- 30 Marks
TAX – May 2024 – L2 – SA – Q1 – Personal Income Tax (PIT)
Determine Mr. Ola Alao’s chargeable income and tax payable with respect to benefits and allowances.
Question
Mr. Ola Alao works as the manager of XYZ Limited located at Ikeja, Lagos. He provided the following income details for the 2021 assessment year:
- Gross monthly income: N204,000
- Bonuses:
- May 29, 2021: N92,000
- September 24, 2021: N162,000
- Workshop allowance (10 days at N45,000 per day)
- Luncheon vouchers: N120,000 (non-assignable)
- Official vehicle (N8,000,000, exclusive use)
- Night guard: N480,000, and domestic staff: N360,000 (both fully paid by the company)
- Transfer allowance: N2,000,000 (for relocation to Port-Harcourt office on November 1, 2021)
- Rented apartment paid by the company: N600,000 per annum
- Pension contribution: 8% of salary, life insurance premium: N20,000/month
- National health insurance and housing fund contributions: N35,000 and N40,000 monthly
Required:
a. For the 2021 assessment year,
i. Identify the relevant tax authority of Mr. Ola Alao. (2 Marks)
ii. Compute the chargeable income of Mr. Alao. (19 Marks)
iii. Compute the income tax payable by Mr. Alao. (5 Marks)
b. Differentiate between a contract of employment and contract for employment. (4 Marks)
Find Related Questions by Tags, levels, etc.
- Tags: Benefits in kind, Employment Income, Income Computation, Tax Reliefs
- Level: Level 2
- Topic: Personal Income Tax
- Series: MAY 2024
Report an error