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

PSAF – Nov 2021 – L2 – Q4c – Treasury Management in the Public Sector

Discuss the benefits of implementing a Treasury Single Account (TSA).

Question

Discuss the benefits of Treasury Single Accounts (TSA).

Answer

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Tags: Benefits, Financial management, Treasury Single Account
Level: Level 2

Topic: Treasury Management in the Public Sector
Series: NOV 2021

PSAF – Nov 2021 – L2 – Q4b – Treasury Management in the Public Sector

Discuss the components of the Treasury Single Account (TSA).

Question

Discuss the components of Treasury Single Accounts (TSA).

Answer

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Tags: Components, E-Collection, E-Payment, Treasury Single Account
Level: Level 2

Topic: Treasury Management in the Public Sector
Series: NOV 2021

PSAF – Nov 2021 – L2 – Q4a – Treasury Management in the Public Sector

Enumerate responsibilities of participants in the smooth operation of the Treasury Single Accounts (TSA).

Question

Enumerate THREE responsibilities for each of the following participants in the smooth operation of the Treasury Single Accounts (TSA):

i. Central Bank of Nigeria (3 Marks)
ii. Deposit Money Banks (3 Marks)
iii. Service Providers (3 Marks)
iv. Office of the Accountant General of the Federation (3 Marks)

Answer

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Tags: Accountant General, Central Bank, Deposit Money Banks, Service Providers, Treasury Single Account
Level: Level 2

Topic: Treasury Management in the Public Sector
Series: NOV 2021

PSAF – Nov 2021 – L2 – Q3b – Ethics and Integrity in Public Sector Financial Management

Discuss offences and their penalties under the Corrupt Practices and Other Related Offences Act 2000.

Question

The Corrupt Practices and Other Related Offences Act 2000 gave birth to the Independent Corrupt Practices and Other Related Offences Commission (ICPC).

Required:

Discuss FIVE offences as well as their penalties as contained in the Act.

Answer

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Tags: Corruption, ICPC, Offences, Penalties
Level: Level 2

Topic: Ethics and Integrity in Public Sector Financial Management
Series: NOV 2021

PSAF – Nov 2021 – L2 – Q3a – Government Accounting Concepts and Principles

Discuss observations and features of a good public sector accounting system in developing countries.

Question

The records of research work in the individual countries in the ‘third world’ are difficult to obtain, unlike in the advanced countries, where research work has been documented and published.

Required:

Discuss FIVE observations and FIVE features of a good system of public sector accounting in the developing countries as contained in the United Nations Manual on Government Accounting.

Answer

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Tags: Developing Countries, Government Accounting, Public Sector Accounting, UN Manual
Level: Level 2

Topic: Government Accounting Concepts and Principles
Series: NOV 2021

PSAF – Nov 2021 – L2 – Q2b – International Public Sector Accounting Standards (IPSAS)

Outline changes in accounting policies and identify disclosure requirements when applying IPSAS 3.

Question

IPSAS 3 – Accounting Policies, Changes in Accounting Estimates, and Errors outlines criteria for selecting and changing accounting policies among other purposes.

Required:

Outline what constitutes changes in accounting policies under the standard.
Identify THREE disclosure requirements under the following headings:
- When the initial application of IPSAS 3 is made and has effects on prior, current, or future periods.
- When voluntary changes in accounting policy are made and have effects on current, prior, or future periods.

Answer

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Tags: Accounting Policies, Accounting Standards, Disclosure Requirements, IPSAS 3
Level: Level 2

Topic: International public sector accounting standards
Series: NOV 2021

PSAF – Nov 2021 – L2 – Q2a – International Public Sector Accounting Standards (IPSAS)

Identify the components and types of borrowing costs eligible for capitalisation under IPSAS 5.

Question

IPSAS 5 – Borrowing Cost prescribes the accounting treatment for borrowing costs for general use.

Required:

Identify FOUR components and TWO types of borrowing costs that are eligible for capitalisation by the standard.

Answer

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Tags: Borrowing Costs, Capitalisation, Finance, IPSAS
Level: Level 2

Topic: International public sector accounting standards
Series: NOV 2021

PSAF – Nov 2021 – L2 – Q1c – Financial Reporting and Accountability in the Public Sector

Discuss six roles of the Public Accounts Committee (PAC) in ensuring financial accountability.

Question

Discuss SIX roles of the Public Accounts Committee (PAC).

Answer

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Tags: Accountability, Government Finance, Oversight, Public Accounts Committee
Level: Level 2

Topic: Financial Reporting and Accountability in the Public Sector
Series: NOV 2021

PSAF – Nov 2021 – L2 – Q1b – Government Accounting Concepts and Principles

Identify risks associated with reliance on MTEF and ways to mitigate them.

Question

Identify FOUR risks associated with reliance on the Medium-Term Expenditure Framework (MTEF) and ways to mitigate these risks.

Answer

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Tags: Mitigation, MTEF, Public Finance, Risk
Level: Level 2

Topic: Government Accounting Concepts and Principles
Series: NOV 2021

PSAF – Nov 2021 – L2 – Q1a – Introduction to Public Sector Accounting

Prepare a statement of cash flows using the direct method for Harmony State Government for the year ending December 31, 2020.

Question

The following information was extracted from the records of the Accountant-General of Harmony State for the year ended December 31, 2020:

The following additional information was made available:
(i) Owing to the inability of the State to fulfill its obligation towards the
payment of the salaries of local government staff, a federal government
bailout of N301,024,000 was received after fulfilling all necessary
criteria set for accessing the fund.
(ii) During the year, the state government made claims for the repayment
of N65,483,000 relating to funds spent on the rehabilitation of federal
roads and was granted.
(iii) Details emerging from the Federation Accounts and Allocation
Committee (FAAC) showed the following:

(iv) Capital expenditure funded from aids and grants and external loan
amounted to N15,387,748,000
(v) During the year, the federal government made a transfer for the refund
on reconciliation of Paris Club account amounting to N41,310,000
(vi) Refund of bank charges to the Ministry of Finance in the state amounted
to N51,112,000.
(vii) Cash and cash equivalents as at January 1, 2020 and December 31, 2020
N1,546,699 and N301,657,000 respectively.
(viii) Other revenue sources of the state government during the year also
included an exchange difference amounting to N490,575,000.
(ix) Details of capital expenditure are categorised as follows:

Required:
a. Prepare statement of cash flows using direct method for the Harmony
State government for the year ended December 31, 2020.

Answer

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Tags: Cash Flows, Direct Method, FAAC, Government Accounting, MTEF
Level: Level 2

Topic: Introduction to Public Sector Accounting
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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PSAF – Nov 2021 – L2 – Q4c – Treasury Management in the Public Sector

Discuss the benefits of implementing a Treasury Single Account (TSA).

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PSAF – Nov 2021 – L2 – Q4b – Treasury Management in the Public Sector

Discuss the components of the Treasury Single Account (TSA).

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PSAF – Nov 2021 – L2 – Q4a – Treasury Management in the Public Sector

Enumerate responsibilities of participants in the smooth operation of the Treasury Single Accounts (TSA).

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PSAF – Nov 2021 – L2 – Q3b – Ethics and Integrity in Public Sector Financial Management

Discuss offences and their penalties under the Corrupt Practices and Other Related Offences Act 2000.

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PSAF – Nov 2021 – L2 – Q3a – Government Accounting Concepts and Principles

Discuss observations and features of a good public sector accounting system in developing countries.

You're reporting an error for "PSAF – Nov 2021 – L2 – Q3a – Government Accounting Concepts and Principles"

PSAF – Nov 2021 – L2 – Q2b – International Public Sector Accounting Standards (IPSAS)

Outline changes in accounting policies and identify disclosure requirements when applying IPSAS 3.

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PSAF – Nov 2021 – L2 – Q2a – International Public Sector Accounting Standards (IPSAS)

Identify the components and types of borrowing costs eligible for capitalisation under IPSAS 5.

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PSAF – Nov 2021 – L2 – Q1c – Financial Reporting and Accountability in the Public Sector

Discuss six roles of the Public Accounts Committee (PAC) in ensuring financial accountability.

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PSAF – Nov 2021 – L2 – Q1b – Government Accounting Concepts and Principles

Identify risks associated with reliance on MTEF and ways to mitigate them.

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PSAF – Nov 2021 – L2 – Q1a – Introduction to Public Sector Accounting

Prepare a statement of cash flows using the direct method for Harmony State Government for the year ending December 31, 2020.

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