Dividend income – Knowsia

TAX – Nov 2015 – L2 – Q5b – Companies Income Tax (CIT)

This question requires the computation of Adebola Nigeria Limited's tax liabilities and withholding tax payable for 2013 and 2014.

Question

Adebola Nigeria Limited has been trading for many years. The company makes up its accounts to 31 December annually. The extracts from its Statement of Comprehensive Income for the years ended 31 December 2013 and 2014 (as adjusted for tax purposes) are as follows:

Year ended 31 December	2014 (₦)	2013 (₦)
Profit for the year	14,000,000	10,000,000
Bank interest received (gross)	2,400,000	1,600,000
Debenture interest received (gross)	800,000	800,000
Dividend received from Adesemowo Ltd. (Net)	720,000	720,000
Dividend paid to shareholders (gross)	6,000,000	4,000,000

Required:
i. Compute the company’s tax liabilities for the relevant years of assessment. Ignore capital allowances. (5 Marks)
ii. Determine the net withholding tax payable or receivable by Adebola Nigeria Limited, arising from dividends paid and received by it. (4 Marks)

Answer

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Tags: Assessment, Corporate Taxation, Dividend income, Interest Income, Tax liabilities, Withholding Tax
Level: Level 2

Topic: Companies Income Tax (CIT), Withholding Tax (WHT)
Series: NOV 2015

TAX – May 2018 – L2 – Q2 – Tax Planning and Management

Compute assessable incomes from various investments for Tosin Oguntona.

Question

Tosin Oguntona was an employee of a Federal Government parastatal in Nigeria. While in service, he invested his earnings in various investments, deriving incomes from them along with his monthly pension. The following details were provided:

Assessment Years	2013	2014
Dividend Income
Dividend from Nigerian companies	N1,200,000	N1,500,000
Dividend from abroad paid into a domiciliary account	$4,000	$4,500
Rental Income
Rent from buildings in Ibadan	N630,000	N720,000
Rent from buildings in Abuja	N1,500,000	N1,740,000
Rent from buildings in Oyo	N420,000	N520,000
Rent from buildings in Lagos	N750,000	N780,000
Expenses
Repairs and maintenance	N90,000	N96,000
Personal income tax paid	N240,000	N280,000
Water rate	N40,000	N50,000
Depreciation on building	N620,000	N700,000
Agent’s commission	N96,000	N108,000
Insurance	N120,000	N150,000
Depreciation on plant	N150,000	N162,000
Interest Incomes
Interest received from bank	N360,000	N420,000
Interest on domiciliary account	$1,200	$1,500

Other information:

Capital allowances agreed with the revenue authority for 2013 and 2014 assessment years were N150,000 and N180,000 respectively.
Insurance on properties included N24,000 and N30,000 for 2013 and 2014, respectively, for his private residence.
Pension of N80,000 per month was received.
Exchange rate: N160 to $1.

Required:
Compute the Assessable Incomes of Tosin Oguntona for 2013 and 2014 Assessment Years.

Answer

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Tags: Capital allowances, Dividend income, Interest Income, Rental Income
Level: Level 2

Topic: Taxation of Trusts and Estates
Series: MAY 2018

TAX – May 2018 – L2 – Q1a – Personal Income Tax

Compute the Personal Income Tax payable by an individual based on salary, allowances, pension, and other income details.

Question

Alhaji Tijani Bello is married and has six children aged between 4 and 21 years. All except Phillip aged 21 are still in school. The following details were obtained from his employment records:
(i) He retired from his previous employment with Standard Chartered Company Limited on September 30, 2015. He was on an annual salary of N6,630,000.
(ii) On October 1, 2015, he took up a new employment with Rehoco International Consulting on a salary of N9,600,000 per annum, transport allowance of N480,000 per annum, and rent allowance of N660,000 per annum.
(iii) From October 1, 2015, he will be on a pension income of N960,000 per annum from his pension fund administrators.
(iv) Contributions to the National Housing Fund and National Pension Scheme are N195,000 and N615,000, respectively.
(v) Alhaji Tijani Bello has a Life Assurance Policy on his life with the sum assured of N7,500,000 and an annual premium of N660,000.
(vi) He lived with his wife and two aged parents on whom he spent a total sum of N1,500,000 per annum.
(vii) Alhaji Tijani Bello received dividends from his publicly quoted investment on the Nigeria Stock Exchange as follows:

Date	Amount (N)
1/1/2014	600,000
1/7/2014	720,000

Required:
a. Compute the Personal Income Tax payable by Alhaji Tijani Bello for the relevant year of assessment.

Answer

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Tags: Allowances, Dividend income, ersonal Income Tax, Pension, Tax computation
Level: Level 2

Topic: Personal Income Tax
Series: MAY 2018

AT – NOV 2021 – L3 – Q1a – Business income – Corporate income tax | International taxation

Compute tax payable for a Free Zone Enterprise based on income from local and export sales and determine the treatment of certain adjustments.

Question

Orga Ltd has the following information relating to its operation as a Free Zone Enterprise for the 2020 year of assessment with a basis period from January to December each year:

Description	Amount (GH¢)
Revenue	35,000,000
Cost	(21,000,000)
Profit	14,000,000

Additional information:

Depreciation of GH¢200,000 has been added to the cost above.
Revenue: Local sales GH¢25,000,000; Exports GH¢10,000,000.
The Managing Director was provided with a mini bar and a swimming pool as part of his employment package costing GH¢1,200,000 in his private residence. The employer added only GH¢200,000 as part of the employment income for tax purposes. The total cost has been adjusted to the cost above.
The dividend received from the United States of America net of taxes of 10% was GH¢22,500. This income has not yet been recorded, although it has been credited in the bank statement.
The excess proceeds from the sale of a depreciable asset over the written down value amount to GH¢300,000. This has not yet been recorded in the company’s accounts.

Required:
i) Compute the tax payable. (6 marks)
ii) Explain the tax treatment of the cost of the swimming pool and mini bar. (2 marks)

Answer

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Tags: Depreciation, Dividend income, Excess Proceeds, Export Sales, Free Zone Enterprise, Local sales, Tax computation, Tax Treatment
Level: Level 3

Topic: Business income - Corporate income tax, International taxation
Series: NOV 2021

AT – Dec 2023 – L3 – Q3a – Business income – Corporate income tax

Computing tax payable for Conti Ltd with adjustments for lunch, interest on loans, derivative transactions, and dividends.

Question

Conti Ltd has been in the business of buying and selling baskets. The company’s chargeable income for the 2021 year of assessment is GH¢7,000,000.

The chargeable income includes the following adjustments:

GH¢200,000 was spent on staff lunch, with management stating that the staff were not affected by this payment.
Financial cost from derivative transactions amounted to GH¢20,000,000.
Financial gain from swaps arrangement was GH¢1,000,000.
Goods invoiced to a related company amounted to GH¢12,000,000, although these goods would have been sold to unrelated parties at GH¢13,130,000.

Additional information:

Interest on loans amounting to GH¢3,200,000 was added to the financial cost. 80% of the interest relates to capital work in progress, and the remainder supports working capital.
GH¢500,000 in net dividends was received from Ann Ltd, a resident company where Conti Ltd holds 24% voting power. The dividend has been added to revenue.

Required:
i) Compute the tax payable.
ii) What are the tax implications of the lunch for staff, interest paid, and the dividend received?
iii) Identify tax planning measures to reduce the tax liability related to the dividend.
iv) What is the tax implication of the financial cost from derivative transactions, and what is its impact on the company?

Answer

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Tags: Corporate Income Tax, Dividend income, Expense adjustments, Financial derivatives
Level: Level 3

Topic: Business income - Corporate income tax
Series: DEC 2023

TAX – Nov 2015 – L2 – Q5b – Companies Income Tax (CIT)

This question requires the computation of Adebola Nigeria Limited's tax liabilities and withholding tax payable for 2013 and 2014.

Question

Year ended 31 December	2014 (₦)	2013 (₦)
Profit for the year	14,000,000	10,000,000
Bank interest received (gross)	2,400,000	1,600,000
Debenture interest received (gross)	800,000	800,000
Dividend received from Adesemowo Ltd. (Net)	720,000	720,000
Dividend paid to shareholders (gross)	6,000,000	4,000,000

Answer

Find Related Questions by Tags, levels, etc.

Tags: Assessment, Corporate Taxation, Dividend income, Interest Income, Tax liabilities, Withholding Tax
Level: Level 2

Topic: Companies Income Tax (CIT), Withholding Tax (WHT)
Series: NOV 2015

TAX – May 2018 – L2 – Q2 – Tax Planning and Management

Compute assessable incomes from various investments for Tosin Oguntona.

Question

Assessment Years	2013	2014
Dividend Income
Dividend from Nigerian companies	N1,200,000	N1,500,000
Dividend from abroad paid into a domiciliary account	$4,000	$4,500
Rental Income
Rent from buildings in Ibadan	N630,000	N720,000
Rent from buildings in Abuja	N1,500,000	N1,740,000
Rent from buildings in Oyo	N420,000	N520,000
Rent from buildings in Lagos	N750,000	N780,000
Expenses
Repairs and maintenance	N90,000	N96,000
Personal income tax paid	N240,000	N280,000
Water rate	N40,000	N50,000
Depreciation on building	N620,000	N700,000
Agent’s commission	N96,000	N108,000
Insurance	N120,000	N150,000
Depreciation on plant	N150,000	N162,000
Interest Incomes
Interest received from bank	N360,000	N420,000
Interest on domiciliary account	$1,200	$1,500

Other information:

Capital allowances agreed with the revenue authority for 2013 and 2014 assessment years were N150,000 and N180,000 respectively.
Insurance on properties included N24,000 and N30,000 for 2013 and 2014, respectively, for his private residence.
Pension of N80,000 per month was received.
Exchange rate: N160 to $1.

Required:
Compute the Assessable Incomes of Tosin Oguntona for 2013 and 2014 Assessment Years.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital allowances, Dividend income, Interest Income, Rental Income
Level: Level 2

Topic: Taxation of Trusts and Estates
Series: MAY 2018

TAX – May 2018 – L2 – Q1a – Personal Income Tax

Compute the Personal Income Tax payable by an individual based on salary, allowances, pension, and other income details.

Question

Date	Amount (N)
1/1/2014	600,000
1/7/2014	720,000

Required:
a. Compute the Personal Income Tax payable by Alhaji Tijani Bello for the relevant year of assessment.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Allowances, Dividend income, ersonal Income Tax, Pension, Tax computation
Level: Level 2

Topic: Personal Income Tax
Series: MAY 2018

AT – NOV 2021 – L3 – Q1a – Business income – Corporate income tax | International taxation

Compute tax payable for a Free Zone Enterprise based on income from local and export sales and determine the treatment of certain adjustments.

Question

Orga Ltd has the following information relating to its operation as a Free Zone Enterprise for the 2020 year of assessment with a basis period from January to December each year:

Description	Amount (GH¢)
Revenue	35,000,000
Cost	(21,000,000)
Profit	14,000,000

Additional information:

Depreciation of GH¢200,000 has been added to the cost above.
Revenue: Local sales GH¢25,000,000; Exports GH¢10,000,000.
The Managing Director was provided with a mini bar and a swimming pool as part of his employment package costing GH¢1,200,000 in his private residence. The employer added only GH¢200,000 as part of the employment income for tax purposes. The total cost has been adjusted to the cost above.
The dividend received from the United States of America net of taxes of 10% was GH¢22,500. This income has not yet been recorded, although it has been credited in the bank statement.
The excess proceeds from the sale of a depreciable asset over the written down value amount to GH¢300,000. This has not yet been recorded in the company’s accounts.

Required:
i) Compute the tax payable. (6 marks)
ii) Explain the tax treatment of the cost of the swimming pool and mini bar. (2 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Depreciation, Dividend income, Excess Proceeds, Export Sales, Free Zone Enterprise, Local sales, Tax computation, Tax Treatment
Level: Level 3

Topic: Business income - Corporate income tax, International taxation
Series: NOV 2021

AT – Dec 2023 – L3 – Q3a – Business income – Corporate income tax

Computing tax payable for Conti Ltd with adjustments for lunch, interest on loans, derivative transactions, and dividends.

Question

Conti Ltd has been in the business of buying and selling baskets. The company’s chargeable income for the 2021 year of assessment is GH¢7,000,000.

The chargeable income includes the following adjustments:

GH¢200,000 was spent on staff lunch, with management stating that the staff were not affected by this payment.
Financial cost from derivative transactions amounted to GH¢20,000,000.
Financial gain from swaps arrangement was GH¢1,000,000.
Goods invoiced to a related company amounted to GH¢12,000,000, although these goods would have been sold to unrelated parties at GH¢13,130,000.

Additional information:

Interest on loans amounting to GH¢3,200,000 was added to the financial cost. 80% of the interest relates to capital work in progress, and the remainder supports working capital.
GH¢500,000 in net dividends was received from Ann Ltd, a resident company where Conti Ltd holds 24% voting power. The dividend has been added to revenue.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate Income Tax, Dividend income, Expense adjustments, Financial derivatives
Level: Level 3

Topic: Business income - Corporate income tax
Series: DEC 2023

Question Tag: Dividend income

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TAX – Nov 2015 – L2 – Q5b – Companies Income Tax (CIT)

This question requires the computation of Adebola Nigeria Limited's tax liabilities and withholding tax payable for 2013 and 2014.

TAX – May 2018 – L2 – Q2 – Tax Planning and Management

Compute assessable incomes from various investments for Tosin Oguntona.

TAX – May 2018 – L2 – Q1a – Personal Income Tax

Compute the Personal Income Tax payable by an individual based on salary, allowances, pension, and other income details.

AT – NOV 2021 – L3 – Q1a – Business income – Corporate income tax | International taxation

Compute tax payable for a Free Zone Enterprise based on income from local and export sales and determine the treatment of certain adjustments.

AT – Dec 2023 – L3 – Q3a – Business income – Corporate income tax

Computing tax payable for Conti Ltd with adjustments for lunch, interest on loans, derivative transactions, and dividends.

TAX – Nov 2015 – L2 – Q5b – Companies Income Tax (CIT)

This question requires the computation of Adebola Nigeria Limited's tax liabilities and withholding tax payable for 2013 and 2014.

TAX – May 2018 – L2 – Q2 – Tax Planning and Management

Compute assessable incomes from various investments for Tosin Oguntona.

TAX – May 2018 – L2 – Q1a – Personal Income Tax

Compute the Personal Income Tax payable by an individual based on salary, allowances, pension, and other income details.

AT – NOV 2021 – L3 – Q1a – Business income – Corporate income tax | International taxation

Compute tax payable for a Free Zone Enterprise based on income from local and export sales and determine the treatment of certain adjustments.

AT – Dec 2023 – L3 – Q3a – Business income – Corporate income tax

Computing tax payable for Conti Ltd with adjustments for lunch, interest on loans, derivative transactions, and dividends.

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TAX – Nov 2015 – L2 – Q5b – Companies Income Tax (CIT)

This question requires the computation of Adebola Nigeria Limited's tax liabilities and withholding tax payable for 2013 and 2014.

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TAX – May 2018 – L2 – Q2 – Tax Planning and Management

Compute assessable incomes from various investments for Tosin Oguntona.

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TAX – May 2018 – L2 – Q1a – Personal Income Tax

Compute the Personal Income Tax payable by an individual based on salary, allowances, pension, and other income details.

You're reporting an error for "TAX – May 2018 – L2 – Q1a – Personal Income Tax"

AT – NOV 2021 – L3 – Q1a – Business income – Corporate income tax | International taxation

Compute tax payable for a Free Zone Enterprise based on income from local and export sales and determine the treatment of certain adjustments.

You're reporting an error for "AT – NOV 2021 – L3 – Q1a – Business income – Corporate income tax | International taxation"

AT – Dec 2023 – L3 – Q3a – Business income – Corporate income tax

Computing tax payable for Conti Ltd with adjustments for lunch, interest on loans, derivative transactions, and dividends.

You're reporting an error for "AT – Dec 2023 – L3 – Q3a – Business income – Corporate income tax"

TAX – Nov 2015 – L2 – Q5b – Companies Income Tax (CIT)

This question requires the computation of Adebola Nigeria Limited's tax liabilities and withholding tax payable for 2013 and 2014.

You're reporting an error for "TAX – Nov 2015 – L2 – Q5b – Companies Income Tax (CIT)"

TAX – May 2018 – L2 – Q2 – Tax Planning and Management

Compute assessable incomes from various investments for Tosin Oguntona.

You're reporting an error for "TAX – May 2018 – L2 – Q2 – Tax Planning and Management"

TAX – May 2018 – L2 – Q1a – Personal Income Tax

Compute the Personal Income Tax payable by an individual based on salary, allowances, pension, and other income details.

You're reporting an error for "TAX – May 2018 – L2 – Q1a – Personal Income Tax"

AT – NOV 2021 – L3 – Q1a – Business income – Corporate income tax | International taxation

Compute tax payable for a Free Zone Enterprise based on income from local and export sales and determine the treatment of certain adjustments.

You're reporting an error for "AT – NOV 2021 – L3 – Q1a – Business income – Corporate income tax | International taxation"

AT – Dec 2023 – L3 – Q3a – Business income – Corporate income tax

Computing tax payable for Conti Ltd with adjustments for lunch, interest on loans, derivative transactions, and dividends.

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