Mandy Construction Nigeria Limited is an engineering company incorporated on January 1, 2009, and commenced business the same day. The company makes up its accounts to June 30 each year. The company had prepared its tax returns for the 2017 assessment year and was of the opinion that it had no total profit and therefore was not subject to companies income tax.
As a tax consultant, the chief executive officer has requested you to review the tax returns to ascertain if any provision of the tax laws stipulates procedures to determine the tax payable in situations where there is no taxable profit or the total profit results in no tax payable.
The following information relates to the company’s records for the year ended June 30, 2016:
Statement of Profit or Loss for the year ended June 30, 2016:
| Particulars |
N’000 |
| Revenue |
5,656,000 |
| Cost of Sales |
(4,404,211) |
| Gross Profit |
1,251,789 |
| Other Income |
152,240 |
| Administrative Expenses |
(907,906) |
| Operating Profit |
496,123 |
| Investment Income |
50,934 |
| Finance Costs |
(890,657) |
| Loss Before Tax |
(343,600) |
| Income Tax |
– |
| Loss for the Year |
(343,600) |
Additional Information:
(i) Included in administrative expenses are the following:
- Loss on disposal of property, plant, and equipment: N4,352,400
- Depreciation: N5,184,700
(ii) Capital allowances agreed with the tax office: N1,065,000
The company’s authorized, issued, and fully paid-up share capital of N1 each is provided as follows:
The net assets of the company extracted from the statement of financial position as at June 30, 2016, was N3,441,041,000.
Required:
From the available information, compute the companies income tax payable by Mandy Construction Nigeria Limited for the relevant assessment year.
