Question Tag: Exemptions

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  • 15 Marks

TAX – Nov 2023 – L2 – Q5 – Tax Administration and Enforcement

Explain stamp duty exemptions, electronic document receipt, duties on contracts, and electronic money transfer levies.

Stamp duties are duties basically on instruments (defined to include written document). Stamp duties are governed by Stamp Duties Act Cap. S8 LFN 2004 (as amended), which provides for the levying of duties on certain matters specified in the Act, effective April 1, 1993.

a. Explain THREE instruments exempted from stamp duties. (3 Marks)
b. Describe when electronic documents are considered received in Nigeria. (3 Marks)
c. Discuss duty on contracts. (3 Marks)
d. Explain the electronic money transfer levy. (6 Marks)

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  • 20 Marks

TAX – May 2024 – L2 – SA – Q4 – Cost-Volume-Profit (CVP) Analysis

Compute minimum tax liability for Pkikan Nigeria Ltd and discuss exemptions and basis.

Pkikan Nigeria Limited has been in business for several years and prepares accounts annually to December 31. The following data is available for the year ended December 31, 2021:

Description Amount (N’000)
Turnover 1,300
Cost of Sales (400)
Gross Profit 900
Less: Total Expenses (1,100)
Net Loss for the Year (200)

Additional information:

You were informed that:
(ii) After the review of the company‟s accounting records, N400,000 meant for the Managing Director of the company was erroneously included in the turnover for the year.
(iii) The issued share capital of the business was N1.8 million, out of which, the shareholders representing N300,000 are yet to pay the final call.
(iv) The net assets of the company was N850,000.
(v) There was a loss brought forward of N210,000 relating to the previous year ofassessment and the agreed capital allowance with the Revenue was N385,000.

Required:
a. Compute the minimum tax liability for the assessment year. (14 Marks)
b. Explain the reasons for calculating minimum tax liability. (3 Marks)
c. Identify companies exempt from minimum tax liability calculations. (3 Marks)

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  • 12 Marks

TAX – Nov 2020 – L1 – SA – Q5b – Taxation of Specialized Businesses

State six categories of properties exempted from land use charge in Lagos State.

In 2018, the Lagos State Government promulgated the Land Use Charge Law to provide for the consolidation of property and land-based charges and make provisions for the levying and collection of land use charge in the state and for connected purposes.

Section 12 (1) of the Land Use Charge Law, 2018, of Lagos State, provides for the exemption of specified categories of properties from the payment of land use charge.

Required:
State SIX categories of properties exempted from land use charge.
(12 Marks)

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  • 10 Marks

PSA&F – Nov 2019 – L2 – Q3a – Pension Accounting in the Public Sector

Identifies two categories of persons exempted from the contributory pension scheme and discusses three deficiencies of the scheme.

In accordance with Section 2(1-2) of the Pension Act 2014, both the public and private sectors’ pension schemes are now contributory. The employers and employees are expected to contribute a minimum of 18% in aggregate towards the retirement of the employees. The rate is subject to review as may be agreed between the employer and employees.

Required:

  • Identify TWO categories of persons exempted from the scheme.
  • Discuss THREE deficiencies of the scheme.

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  • 1 Marks

TAX – May 2021 – L1 – SA – Q10 – Value Added Tax (VAT)

Multiple-choice question identifying who is not considered a vatable person under Nigerian tax law.

Which of the following is NOT a vatable person?
A. A firm
B. A limited liability company
C. A sole trader
D. An individual
E. A public educational institution

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  • 5 Marks

FR – May 2020 – L2 – Q5d – Consolidated Financial Statements

Explain the concept of consolidated financial statements and identify exemptions from preparing them.

d) IFRS 10: Consolidated Financial Statements outlines the requirements for the preparation and presentation of consolidated financial statements, requiring entities to consolidate other entities it controls. The control principle in IFRS 10 sets out the following three elements of control: power over the investee; exposure, or rights, to variable returns from involvement with the investee; and the ability to use power over the investee to affect the amount of those returns.

i) What are Consolidated Financial Statements? (1 mark)

ii) Identify FOUR (4) circumstances under which a company may gain control over another company but will not be allowed to prepare consolidated financial statements. (4 marks)

 

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  • 15 Marks

TAX – May 2019 – L2 – Q5 – Withholding Tax (WHT)

Calculate withholding tax credits, determine claim periods, and discuss compliance requirements.

Oloriogun Logistics Limited renders consultancy services to newspaper publishing companies in Nigeria. All the publishers are limited liability companies which deduct appropriate withholding taxes from all consultancies and remit to relevant tax authorities within the time limit specified by the law. Oloriogun Logistics Limited makes up its accounts to December 31 each year and suffered withholding tax on the invoices raised for specific dates as follows:

Date of Remittance Month of Transaction Invoice Number Amount (N)
19/2/2015 Jan. 2015 002/01 350,000
19/3/2015 Feb. 2015 003/02 670,000
20/4/2015 March 2015 004/03 810,000
20/5/2015 April 2015 005/04 305,000
19/6/2015 May 2015 006/05 295,000
20/8/2015 June 2015 008/07 922,000
21/9/2015 Aug. 2015 009/08 270,000
21/10/2015 Sept. 2015 010/09 195,000
20/11/2015 Oct. 2015 011/10 408,000
21/12/2015 Nov. 2015 012/11 495,000
21/01/2016 Dec. 2015 012/12 396,000
21/03/2016 Jan. & Feb. 2016 01/02 1,649,000

Withholding tax credit notes on the above invoices were forwarded to Diederik Logistics Limited, but the accountant was confused as to which year of assessment to claim these tax credits.

Required:
(a) Calculate the withholding tax credits for each of the above invoices. (6 Marks)
(b) Determine the total amount of withholding tax credits to be claimed for each year of assessment. (3 Marks)
(c) What is the due date for remitting withholding tax returns to the tax authority mentioned in (b) above? (1 Mark)
(d) State three transactions exempted from withholding tax in Nigeria. (3 Marks)
(e) List four distinct groups referred to as agents of the government for the collection and remittance of withholding tax in Nigeria. (2 Marks)

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  • 10 Marks

PT – April 2022 – L2 – Q5a – Withholding Tax Administration

Explain four exemptions from withholding tax according to the Income Tax Act, 2015 (Act 896).

Although the scope of withholding tax covers employment, business, and investment income, not every income is subject to withholding tax in accordance with the Income Tax Act, 2015 (Act 896) as amended.

Required:
Explain FOUR (4) of these withholding tax exemptions.
(10 marks)

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  • 4 Marks

PT – March 2023 – L2 – Q5b – Withholding Tax Administration

State the payments which are exempt from withholding tax.

A resident person shall withhold tax on payments of any dividends, interests, rent, royalties, natural resources, and payments with a source in the country.

Required:

State FOUR (4) payments to which withholding tax does not apply.
(4 marks)

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  • 4 Marks

AT – Nov 2015 – L3 – Q1b – Business income – Corporate income tax

Circumstances under which shares are not considered chargeable assets for capital gains tax purposes.

Shares of a resident company are classified as chargeable assets under capital gains tax. Under what circumstances will shares not be described as chargeable assets under capital gains tax provision?

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  • 15 Marks

TAX – Nov 2023 – L2 – Q5 – Tax Administration and Enforcement

Explain stamp duty exemptions, electronic document receipt, duties on contracts, and electronic money transfer levies.

Stamp duties are duties basically on instruments (defined to include written document). Stamp duties are governed by Stamp Duties Act Cap. S8 LFN 2004 (as amended), which provides for the levying of duties on certain matters specified in the Act, effective April 1, 1993.

a. Explain THREE instruments exempted from stamp duties. (3 Marks)
b. Describe when electronic documents are considered received in Nigeria. (3 Marks)
c. Discuss duty on contracts. (3 Marks)
d. Explain the electronic money transfer levy. (6 Marks)

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  • 20 Marks

TAX – May 2024 – L2 – SA – Q4 – Cost-Volume-Profit (CVP) Analysis

Compute minimum tax liability for Pkikan Nigeria Ltd and discuss exemptions and basis.

Pkikan Nigeria Limited has been in business for several years and prepares accounts annually to December 31. The following data is available for the year ended December 31, 2021:

Description Amount (N’000)
Turnover 1,300
Cost of Sales (400)
Gross Profit 900
Less: Total Expenses (1,100)
Net Loss for the Year (200)

Additional information:

You were informed that:
(ii) After the review of the company‟s accounting records, N400,000 meant for the Managing Director of the company was erroneously included in the turnover for the year.
(iii) The issued share capital of the business was N1.8 million, out of which, the shareholders representing N300,000 are yet to pay the final call.
(iv) The net assets of the company was N850,000.
(v) There was a loss brought forward of N210,000 relating to the previous year ofassessment and the agreed capital allowance with the Revenue was N385,000.

Required:
a. Compute the minimum tax liability for the assessment year. (14 Marks)
b. Explain the reasons for calculating minimum tax liability. (3 Marks)
c. Identify companies exempt from minimum tax liability calculations. (3 Marks)

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  • 12 Marks

TAX – Nov 2020 – L1 – SA – Q5b – Taxation of Specialized Businesses

State six categories of properties exempted from land use charge in Lagos State.

In 2018, the Lagos State Government promulgated the Land Use Charge Law to provide for the consolidation of property and land-based charges and make provisions for the levying and collection of land use charge in the state and for connected purposes.

Section 12 (1) of the Land Use Charge Law, 2018, of Lagos State, provides for the exemption of specified categories of properties from the payment of land use charge.

Required:
State SIX categories of properties exempted from land use charge.
(12 Marks)

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  • 10 Marks

PSA&F – Nov 2019 – L2 – Q3a – Pension Accounting in the Public Sector

Identifies two categories of persons exempted from the contributory pension scheme and discusses three deficiencies of the scheme.

In accordance with Section 2(1-2) of the Pension Act 2014, both the public and private sectors’ pension schemes are now contributory. The employers and employees are expected to contribute a minimum of 18% in aggregate towards the retirement of the employees. The rate is subject to review as may be agreed between the employer and employees.

Required:

  • Identify TWO categories of persons exempted from the scheme.
  • Discuss THREE deficiencies of the scheme.

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  • 1 Marks

TAX – May 2021 – L1 – SA – Q10 – Value Added Tax (VAT)

Multiple-choice question identifying who is not considered a vatable person under Nigerian tax law.

Which of the following is NOT a vatable person?
A. A firm
B. A limited liability company
C. A sole trader
D. An individual
E. A public educational institution

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  • 5 Marks

FR – May 2020 – L2 – Q5d – Consolidated Financial Statements

Explain the concept of consolidated financial statements and identify exemptions from preparing them.

d) IFRS 10: Consolidated Financial Statements outlines the requirements for the preparation and presentation of consolidated financial statements, requiring entities to consolidate other entities it controls. The control principle in IFRS 10 sets out the following three elements of control: power over the investee; exposure, or rights, to variable returns from involvement with the investee; and the ability to use power over the investee to affect the amount of those returns.

i) What are Consolidated Financial Statements? (1 mark)

ii) Identify FOUR (4) circumstances under which a company may gain control over another company but will not be allowed to prepare consolidated financial statements. (4 marks)

 

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  • 15 Marks

TAX – May 2019 – L2 – Q5 – Withholding Tax (WHT)

Calculate withholding tax credits, determine claim periods, and discuss compliance requirements.

Oloriogun Logistics Limited renders consultancy services to newspaper publishing companies in Nigeria. All the publishers are limited liability companies which deduct appropriate withholding taxes from all consultancies and remit to relevant tax authorities within the time limit specified by the law. Oloriogun Logistics Limited makes up its accounts to December 31 each year and suffered withholding tax on the invoices raised for specific dates as follows:

Date of Remittance Month of Transaction Invoice Number Amount (N)
19/2/2015 Jan. 2015 002/01 350,000
19/3/2015 Feb. 2015 003/02 670,000
20/4/2015 March 2015 004/03 810,000
20/5/2015 April 2015 005/04 305,000
19/6/2015 May 2015 006/05 295,000
20/8/2015 June 2015 008/07 922,000
21/9/2015 Aug. 2015 009/08 270,000
21/10/2015 Sept. 2015 010/09 195,000
20/11/2015 Oct. 2015 011/10 408,000
21/12/2015 Nov. 2015 012/11 495,000
21/01/2016 Dec. 2015 012/12 396,000
21/03/2016 Jan. & Feb. 2016 01/02 1,649,000

Withholding tax credit notes on the above invoices were forwarded to Diederik Logistics Limited, but the accountant was confused as to which year of assessment to claim these tax credits.

Required:
(a) Calculate the withholding tax credits for each of the above invoices. (6 Marks)
(b) Determine the total amount of withholding tax credits to be claimed for each year of assessment. (3 Marks)
(c) What is the due date for remitting withholding tax returns to the tax authority mentioned in (b) above? (1 Mark)
(d) State three transactions exempted from withholding tax in Nigeria. (3 Marks)
(e) List four distinct groups referred to as agents of the government for the collection and remittance of withholding tax in Nigeria. (2 Marks)

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  • 10 Marks

PT – April 2022 – L2 – Q5a – Withholding Tax Administration

Explain four exemptions from withholding tax according to the Income Tax Act, 2015 (Act 896).

Although the scope of withholding tax covers employment, business, and investment income, not every income is subject to withholding tax in accordance with the Income Tax Act, 2015 (Act 896) as amended.

Required:
Explain FOUR (4) of these withholding tax exemptions.
(10 marks)

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  • 4 Marks

PT – March 2023 – L2 – Q5b – Withholding Tax Administration

State the payments which are exempt from withholding tax.

A resident person shall withhold tax on payments of any dividends, interests, rent, royalties, natural resources, and payments with a source in the country.

Required:

State FOUR (4) payments to which withholding tax does not apply.
(4 marks)

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  • 4 Marks

AT – Nov 2015 – L3 – Q1b – Business income – Corporate income tax

Circumstances under which shares are not considered chargeable assets for capital gains tax purposes.

Shares of a resident company are classified as chargeable assets under capital gains tax. Under what circumstances will shares not be described as chargeable assets under capital gains tax provision?

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