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

BL – Nov 2021 – L1 – SA – Q14 – Sale of Goods

Determining the meaning of “delivery” in the sale of goods.

Question

In a sale of goods, the seller is under a duty to deliver the goods to the buyer. The delivery means
A. Transfer of ownership to the buyer
B. Transfer of possession to the buyer
C. Transfer of possession and ownership to the buyer
D. Collection of the goods by the buyer
E. Demand of the goods by the buyer

Answer

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Tags: Delivery, Sale of Goods
Level: Level 1

Topic: Sale of Goods
Series: NOV 2021

BL – Nov 2021 – L1 – SA – Q13 – Law of Tort

Identifying a type of liability borne by one person due to another’s tortious act.

Question

A tortious liability borne by one as a result of another’s tortious act is known as
A. Third-party liability
B. Varied liability
C. Vicarious liability
D. Vivacious liability
E. Transferred liability

Answer

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Tags: Tort Law, Vicarious Liability
Level: Level 1

Topic: Law of Tort
Series: NOV 2021

BL – Nov 2021 – L1 – SA – Q12 – Agency Law

Defining the rights of an undisclosed principal.

Question

An undisclosed principal
A. Cannot sue a third party based on the acts of the agent done on his behalf
B. Is one whose existence and identity is dual
C. Is one whose identity is not known though his existence is known
D. Can sue a third party based on the acts of the agent done on his behalf
E. Is one who has no known address in Nigeria

Answer

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Tags: Agency Law, Undisclosed Principal
Level: Level 1

Topic: Agency Law
Series: NOV 2021

BL – Nov 2021 – L1 – SA – Q11 – Contract Law

Identifying the type of contract negotiated on social media.

Question

Emeka and Ngozi negotiated and entered into a contract using Facebook throughout. What kind of contract is this?
A. Facebook contract
B. Unenforceable contract
C. Contract pending signature
D. Social media contract
E. Electronic contract

Answer

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Tags: Contract Law, Electronic Contract, Social Media
Level: Level 1

Topic: Contract Law
Series: NOV 2021

BL – Nov 2021 – L1 – SA – Q10 – Agency Law

Defining crimes committed using a computer.

Question

Any crime committed using a computer is known as
A. Cybercrime
B. Internet fraud
C. Internet crime
D. Computerised crime
E. Computer crime

Answer

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Tags: Cybercrime, Technology Law
Level: Level 1

Topic: Agency Law
Series: NOV 2021

BL – Nov 2021 – L1 – SA – Q9 – Company Law

Identifying the offence related to illicit financial transactions.

Question

What offence is committed when a person transfers money derived from illicit traffic in cocaine in such a way as to hide the illicit source of the money and to avoid the law?
A. Drug trafficking
B. Unlawful transfer
C. Money trafficking
D. Money laundering
E. Illicit trafficking

Answer

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Tags: Criminal Law, Illicit Transactions, Money laundering
Level: Level 1

Topic: Company Law
Series: NOV 2021

BL – Nov 2021 – L1 – SA – Q8 – Company Law

Identifying the offence related to deception in criminal law.

Question

Mabel, acting under false pretences, induced Adam to transfer permanent possession of goods to her with no intention of retaining ownership. What offence can Mabel be charged for?
A. Deception
B. Fraud
C. Theft
D. Cheating
E. Breach of trust

Answer

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Tags: Criminal Offences, Nigerian Law
Level: Level 1

Topic: Company Law
Series: NOV 2021

BL – Nov 2021 – L1 – SA – Q7 – Agency Law

Determining consequences of a breach of ethical codes for professionals.

Question

The consequence of a professional committing a crime could be a jail term. What is the consequence for a professional who commits a breach of ethical codes?
A. A fine payable to court
B. Withdrawal of professional licence
C. A suspended jail term
D. A fine payable to the Institute of Chartered Accountants of Nigeria
E. Reference to the Economic and Financial Crimes Commission for investigation

Answer

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Tags: Legal Penalties, Professional Ethics
Level: Level 1

Topic: Agency Law
Series: NOV 2021

BL – Nov 2021 – L1 – SA – Q6 – Company Law

Understanding the role of a court-appointed receiver.

Question

A Receiver of any undertaking of a company appointed by the court is an officer of the
A. Court
B. Shareholders
C. Company
D. Board of directors
E. Company’s secured creditors

Answer

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Tags: Company Law, Receivership
Level: Level 1

Topic: Company Law
Series: NOV 2021

BL – Nov 2021 – L1 – SA – Q5 – Company Law

Assigning responsibility for preparing financial statements of a company.

Question

With particular reference to section 377 of the Companies and Allied Matters Act 2020, whose duty is it to prepare the financial statements of a company for each year?
A. The directors
B. The chief accountant
C. The account clerks
D. The auditor
E. The company secretary

Answer

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Tags: Company Law, Financial Statements
Level: Level 1

Topic: Company Law
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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BL – Nov 2021 – L1 – SA – Q14 – Sale of Goods

Determining the meaning of “delivery” in the sale of goods.

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BL – Nov 2021 – L1 – SA – Q13 – Law of Tort

Identifying a type of liability borne by one person due to another’s tortious act.

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BL – Nov 2021 – L1 – SA – Q12 – Agency Law

Defining the rights of an undisclosed principal.

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BL – Nov 2021 – L1 – SA – Q11 – Contract Law

Identifying the type of contract negotiated on social media.

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BL – Nov 2021 – L1 – SA – Q10 – Agency Law

Defining crimes committed using a computer.

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BL – Nov 2021 – L1 – SA – Q9 – Company Law

Identifying the offence related to illicit financial transactions.

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BL – Nov 2021 – L1 – SA – Q8 – Company Law

Identifying the offence related to deception in criminal law.

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BL – Nov 2021 – L1 – SA – Q7 – Agency Law

Determining consequences of a breach of ethical codes for professionals.

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BL – Nov 2021 – L1 – SA – Q6 – Company Law

Understanding the role of a court-appointed receiver.

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BL – Nov 2021 – L1 – SA – Q5 – Company Law

Assigning responsibility for preparing financial statements of a company.

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