Series: NOV 2021

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TAX – Nov 2021 – L2 – Q7 – Tax Administration

Explanation of five different aspects of tax administration that TAXPRO MAX can handle.

Question

Tago Nigeria Limited was incorporated in 2009 as a trading company. It supplies
office furniture, equipment and other office materials to end users.

Due to the favourable business climate in recent years, the company achieved a
gross turnover of N120,000,000 in 2020. The directors were impressed by the profits
posted by the company, hence the decision to computerise the accounting system of
the company.
You were appointed the tax consultant to the company in 2018. You are aware that
in 2006, the Federal Inland Revenue Service (FIRS) deployed the first tax portal
(Webportal) to automate and streamline taxpayer‟s registration and other tax
administration system (ITAS) known as SIGTAS. This was implemented though its
deployment was stalled.

Following the enactment of the Finance Act, 2020, the Federal Inland Revenue
Service is empowered to automate filing of tax returns and payment processes.
You attended a seminar organised by the Federal Inland Revenue Service in June
2021, to inform tax consultants of the adoption of a locally developed tax
management solution known as TAXPRO MAX. The FIRS insisted that manual filings
of tax returns would no longer be allowed.
At a meeting held with the Managing Director of Tago Nigeria Limited, you intimated
him of the tax development. He was worried that there could be a delay in filing of
tax returns for the year ended December 31, 2020, more so when taxpayers are yet to
be fully aware of this new development.

Required

Explain to the management FIVE different aspects of tax administration that the tax management solution known as TAXPRO MAX can handle.

Answer

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Tags: Automation, E-Payment, Tax Filing, TAXPRO MAX
Level: Level 2

Series: NOV 2021

TAX – Nov 2021 – L2 – Q6 – Value Added Tax (VAT)

Explanation of when goods and services are deemed to be supplied in Nigeria according to section 2 of the VAT Act.

Question

Taxable supplies of goods and services are those listed under the First Schedule of
the Value Added Tax Act Cap VI for 2004 (as amended). Essentially, these are goods
and services liable to value added tax at the prescribed rate.
Required:
Explain when goods and services shall be deemed to be supplied in Nigeria in
accordance with section 2 of VAT Act (as amended).

Answer

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Tags: Goods, Nigeria, Services, Supply, VAT
Level: Level 2

Topic: Value-Added Tax (VAT)
Series: NOV 2021

TAX – Nov 2021 – L2 – Q5 – Companies Income Tax (CIT)

Explanation of documents required for tax registration, time lag for filing tax returns, and penalties for late filing of returns.

Question

QUESTION 5
The Companies Income Tax Act Cap C21 LFN 2004 (as amended) empowers the
Federal Inland Revenue Service to assess the income of corporate organisations.
Corporate organisations are required to file tax returns within a specified period of
time to the relevant tax authority.
Required:
a. Explain the documents/information required to be forwarded to the relevant tax
authority when registering with the nearest integrated tax office. (5 Marks)
b. State the time lag for filing the first set of returns and subsequent ones.
(5 Marks)
c. State the penalty for late filing of tax returns on the due dates. (5 Marks)
(Total 15 Marks)

Answer

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Tags: Corporate Tax Returns, Filing Deadlines, Penalties, Tax Documents
Level: Level 2

Topic: Companies Income Tax (CIT)
Series: NOV 2021

TAX – Nov 2021 – L2 – Q4b – Tax Incentives and Reliefs

Explanation of the rules governing loss relief for companies, including carry forward, loss limitation, and cessation rules.

Question

Explain FIVE rules governing loss relief for companies.

Answer

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Tags: Corporate Losses, Loss relief, Tax Rules
Level: Level 2

Topic: Tax Incentives and Reliefs
Series: NOV 2021

TAX – Nov 2021 – L2 – Q4a – Companies Income Tax (CIT)

Computation of income tax payable for Ajani-Ogun Ventures Limited from 2018 to 2021 years of assessment.

Question

Ajani-Ogun Ventures Limited was incorporated on February 1, 2012, and commenced business on September 1, 2013. The company makes up accounts to August 31, every year. The following additional information is provided:

Adjusted (loss)/profit:
- Year ended August 31, 2017: (N95,000)
- Year ended August 31, 2018: N55,000
- Year ended August 31, 2019: N35,000
- Year ended August 31, 2020: N65,000
Capital Allowances for each year of assessment:
- Year ended August 31, 2018: N6,500
- Year ended August 31, 2019: N5,000
- Year ended August 31, 2020: N4,200
- Year ended August 31, 2021: N4,000

The Finance Director was worried that the tax officials would soon conduct a tax
audit of their financial transactions and he wanted to know the tax liabilities
payable to the Federal Inland Revenue Service for the relevant assessment years.
During the year ended August 31, 2020, the company achieved a revenue of
N20,000,000.

Required:
a. Compute the income tax for 2018 to 2021 years of assessment, taking into consideration the provisions of the Finance Act, 2019. Ignore minimum tax computation. (15 Marks)

Answer

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Tags: Capital allowances, Corporate Tax, Income Tax, Loss relief
Level: Level 2

Topic: Companies Income Tax (CIT)
Series: NOV 2021

TAX – Nov 2021 – L2 – Q3c – Value Added Tax (VAT)

Explanation of the merits and demerits of Value Added Tax (VAT) as a consumption tax.

Question

Explain the merits and demerits of VAT

Answer

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Tags: Consumption Tax, Tax Administration, Tax Efficiency, VAT
Level: Level 2

Topic: Value-Added Tax (VAT)
Series: NOV 2021

TAX – Nov 2021 – L2 – Q3b – Value Added Tax (VAT)

Explanation of penalties associated with VAT non-compliance including failure to register, failure to notify of address changes, and failure to submit returns.

Question

Explain the penalties associated with the following:

i. Failure to register for VAT return (2 Marks)
ii. Failure to notify the FIRS of change of address or cessation of trade or business (2 Marks)
iii. Failure to submit VAT returns (2 Marks)

Answer

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Tags: Non-compliance, Penalties, Registration, Returns, VAT
Level: Level 2

Topic: Value-Added Tax (VAT)
Series: NOV 2021

TAX – Nov 2021 – L2 – Q3a – Value Added Tax (VAT)

Calculation of total VAT payable by Adegboyega Enterprises to the Federal Inland Revenue Service (FIRS) for product sales.

Question

Adegboyega Enterprise is a manufacturing outfit based in Jankara, Lagos State. In 2020, the company sold its vatable product to a wholesaler, Ikeja Venture, for N3,500,000. The wholesaler sold the products to a retailer, Mrs. Adeosun, for N4,900,000, who finally sold it to consumers for N6,300,000 (VAT inclusive). Assume there was no closing inventory at each stage of the transaction.

Required:
a. Compute the total VAT payable to the Federal Inland Revenue Service by Adegboyega Enterprises on the transactions stated above.

Answer

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Tags: Manufacturing, Sales, Taxable Goods, VAT, VAT Computation
Level: Level 2

Topic: Value-Added Tax (VAT)
Series: NOV 2021

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.

Question

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)

Answer

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Tags: Companies Income Tax, Excess Interest, Interest Deduction, Loan Interest
Level: Level 2

Topic: Companies Income Tax (CIT)
Series: NOV 2021

AX – Nov 2021 – L2 – Q1 – Personal Income Tax (PIT)

Calculation of personal income tax liability for two job offers and providing advice on the offer that yields a higher income after tax.

Question

Miss Opeyemi Olunba is a young engineer who has been working in an oil sector for
over 5 years. She currently earns a gross salary of N10,000,000 per annum. She
recently attended two interviews for a new job at Joke Oil & Gas in Rivers State and
Dabiri Hotels & Suite in Lagos State.
She has been called by the two companies to assume office on April 1, 2021. The
following salaries and allowances were offered by the two companies:

Additional information:

If Miss Opeyemi accepts the offer from Joke Oil & Gas, she will rent out her Lagos apartment for N20,000,000 per annum but will need a loan of N12,000,000 at 20% interest to modify the apartment.
She will pay rent of N5,000,000 in Port Harcourt if she relocates.
She maintains her child, a student at St. John University,
She also supports her parents.
She pays a life assurance premium of N5,000,000 annually.
Her employers will deduct contributions for the National Housing Fund (N5,000,000) and Pension Fund (N3,000,000).
She also pays National Health Insurance Premium (N1,000,000).

Required:

a. Compute Miss Opeyemi’s personal income tax liability for the relevant year of assessment for both offers.
b. Advise her on which employment will give her a higher income after tax.

Answer

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Tags: Allowances, Employment Income, Loan Interest, Personal income tax, Tax deductions
Level: Level 2

Topic: Personal Income Tax
Series: NOV 2021

BMF – Nov 2021 – L1 – SA – Q19 – Basics of Business Finance and Financial Markets

Question on identifying the key role of banks as financial intermediaries.

Question

Banks are important financial intermediaries because they:

A. Create new debt
B. Are the only source of debt finance
C. Are the only source of long-term finance
D. Operate between investors and borrowers
E. Take deposits from all their customers

Answer

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Tags: Banking, Debt Financing, Financial Intermediation
Level: Level 1

Topic: Basics of Business Finance and Financial Markets
Series: NOV 2021

BMF – Nov 2021 – L1 – SA – Q18 – Communications in Business

Question on the year Shannon and Weaver developed their communication model.

Question

Shannon and Weaver’s communication model was developed in:

A. 1929
B. 1937
C. 1949
D. 1957
E. 1969

Answer

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Tags: Communication Theories, Information Systems, Shannon and Weaver
Level: Level 1

Topic: Communications in Business
Series: NOV 2021

BMF – Nov 2021 – L1 – SA – Q17 – The Role of Professional Accountants in Business and Society

Question on who developed agency theory in 1976.

Question

Agency theory was developed in 1976 by:

A. Fayol and Mayo
B. Kanter and Urwick
C. Jensen and Meckling
D. Mintzberg and Ouchi
E. Frank and Lillian Gilbreth

Answer

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Tags: Agency theory, Corporate Governance, Management
Level: Level 1

Topic: The Role of Professional Accountants in Business and Society
Series: NOV 2021

BMF – Nov 2021 – L1 – SA – Q16 – Basics of Business Finance and Financial Markets

Question on separating risk and return characteristics from individual investment decisions.

Question

Separating the risk and return characteristics of market investments from the individual investment decisions is known as:

A. Risk transformation
B. Separation theorem
C. Financial intermediation
D. Maturity transformation
E. Amortisation

Answer

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Tags: Investment Theory, Risk Management, Separation Theorem

Topic: Basics of Business Finance and Financial Markets
Series: NOV 2021

BMF – Nov 2021 – L1 – SA – Q15 – Investment Decisions

Question about the relevant cost for capital investment decisions.

Question

The concept of cash flow is of vital importance to capital investment appraisal. Which of the following costs is relevant to investment decisions?

A. Future costs
B. Notional costs
C. Committed cost
D. Absorbed cost
E. Apportionment cost

Answer

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Tags: Capital Budgeting, Investment Appraisal, Relevant Costs
Level: Level 1

Topic: Investment Decisions
Series: NOV 2021

BMF – Nov 2021 – L1 – SA – Q14 – The Role of Professional Accountants in Business and Society

Question about identifying an act that cannot be categorized under NOCLAR.

Question

Which of the following CANNOT be categorized as an act of Non-Compliance with Laws and Regulations (NOCLAR)?

A. Bribery
B. Whistleblowing
C. False accounting
D. Fraudulent practice
E. Mutilated financial records

Answer

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Tags: Ethics, Laws and regulations, Non-compliance
Level: Level 1

Topic: The Role of Professional Accountants in Business and Society
Series: NOV 2021

BMF – Nov 2021 – L1 – SA – Q13 – Management, Individual, and Organizational Behaviour

Question about identifying who developed a contingency theory of leadership.

Question

One of the contingency theories of leadership was developed by:

A. Lippitt and White
B. Blake and Mouton
C. Shannon and Weaver
D. Hersey and Blanchard
E. Tannenbaum and Schmidt

Answer

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Tags: Contingency Theories, Leadership, Organizational Behaviour
Level: Level 1

Topic: Management, Individual, and Organizational Behavior
Series: NOV 2021

BMF – Nov 2021 – L1 – SA – Q12 – Management, Individual, and Organizational Behaviour

Question about describing a leader according to Warren Bennis.

Question

According to the works of Warren Bennis, which of the following describes a leader?

A. Imitates
B. Maintains
C. Originates
D. Does things rightly
E. Places reliance on control

Answer

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Tags: Leadership, Management Theories, Warren Bennis
Level: Level 1

Topic: Management, Individual, and Organizational Behavior
Series: NOV 2021

BMF – Nov 2021 – L1 – SA – Q11 – Basics of Business Finance and Financial Markets

Question about identifying incorrect statements related to bonds as debt instruments.

Question

Bonds are debt instruments issued by governments, government agencies, international organizations, and companies. Which of the following is NOT true of bonds?

A. They may be issued for a fixed period of time
B. They can be classified either as domestic or international
C. They are redeemed by the issuer usually at their face value
D. The bond markets are accessible to small companies
E. While in issue, the issuer pays interest to the bondholders each year

Answer

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Tags: Bonds, Debt Instruments, Investment
Level: Level 1

Topic: Basics of Business Finance and Financial Markets
Series: NOV 2021

BMF – Nov 2021 – L1 – SA – Q10 – Basics of Business Finance and Financial Markets

Question about identifying a source of long-term financing.

Question

Which of the following is a source of long-term financing?

A. Bank overdraft
B. Trade payables
C. Venture capital
D. Operating lease
E. Debt factoring

Answer

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Tags: Corporate finance, Debt Instruments, Long-term Financing
Level: Level 1

Topic: Basics of Business Finance and Financial Markets
Series: NOV 2021

Series: NOV 2021

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TAX – Nov 2021 – L2 – Q7 – Tax Administration

Explanation of five different aspects of tax administration that TAXPRO MAX can handle.

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TAX – Nov 2021 – L2 – Q6 – Value Added Tax (VAT)

Explanation of when goods and services are deemed to be supplied in Nigeria according to section 2 of the VAT Act.

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TAX – Nov 2021 – L2 – Q5 – Companies Income Tax (CIT)

Explanation of documents required for tax registration, time lag for filing tax returns, and penalties for late filing of returns.

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TAX – Nov 2021 – L2 – Q4b – Tax Incentives and Reliefs

Explanation of the rules governing loss relief for companies, including carry forward, loss limitation, and cessation rules.

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TAX – Nov 2021 – L2 – Q4a – Companies Income Tax (CIT)

Computation of income tax payable for Ajani-Ogun Ventures Limited from 2018 to 2021 years of assessment.

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TAX – Nov 2021 – L2 – Q3c – Value Added Tax (VAT)

Explanation of the merits and demerits of Value Added Tax (VAT) as a consumption tax.

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TAX – Nov 2021 – L2 – Q3b – Value Added Tax (VAT)

Explanation of penalties associated with VAT non-compliance including failure to register, failure to notify of address changes, and failure to submit returns.

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TAX – Nov 2021 – L2 – Q3a – Value Added Tax (VAT)

Calculation of total VAT payable by Adegboyega Enterprises to the Federal Inland Revenue Service (FIRS) for product sales.

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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.

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AX – Nov 2021 – L2 – Q1 – Personal Income Tax (PIT)

Calculation of personal income tax liability for two job offers and providing advice on the offer that yields a higher income after tax.

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BMF – Nov 2021 – L1 – SA – Q19 – Basics of Business Finance and Financial Markets

Question on identifying the key role of banks as financial intermediaries.

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BMF – Nov 2021 – L1 – SA – Q18 – Communications in Business

Question on the year Shannon and Weaver developed their communication model.

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BMF – Nov 2021 – L1 – SA – Q17 – The Role of Professional Accountants in Business and Society

Question on who developed agency theory in 1976.

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BMF – Nov 2021 – L1 – SA – Q16 – Basics of Business Finance and Financial Markets

Question on separating risk and return characteristics from individual investment decisions.

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BMF – Nov 2021 – L1 – SA – Q15 – Investment Decisions

Question about the relevant cost for capital investment decisions.

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BMF – Nov 2021 – L1 – SA – Q14 – The Role of Professional Accountants in Business and Society

Question about identifying an act that cannot be categorized under NOCLAR.

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BMF – Nov 2021 – L1 – SA – Q13 – Management, Individual, and Organizational Behaviour

Question about identifying who developed a contingency theory of leadership.

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BMF – Nov 2021 – L1 – SA – Q12 – Management, Individual, and Organizational Behaviour

Question about describing a leader according to Warren Bennis.

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BMF – Nov 2021 – L1 – SA – Q11 – Basics of Business Finance and Financial Markets

Question about identifying incorrect statements related to bonds as debt instruments.

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BMF – Nov 2021 – L1 – SA – Q10 – Basics of Business Finance and Financial Markets

Question about identifying a source of long-term financing.

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