies, the company’s management embarked on foreign diversification of income. They sourced and secured some contracts in the United Kingdom where they have operational activities in London.

Extracts from the Statement of Profit or Loss for the year ended December 31, 2015, for Lagos and London operations, are as follows:

Description Lagos (N) London (N) Global (N)
Revenue 68,000,000 70,200,000 138,200,000
Direct expenses (43,410,000) (44,050,000) (87,460,000)
Gross profit 24,590,000 26,150,000 50,740,000
Administrative expenses:
– Staff salaries 1,200,000 1,440,000 2,640,000
– Rent and rates 840,000 960,000 1,800,000
– Motor vehicle expenses 136,000 148,000 284,000
– Repairs and maintenance 92,000 106,500 198,500
– Utilities 76,840 81,000 157,840
– Business insurances 55,000 60,000 115,000

Capital allowances: N725,000.

Required: Compute the final tax liability of the company for the relevant assessment year. (15 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "AT – May 2018 – L3 – SB – Q4b – Double Taxation Reliefs and Credits"

  • 20 Marks

AT – Nov 2023 – L1 – SB – Q2 – Petroleum Profits Tax

Calculation of hydrocarbon and companies income tax for Brass Petroleum Producing Company Ltd under Petroleum Industry Act and Companies Income Tax Act.

Brass Petroleum Producing Company Limited has been operating as an oil prospecting company in Nigeria for fifteen years. The company operates in both onshore and shallow water in the Koko area of the Niger Delta region.

Following the provisions of the Petroleum Industry Act 2021, the company applied for, and was granted a petroleum prospecting license (PPL) on January 1, 2021.

Extracts from the company’s financial records for the year ended December 31, 2021, revealed the following:

Description N’million
Revenue:
Value of crude oil sold 184,450
Value of condensate from associated gas sold 47,175
Value of natural gas liquid from associated gas sold 41,650
Gross revenue 273,275
Balancing charge 32
Total Gross Revenue 273,307
Deduct:
Production cost 106,470
Cost of gas reinjection wells 600
Drilling cost incurred 4,360
Depreciation of plant, machinery, and fixtures 1,500
Decommissioning and abandonment 1,900
Repairs and maintenance 5,750
Royalty cost paid 40,990
Niger Delta Development Commission charge 250
Finance costs 510
Terminaling cost 1,380
Donations to recognised charity home 130
Concession rentals 20,470
Host community fund 1,000
Local government municipal levy 100
Environmental remediation fund 1,420
Cost incurred in seeking information for oil deposits 370
Total Deductible Expenses 187,200
Net Profit 86,107

Additional Information:

  1. Value of crude oil sold:
    • Type: Forcados
    • Quantity (barrels): 6,200,000
    • Actual Price ($): 70
    • Fiscal Price ($): 72
  2. Value of condensate from associated gas sold:
    • Type: OSO condensate
    • Quantity (barrels): 3,700,000
    • Actual Price ($): 30
    • Fiscal Price ($): 30
  3. Value of gas liquid from associated gas sold:
    • Type: Pennington
    • Quantity (barrels): 2,800,000
    • Actual Price ($): 35
    • Fiscal Price ($): 34
  4. Drilling cost incurred:
    • Tangible drilling cost for first exploration well: N2,800 million
    • Drilling the first two appraisal wells: N1,560 million
    • Total: N4,360 million
  5. Repairs and maintenance:
    • Repairs of plant, machinery, and fixtures: N2,750 million
    • Repairs or alteration of production implement utensils: N3,000 million
    • Total: N5,750 million
  6. Losses brought forward from last year: N655 million
  7. Capital allowances computed:
    • Brought forward: N320 million
    • For the current year: N1,400 million
    • Total: N1,720 million
  8. Production allowances after commencement of the Petroleum Industry Act: N3,300 million
  9. Exchange Rate: Assume N425 is equivalent to US$1.

Required:

As the company’s Tax Manager, you are to prepare a report to the Managing Director, showing in line with the provisions of Petroleum Industry Act 2021 and Companies Income Tax Act 2004 (as amended), the:

a. Hydrocarbon tax (14 Marks)

b. Companies income tax payable (6 Marks)

(Total: 20 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "AT – Nov 2023 – L1 – SB – Q2 – Petroleum Profits Tax"

  • 20 Marks

TAX – May 2015 – L2 – SB – Q3 – Companies Income Tax (CIT)

Steps involved in changing accounting date and computing assessable profits under both old and new dates, and cessation implications.

Hopeful Limited, a manufacturing company, has been having declining profits and liquidity problems since 2010. The company changed its accounting year-end in 2010 from 31 May to 31 December.

The shareholders injected ₦10 million into the company in January 2011, which boosted its profits in 2011 and 2012.

Even with the increase in profits in 2011 and 2012, the Managing Director was of the opinion that it is better to cut the company’s losses, once and for all, by winding-up the company. However, the Finance Director disagreed and argued that since the company’s performance was now improving, it should continue to operate.

The Company’s Accountant has prepared the financial statements and the following are extracts:

Year Profits (₦)
Year ended 31 May 2009 540,000
Year ended 31 May 2010 300,000
Seven months to 31 December 2010 645,000
Year ended 31 December 2011 1,575,000
Year ended 31 December 2012 1,876,500

The Chairman of Hopeful Limited invited you to his office on 12 June 2013, to educate him on the two concepts of change of accounting date and cessation of business as well as their tax implications.

Required:

a. Identify the steps involved in the event that HOPEFUL Limited adopts the change of accounting date. (6 Marks)
b. Compute the Assessable profits for 2011 – 2013, if the option to change accounting date is accepted, using both the old and the new dates. (7 Marks)
c. Compute the Assessable profits for the relevant years if the cessation option is accepted using the normal basis and the revised basis of assessment. (7 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "TAX – May 2015 – L2 – SB – Q3 – Companies Income Tax (CIT)"

  • 20 Marks

TAX – May 2023 – L2 – SA – Q4 – Companies Income Tax

Calculate assessable profit basis periods and capital allowances for Wizzy-Baddo Ltd.

As part of the induction program for the newly recruited staff of your firm of tax consultants, you have been tasked with a presentation on companies’ income tax computation for beginners during the firm’s training session.

You are provided with the following information relating to Wizzy-Baddo Limited, which commenced business on September 1, 2020:

  • Adjusted Profit:
    • Period to December 31, 2020: N6,937,500
    • Year ended December 31, 2021: N9,300,500

The following assets were acquired as follows:

Date Asset Cost (N)
June 5, 2020 Land and building 5,467,500
July 1, 2020 Motor vehicle 10,000,000
October 15, 2020 Machinery 4,375,000
February 28, 2021 Furniture 3,458,000
May 1, 2021 Delivery van 4,750,000

Required:

a. State the basis periods for assessable profits and qualifying capital expenditure. (5 Marks)

b. Compute the capital allowances.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "TAX – May 2023 – L2 – SA – Q4 – Companies Income Tax"

  • 15 Marks

TAX – Nov 2020 – L1 – SA – Q4b – Companies Income Tax (CIT)

Compute tax liabilities for Oxygen Nigeria Limited, considering capital allowances and available options.

(ii) Capital allowances as agreed with the Federal Inland Revenue are as follows:

Year of Assessment Amount (N)
2016 600,000
2017 490,000
2018 420,000
2019 385,000

Required:
Compute the tax liabilities of the company for the relevant years of assessment, taking into consideration the options available to the company.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "TAX – Nov 2020 – L1 – SA – Q4b – Companies Income Tax (CIT)"

  • 30 Marks

TAX – Nov 2015 – L2 – Q1 – Companies Income Tax (CIT)

Discussing taxation and capital allowance claims of Quickfix Limited for several years of assessment and computation of total profits and tax payable.

Quickfix Limited deals in the sale of Sweetmilk brand of drink. The company commenced business on 1 May 2000. Due to the prohibitive cost of doing business in Nigeria, it decided to cease business on 1 July 2012. The following information was extracted from its records:

Year of Assessment Assessable Profit/(Loss) Capital Allowance Total Profit Tax Paid
2007 (1,921,400) 4,681,450 – –
2008 3,942,000 5,817,000 1,314,000 394,200
2009 9,201,750 4,168,500 3,067,250 920,175
2010 7,581,750 6,633,000 2,527,250 758,175
2011 11,580,750 9,058,000 3,860,250 1,158,075
2012 4,664,375 4,190,500 1,554,790 466,438

The company made a claim for unutilized capital allowances to be carried back. During the period, 1 January to 30 June 2013, the adjusted loss of the company was N1,614,500. Capital Allowance due was N2,561,250.

The tax computations as agreed are as follows:

Required:
a. Compute the revised assessment of Quickfix Limited on cessation basis, taking into account unutilized capital allowances.
b. Determine the tax refundable by the Federal Inland Revenue Service (FIRS) for the relevant years of assessment.

 

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "TAX – Nov 2015 – L2 – Q1 – Companies Income Tax (CIT)"

  • 20 Marks

TAX – Nov 2021 – L2 – Q2 – Companies Income Tax (CIT)

Computation of interest deductible under section 24 of CITA 2004 and treatment of excess interest for XYZ Limited.

XYZ Limited was incorporated on August 31, 2012, and it commenced business on May 31, 2013. Diki (Malaysia) Limited is its subsidiary in Malaysia. An extract of the financial statements of XYZ Limited for the year ended December 31, 2020, revealed the following:

Assessable profit: N2,000,000

Interests and depreciation deducted before arriving at the assessable profit are:

  • Interest on loan paid to Diki (Malaysia) Limited: N1,050,000
  • Interest on loan paid to other creditors: N1,000,000
  • Depreciation: N400,000

It was discovered that N450,000 of the loan paid to other creditors was in respect of a loan obtained to generate tax-exempt profits.

The Managing Director of XYZ Limited has asked you as a tax consultant to explain the provisions of section 24 of CITA 2004 (as amended) and the Seventh Schedule in respect of the interest deductible by a Nigerian company.

Required:
a. Compute the interest deductible in the relevant assessment year. (16 Marks)
b. Explain how the excess interest not deducted in the relevant assessment year would be treated. (4 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "TAX – Nov 2021 – L2 – Q2 – Companies Income Tax (CIT)"

  • 8 Marks

TAX – May 2021 – L1 – SB – Q4a – Companies Income Tax (CIT)

Conditions for the allowability of donations under the Companies Income Tax Act.

Under the provisions of Companies Income Tax Act Cap C21 LFN 2004 (as amended), for an expenditure to be allowable for tax purposes, it should be an expenditure incurred wholly, exclusively, necessarily, and reasonably in earning the income of the company. Despite the above-stated assertion, some donations are still allowable for tax purposes.

Required:
State the conditions that must be met before a donation is allowed for tax purposes.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "TAX – May 2021 – L1 – SB – Q4a – Companies Income Tax (CIT)"

  • 15 Marks

TAX – May 2019 – L2 – Q6 – Companies Income Tax (CIT)

Compute total profit and tax liabilities, describe zero-rated VAT items, and discuss penalties for non-registration for VAT.

Duru Cobbler Limited has been in the business of shoe manufacturing for many years. Information contained in the company’s statement of profit or loss for the year ended November 30, 2018, is as follows:

Details Amount (N)
Revenue 18,546,000
Other income:
– Rental income (gross) 240,000
– Profit on sale of property, plant, and equipment 120,000
– Interest on bank deposits (net) 234,000
Total Other Income 594,000
Total Revenue 19,140,000
Less:
Staff salaries and wages 6,180,300
Finance cost 1,144,000
General administration expenses 10,585,190
Impairment loss 420,000
Depreciation and amortization 1,690,000
Total Expenses 20,019,490
Loss before tax (879,490)
Income tax expense –
Deferred tax provision (64,380)
Loss after tax (943,870)

Additional notes provided by the accountant:

  1. Finance costs include bank charges and interest on overdrafts.
  2. General administration expenses include:
    • Bad debts of N655,000 from bulk sales of shoes to the managing director’s relations.
    • Value added tax of N985,000 not imposed on some invoices.
  3. Capital allowances for the relevant year amount to N1,294,000.

Required:
(a) Compute the total profit and tax liabilities payable by Duru Cobbler Limited for the relevant year of assessment. (10 Marks)
(b) Describe zero-rated goods and services under the Value Added Tax Act Cap VI LFN 2004 (as amended) and identify two transactions that may fall under this category. (3 Marks)
(c) Identify the penalties for non-registration for VAT. (2 Marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "TAX – May 2019 – L2 – Q6 – Companies Income Tax (CIT)"

  • 10 Marks

TAX – May 2019 – L2 – Q1b – Companies Income Tax (CIT)

Calculate profit sharing for the partners of Obi Consults.

ABCEE Limited has been in the business of clearing and forwarding in Nigeria since 2007. The company has a standing policy of declaring dividends to the shareholders and has continued to do so despite the dwindling business activities in recent years. The following information was extracted from the ABCEE Limited’s income tax returns submitted to the Federal Inland Revenue Service for the 2016 year of assessment:

Description Amount (N)
Total profit per 2016 tax computation 10,899,000
Tax assessed based on total profit @ 30% 3,269,700
Dividend declared 14,000,000

Required:

As the desk officer in charge of ABCEE Limited, compute the revised tax liability of the company in line with Section 19 of the Companies Income Tax Act Cap C21 LFN 2004 (as amended).

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "TAX – May 2019 – L2 – Q1b – Companies Income Tax (CIT)"

  • 16 Marks

TAX – Nov 2018 – L2 – SC – Q5a – Companies Income Tax (CIT)

Compute the companies' income tax payable for Mandy Construction Nigeria Limited for the 2017 assessment year.

Mandy Construction Nigeria Limited is an engineering company incorporated on January 1, 2009, and commenced business the same day. The company makes up its accounts to June 30 each year. The company had prepared its tax returns for the 2017 assessment year and was of the opinion that it had no total profit and therefore was not subject to companies income tax.

As a tax consultant, the chief executive officer has requested you to review the tax returns to ascertain if any provision of the tax laws stipulates procedures to determine the tax payable in situations where there is no taxable profit or the total profit results in no tax payable.

The following information relates to the company’s records for the year ended June 30, 2016:

Statement of Profit or Loss for the year ended June 30, 2016:

Particulars N’000
Revenue 5,656,000
Cost of Sales (4,404,211)
Gross Profit 1,251,789
Other Income 152,240
Administrative Expenses (907,906)
Operating Profit 496,123
Investment Income 50,934
Finance Costs (890,657)
Loss Before Tax (343,600)
Income Tax –
Loss for the Year (343,600)

Additional Information:
(i) Included in administrative expenses are the following:

  • Loss on disposal of property, plant, and equipment: N4,352,400
  • Depreciation: N5,184,700

(ii) Capital allowances agreed with the tax office: N1,065,000

The company’s authorized, issued, and fully paid-up share capital of N1 each is provided as follows:

The net assets of the company extracted from the statement of financial position as at June 30, 2016, was N3,441,041,000.

Required:
From the available information, compute the companies income tax payable by Mandy Construction Nigeria Limited for the relevant assessment year.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "TAX – Nov 2018 – L2 – SC – Q5a – Companies Income Tax (CIT)"

  • 20 Marks

TAX – Nov 2018 – L2 – SB – Q2 – Companies Income Tax (CIT)

Compute total profit and companies' income tax payable, calculate tertiary education tax, and identify exempt companies from minimum tax.

Adamu Musa Company Limited is a Nigerian telecommunications company that has been in business for several years. The company’s annual report for the year ended October 31, 2017, provides the following summary of the statement of profit or loss:

  • Gross profit: N3,062,500
  • Dividend received from other Nigerian companies (gross): N175,000
  • Profit on sale of property, plant, and equipment: N160,000
  • Rents received (gross): N140,000
  • Expenses:
    • Rent paid: N250,000
    • Wages and salaries: N725,000
    • Lighting and air conditioning: N37,500
    • Travelling expenses: N50,000
    • Rates: N60,000
    • Repairs to premises: N150,000
    • Depreciation: N125,000
    • Bad debts written off: N50,000
    • Income tax provision: N175,000
    • Stationery: N75,000
    • Postages and telephone: N30,000
    • Business name sign post: N10,000
    • Legal expenses: N100,000
    • General expenses: N200,000
    • Expansion of cold room: N500,000

Additional information:

  • Bad debts include general provisions of N22,500 written off on the sale of trade inventory.
  • Legal expenses include N25,000 for acquiring a new lease and N12,500 for renewing an old lease.
  • General expenses include 
  • Travelling expenses include Chief Taragi‟s (managing director) private hotel bill of N11,250
  • Capital allowances agreed with the tax office total N125,000.
  • Withholding tax at 10% was deducted from rental income.

Required:
(a) Compute the total profit and companies’ income tax payable.
(b) Calculate tertiary education tax (TET).
(c) State five categories of companies liable to information technology tax.

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "TAX – Nov 2018 – L2 – SB – Q2 – Companies Income Tax (CIT)"

knowsia

Elevate your professional expertise across key business domains with our comprehensive training programs

Our offerings

Contact Info

  • +233203701923
    +233543919232
  • info@knowsia.com

Customer

Get In Touch

Follow us on our social media and get daily updates.

Facebook-f Twitter Linkedin-in Envelope
Oops!

This feature is only available in selected plans.

Click here to view all plans

Click on the login button below to login if you’re already subscribed to a plan or click on the upgrade button below to upgrade your current plan.

Login
Upgrade Plan

If you’re not subscribed to a plan, click on the button below to choose a plan

Subscribe to a plan