Question Tag: Tax Compliance

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  • 10 Marks

AT – Nov 2024 – L3 – Q5a – Transfer Pricing Documentation and Compliance

Explain the required transfer pricing documentation and exemptions under Ghana’s Transfer Pricing Regulations, 2020 (L.I. 2412).

You are a Senior Transfer Pricing Associate of Fameye and Associates. You have received the following email from a former client, Asew LTD, who has received a Transfer Pricing audit assessment from the Ghana Revenue Authority (GRA) for the 2021, 2022, and 2023 years of assessment.

Subject: Transfer Pricing Compliance Assistance

Hello Team,

I came to the office today and received a letter from the GRA regarding a tax assessment on transfer pricing issues. According to the letter, our company owes the GRA some penalties for non-compliance with the transfer pricing regulations. I am confused as to what our compliance obligations are. I would need your assistance on how we can comply with the transfer pricing laws of Ghana.

I hope to hear from you soon.

Kind regards,

Nii Armaah
Managing Director, Asew LTD

Required:

In line with the provisions of the Transfer Pricing Regulations, 2020 (L.I. 2412), draft a response for the review of your Tax Partner, covering the following:

(i) The required transfer pricing documentation that must be maintained by companies in Ghana under the three-tier transfer pricing documentation requirements, including the time by which these must be filed with the GRA, where applicable.                      (ii) TWO conditions or circumstances under which a company may be exempted from compliance with any of the above documentation requirements.

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  • 3 Marks

AT – Nov 2024 – L3 – Q3b – Prohibitions on Representation and Tax Advice

Explain the prohibitions on representation and tax advice in relation to tax consultants under the Revenue Administration Act, 2016 (Act 915).

With reference to the Revenue Administration Act, 2016 (Act 915), what constitutes prohibitions on representation and tax advice in relation to tax consultants?

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  • 5 Marks

PT- Nov 2024 – L2 – Q5d – Data Analytics in Taxation

Explain how data analytics can be used to detect tax evasion and provide examples of how GRA might use data analytics to enhance tax compliance.

GRA’s use of data analytics has become increasingly important in identifying tax evasion and improving compliance.

Required:
i) Explain how data analytics can be used to detect tax evasion. 
ii) Provide TWO examples of how GRA might use data analytics to enhance tax compliance.

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  • 5 Marks

PT – Nov 2024 – L2 – Q5c – E-Auditing and Tax Compliance

Explain e-auditing, its differences from traditional tax audits, and discuss advantages for taxpayers and tax authorities.

The integration of Information Technology in tax administration has enabled the Ghana Revenue Authority (GRA) to adopt e-auditing processes, allowing for the remote examination of taxpayers’ records.                                                                                                      Required:
i) Describe the process of e-auditing and how it differs from traditional tax audits. 
ii) Discuss TWO advantages of e-auditing for both the taxpayer and the tax authority.

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  • 5 Marks

PT – Nov 2024 – L2 – Q5b – Withholding Tax & VAT Calculation

Compute VAT and direct tax withheld on a taxable supply of medical consumables to a tax withholding agent.

Charley Chemist LTD made a taxable supply of medical consumables amounting to GH¢750,000 exclusive of VAT and levies on 23 November 2023 to the University of Ghana Medical Centre. The University of Ghana Medical Centre is a withholding tax agent for both VAT withholding and Direct Tax withholding.

Required:
i) Compute the amount of VAT withheld by the University of Ghana Medical Center. 
ii) Compute the amount of direct tax withheld by the University of Ghana Medical Centre.

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  • 5 Marks

PT – Nov 2024 – L2 – Q5a – Notification to Commissioner-General for Non-Resident Contracts

Requirements for notifying the Commissioner-General when a resident contracts a non-resident.

For the purpose of withholding tax, the Income Tax Act, 2016 (Act 896) requires a resident person who enters into a contract with a non-resident person which gives rise to income from Ghana to notify the Commissioner-General within thirty (30) days.

Required:

State the items that must be detailed in the notification to the Commissioner-General.

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  • 5 Marks

PT – Nov 2024 – L2 – Q2e – Tax Audit and Under-declaration of Sales

Action to be taken regarding an under-declared sales revenue during a tax audit.

You have been engaged as an Accounts Officer in Abokobi LTD. Sales of GH¢10,000,000 were inadvertently under-declared. A team from the Ghana Revenue Authority (GRA) is at your premises conducting an audit. The GRA Audit Team did not review the sales revenue. After the audit, you noted that the amount constituting the under-declaration of the sales was mistakenly credited to the suppliers’ account in the ledger.

Required:

Detail out your position on the above as to what action to take.

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  • 2 Marks

PT – Nov 2024 – L2 – Q2a – Integration of Revenue Agencies into GRA

Explanation of the benefits resulting from the consolidation of revenue agencies into GRA.

In 2009, the former revenue agencies (VAT, IRS, and CEPS) were consolidated into the Ghana Revenue Authority (GRA). This integration was anticipated to provide certain benefits to both taxpayers and the overall tax administration.

Required:

State FOUR benefits resulting from the integration of the revenue agencies into the GRA

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  • 20 Marks

ATAX – May 2019 – L3 – Q3 – Taxation of Companies

Prepare capital allowance computations and tax liabilities for Pardo Nigeria Limited based on its financial data and asset acquisitions.

Pardo Nigeria Limited is a manufacturer of polythene bags. It was incorporated on January 1, 2013, but commenced business operations on March 1, 2013. The following is the summary of its adjusted profits for the respective years:

Period Ended Adjusted Profit (₦’000)
December 31, 2013 7,200
December 31, 2014 10,700
December 31, 2015 12,650
December 31, 2016 15,220
December 31, 2017 19,850

The company acquired the following assets:

Date Asset Type Amount (₦’000)
April 5, 2013 Factory building 5,400
January 17, 2014 Office furniture 2,750
December 1, 2014 Motor vehicle 4,500
January 3, 2015 Production plant 1,820

The company sold some of its assets on December 31, 2017 as follows:

Asset Type Cost (₦’000) Proceeds (₦’000)
Office furniture 250,000 35
Production plant 650,000 60

As the newly appointed tax consultant to the company, the managing director sought your advice on both capital allowances available to the company and the tax liabilities resulting from them for the relevant years. He, however, informed you during the finalization of the engagement that the factory building was purchased second-hand from a company that had ceased operation six months earlier.

Required:
Prepare a report addressed to the managing director of the company showing, for all the relevant years:

a. Capital allowance computations (9 Marks)
b. Tax liabilities payable (11 Marks)

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  • 15 Marks

AT – May 2024 – L3 – SC – Q6 – Capital Gains Tax

Prepare a report calculating Kanadu Nigeria Limited’s capital gains tax, undisposed property cost, roll-over relief, and tax payment due dates.

Kanadu Nigeria Limited is a manufacturer of leather shoes, bags, and allied accessories since 2017. The recent changes in the taste of customers, particularly the quest for imported, cheaper leather shoes and bags, have had a negative impact on the company’s profits. The management has decided to re-organize the business in a way to better satisfy the customers.

The following transactions were extracted from the books of the company:

(i) June 2017: Acquisition of an acre of land at the outskirts of the State capital for N8,500,000. The company spent an additional amount of N1,500,000 to sand-fill the land;

(ii) August 2017: A factory was built on the acquired land for the purpose of the business at a cost of N65,000,000;

(iii) May 2022: Sold part of the factory’s land for N25,500,000;

(iv) The market value of the remaining property unsold, as valued by a professional valuer, at the time of disposal in May 2022, was N99,500,000;

(v) July 2023: Acquisition of a new acre of land in the town for N45,000,000 (utilized all the proceeds from the disposal of the land). This is expected to be used for the construction of another factory in the same line of business.

The company’s General Manager, who is an engineer, has just engaged your professional accounting firm as its tax consultants.

Required:

As the Principal Partner, you are to prepare a report to the General Manager, stating the:

a. Capital gains tax payable in line with the provisions of Capital Gains Tax Cap C1 LFN 2004 (as amended) (10 Marks)

b. New cost of undisposed property (2 Marks)

c. The roll-over relief (if any) the company is entitled to (2 Marks)

d. Due date(s) for the payment of tax liabilities (1 Mark)

(Total 15 Marks)

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  • 5 Marks

AT – May 2018 – L3 – SB – Q4a – Ethical Issues in Tax Practice

Differentiate between tax avoidance and tax evasion with key distinctions and implications.

The tax authorities view any case of tax evasion seriously. They are empowered to set aside tax avoidance schemes that result in artificial or fictitious transactions. Tax evasion is usually more prevalent when the tax system is perceived to be unfair.

Required: Differentiate between Tax Avoidance and Tax Evasion. (5 Marks)

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  • 30 Marks

AT – May 2018 – L3 – SA – Q1 – Taxation of Corporations

Discuss multiple taxation, jurisdiction, withholding tax, and penalties related to Rex Pharmaceuticals.

You are the tax controller of Rex Pharmaceuticals (Nigeria) Limited, having its head office at Ketu in Epe local government of Lagos State.

In the past three years, the company had been subjected to an array of taxes by different revenue authorities within Lagos State and indeed the entire country.

Apart from the Companies Income Tax, Withholding Tax is another tax that the company‟s management is concerned about. The Managing Director is very much worried that this multiplicity of taxes is taking its toll on the company‟s financials.

The company is already facing myriads of problems ranging from high cost of capital which led to increase in cost of production and attendant reduction in profit. The company‟s goods are becoming uncompetitive compared with imported similar goods. The long term effect is either reduction in work force or relocation to a more favourable economic environment. The Managing Director has invited you to his office to discuss the following issues:

(i) Whether as a corporate body, the company ought to be subjected to myriads of taxes beyond the corporate tax;

(ii) The jurisdiction of the tiers of government in the imposition and collection of taxes;

(iii) Withholding Tax;

(iv) Pay-As-You-Earn (PAYE) as it affects the staff; and

(v) Capital Gains Tax.

You have also been provided with the following information:

  • The company‟s technical agreement with the foreign head office and the need to remit funds;
  • Non-resident directors are to receive N2,500,000;
  • Staff P.A.Y.E has been centralised;
  • Dividend has been paid to shareholders in different parts of the country, and those resident in Kogi State of Nigeria, received N375,000;
  • Land for a factory in Abuja was purchased from Alhaji Garuba Maito who resides in Kano;
  • The company received N4,500,000 as net dividend from an associated company, Laiketop Limited, for the year ended September 30, 2014;
  • In the audited financial statements of Rex Pharmaceuticals for the year ended December 31, 2015, a dividend of N9,500,000 was proposed. Out of this amount, N3,500,000 was from dividend received from Laiketop Limited while the balance was from a Total Profit of N22,500,000 from other trading activities; and
  • Out of the thirty employees in Abuja, five are resident in Suleja, Niger State.

You are required to prepare a memo to the Managing Director explaining the following:

(a) i. Double/Multiple Taxation.
ii. Double Taxation Treaty.
iii. Multiple Taxation in Nigeria.
iv. Measures put in place to reduce cases of multiple taxation in Nigeria.
v. Withholding Tax with respect to (i) to (v).
vi. Penalty for non-deduction/remittance of Withholding Tax. (12 Marks)

(b) The arms of government empowered to legislate on tax matters by the Constitution. (4 Marks)

(c) Relevant tax authority and the Withholding Tax due, if any. (4 Marks)

(d) i. The appropriate description of the income received from Laiketop Limited.
ii. The tax due from other trading activities of Rex Pharmaceuticals.
iii. Amount to be recouped by Rex Pharmaceuticals, if any.
iv. Net amount received by shareholders of Rex Pharmaceuticals.
v. Relevant section of the law to buttress your points in (i) and (ii) above. (10 Marks)

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  • 20 Marks

ADV – Nov 2018 – L3 – SA – Q1 – Taxation of Companies

Analyze tax implications for XYZ Nigeria Ltd based on provided financial data, assessing allowable expenses and adjustments for tax liability.

XYZ Nigeria Limited is a manufacturing company that produces ice cream. It was incorporated on January 7, 2009, with an authorized share capital of N12,000,000 consisting of 12,000,000 ordinary shares of N1.00 each. All shares were fully allotted and paid for.

The company commenced business on January 2, 2012. The statement of profit or loss for the year ending December 31, 2017, is as follows:

You are provided with the following information:

The breakdown is as follows:

The auditors submitted the audited financial statements to the tax office on June29, 2018. This was evidenced by the stamped copy of the covering letter in the auditors‟ file. The tax inspector raised a Best of Judgement (BOJ) assessment of N10,000,000 and late returns penalty of N75,000 on September 7, 2018. The managing director was concerned that despite efforts by the management to comply with tax regulations, the tax office still raised the B.O.J assessment and the late returns penalty. During discussions at the management meeting of the company, the blame was attributed to the auditors.

You are required to:
a. Compute the tax liabilities of XYZ Nigeria Limited for the relevant assessment years. Show all workings. (25 Marks)
b. Based on the result in (a) above, advise the managing director of XYZ Nigeria Limited on the validity or otherwise of the best of judgement assessment and the penalty raised by the tax office. (5 Marks)

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  • 15 Marks

AT – Nov 2023 – L3 – SC – Q7 – Taxation of Specialized Businesses

Calculation of tax liabilities under the Mining Act and an explanation of tax neutralities with applications to policy issues.

Udi Nigeria Limited is a mining company which was established ten years ago. The company makes up its accounts to December 31 of every year. The Managing Director, who is an engineer, while having a chat with his former colleagues in the university during the week, heard for the first time, the concept of tax neutralities. He wondered how tax could be neutral.

On getting to the office the following week, he requested further information on tax neutralities from the accountant, but based on his personal opinion, the accountant’s response was not convincing enough.

The company is in the process of filing its annual returns for the year ended December 31, 2021, to the tax authorities. The Managing Director has directed the Financial Accountant to forward the following reports to you (being the company’s Tax Consultant) in respect of the company’s operational activities for the year:

Operational Results:

Description N’000
Gross Turnover 125,490
Salaries and Wages 25,900
Depreciation of Mining Equipment 15,400
Transport and Traveling 2,100
Repairs and Maintenance 3,700
Allowance for Bad Debts 6,200
Electricity and Other Utilities 4,660
Legal and Professional Fees 4,850
Certified Exploration Expenditure 4,500
Administrative Expenses 1,450
Development and Processing Expenditure 2,500
Miscellaneous Expenses 3,420
Total Deductibles 74,680
Net Profit 50,810

Additional Information:

  1. Repairs and maintenance included an amount of N1,500,000, being cost of fittings incurred at the operational site.
  2. Capital allowances computed:
    • Brought forward: N750,000
    • Current year (excluding current year capital expenditure): N12,200,000
    • Total: N12,950,000

Required:

As the company’s Tax Consultant, you are to prepare a report to the Managing Director of Udi Nigeria Limited, which will:

a. Show the tax liabilities payable by the company for the relevant assessment year in line with the provisions of Nigerian Minerals and Mining Act 2007 (as amended). (9 Marks)

b. Explain the concept of tax neutralities and its applications to specific policy issues. (6 Marks)

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  • 15 Marks

AT – Nov 2023 – L3 – SC – Q6 – Tax Administration and Dispute Resolution

Outline of the fundamental features of NTP 2017 and principles from the IESBA codes for professional accountants.

The National tax policy (NTP) 2017, provides fundamental guidelines for the orderly development of the Nigerian tax system. Professional accountants are one of the major stakeholders that are expected to drive the tenets of the tax policy for economic development of the country. In guiding professional accountants to behave in a responsible ethical manner, the International Ethics Standards Board for Accountants (IESBA) develops and issues in the public interest, high-quality ethical standards and other pronouncements for use by professional accountants around the world.

Required:

a. Explain FIVE fundamental features as provided for in the NTP 2017, which the existing and future taxes are expected to align with. (5 Marks)

b. Identify and explain FOUR principles and guidance for accountants as specified in the IESBA codes. (10 Marks)

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  • 15 Marks

AT – Nov 2023 – L3 – SC – Q5 – Tax Administration and Dispute Resolution

Steps and objectives in handling a tax audit with FIRS and the required documentation.

Zola Nigeria Limited has been in business for several years, preparing its accounts to December 31 of every year. Prior to the last two years, the company had a very good relationship with the Federal Inland Revenue Service (FIRS) as far as prompt filing of annual tax returns and payment of tax liabilities are concerned. The company was, however, fined for late filing of returns in the last financial year ended December 31, 2020.

In compliance with the provisions of the Companies Income Tax Act Cap C21 LFN 2004 (as amended), the company filed its annual returns for the 2022 assessment year (year ended December 31, 2021) within the statutory period. Payment of tax due was also made.

The review done by the tax officials at the FIRS on the tax returns filed by the company necessitated the request for additional relevant documents to authenticate some items of expenditure and capital allowances claimed. The FIRS subsequently wrote a letter to the company for the submission of the documents within two weeks of the receipt of the letter. The receipt of the letter was acknowledged by the company, but it, however, failed to forward the required documents to the tax authorities. A reminder was sent to the company four weeks after the first letter was written, yet it failed to respond to the request made.

The Managing Director of the company has just received a letter from the tax office that a team of tax inspectors will be visiting the company in a fortnight to conduct a tax audit.

The company has approached your firm of chartered accountants to assist with advice on how the company should handle the forthcoming tax audit.

Required:

Your Principal Partner has directed you, as a newly employed Audit Senior, to handle the engagement and expects you to prepare a report for his review before sending the same to the client. The report should address the following:

a. Objectives of tax audits (5 Marks)

b. Stages in a typical tax audit process (4 Marks)

c. Schedule of requirements for FIRS tax audit (6 Marks)

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  • 20 Marks

AT – Nov 2023 – L1 – SB – Q2 – Petroleum Profits Tax

Calculation of hydrocarbon and companies income tax for Brass Petroleum Producing Company Ltd under Petroleum Industry Act and Companies Income Tax Act.

Brass Petroleum Producing Company Limited has been operating as an oil prospecting company in Nigeria for fifteen years. The company operates in both onshore and shallow water in the Koko area of the Niger Delta region.

Following the provisions of the Petroleum Industry Act 2021, the company applied for, and was granted a petroleum prospecting license (PPL) on January 1, 2021.

Extracts from the company’s financial records for the year ended December 31, 2021, revealed the following:

Description N’million
Revenue:
Value of crude oil sold 184,450
Value of condensate from associated gas sold 47,175
Value of natural gas liquid from associated gas sold 41,650
Gross revenue 273,275
Balancing charge 32
Total Gross Revenue 273,307
Deduct:
Production cost 106,470
Cost of gas reinjection wells 600
Drilling cost incurred 4,360
Depreciation of plant, machinery, and fixtures 1,500
Decommissioning and abandonment 1,900
Repairs and maintenance 5,750
Royalty cost paid 40,990
Niger Delta Development Commission charge 250
Finance costs 510
Terminaling cost 1,380
Donations to recognised charity home 130
Concession rentals 20,470
Host community fund 1,000
Local government municipal levy 100
Environmental remediation fund 1,420
Cost incurred in seeking information for oil deposits 370
Total Deductible Expenses 187,200
Net Profit 86,107

Additional Information:

  1. Value of crude oil sold:
    • Type: Forcados
    • Quantity (barrels): 6,200,000
    • Actual Price ($): 70
    • Fiscal Price ($): 72
  2. Value of condensate from associated gas sold:
    • Type: OSO condensate
    • Quantity (barrels): 3,700,000
    • Actual Price ($): 30
    • Fiscal Price ($): 30
  3. Value of gas liquid from associated gas sold:
    • Type: Pennington
    • Quantity (barrels): 2,800,000
    • Actual Price ($): 35
    • Fiscal Price ($): 34
  4. Drilling cost incurred:
    • Tangible drilling cost for first exploration well: N2,800 million
    • Drilling the first two appraisal wells: N1,560 million
    • Total: N4,360 million
  5. Repairs and maintenance:
    • Repairs of plant, machinery, and fixtures: N2,750 million
    • Repairs or alteration of production implement utensils: N3,000 million
    • Total: N5,750 million
  6. Losses brought forward from last year: N655 million
  7. Capital allowances computed:
    • Brought forward: N320 million
    • For the current year: N1,400 million
    • Total: N1,720 million
  8. Production allowances after commencement of the Petroleum Industry Act: N3,300 million
  9. Exchange Rate: Assume N425 is equivalent to US$1.

Required:

As the company’s Tax Manager, you are to prepare a report to the Managing Director, showing in line with the provisions of Petroleum Industry Act 2021 and Companies Income Tax Act 2004 (as amended), the:

a. Hydrocarbon tax (14 Marks)

b. Companies income tax payable (6 Marks)

(Total: 20 Marks)

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  • 20 Marks

AT – Nov 2022 – L3 – Q2 – Petroleum Profits Tax (PPT)

Calculate Colamrud Petroleum’s adjusted and assessable profit for Q1 2022 based on allowable and non-allowable expenses under the Petroleum Industry Act 2021, and comment on the company's cost-price ratio in relation to regulatory standards.

Colamrud Petroleum (Nigeria) Limited, a subsidiary of a foreign oil and gas company, has been engaged in petroleum prospecting and exploration (upstream) operations for both local and foreign markets for over a decade. As part of corporate policy, the management reviews the quarterly performance reports in board meetings. Below is the financial summary for the first quarter (January – March) 2022, prepared by the Finance Controller:

Income (N’000):

  • Value of oil sold (export): 900,380
  • Value of oil sold (local): 223,300
  • Value of gas sold: 430,100
  • Other income: 7,200
  • Gross revenue: 1,560,980

Expenses (N’000):

  • Production cost: 210,730
  • Tangible drilling cost (first appraisal well): 18,800
  • Intangible drilling cost (first appraisal well): 17,600
  • Cost of gas reinjection wells: 4,000
  • Cost of drilling 3 appraisal wells: 24,000
  • Rent: 13,000
  • Royalties on export sales: 69,300
  • Royalties on local sales: 9,800
  • Salaries and wages: 170,500
  • Head office shared costs: 62,000
  • Repairs and maintenance: 8,930
  • Customs duty on essentials: 2,900
  • Depreciation: 66,000
  • Interest on loans: 4,400
  • Allowance for doubtful debts: 34,000
  • Administrative expenses: 79,200
  • Stamp duties on increase in share capital: 1,000
  • Bank charges: 900
  • Miscellaneous expenses: 22,500
  • Income tax provision: 90,000
  • Tertiary education tax provision: 6,000
  • Total expenses: 915,560
  • Net profit: 645,420

Additional Information:

  1. Fiscal oil and gas prices were approved on an export parity basis by the Nigerian Upstream Petroleum Regulatory Commission.
  2. Head office shared costs:
    • Research and development costs: 12,000
    • Indirect production costs: 50,000
  3. Repairs and maintenance:
    • Repairs of oil pipelines and storage tanks: 6,000
    • Repairs of plant: 1,500
    • Improvement to building: 1,430
  4. Allowance for doubtful debts:
    • Specific provision: 10,000
    • General provision: 20,000
    • Bad debt written off: 4,000
  5. Administrative expenses:
    • Natural gas flare fees: 10,000
    • Transport cost: 13,200
    • Cost of obtaining information on oil existence: 7,300
    • Expenditure for acquisition of geological information: 14,900
    • Other allowable expenses: 33,800
  6. Miscellaneous expenses:
    • Tenement levy paid to local government: 2,000
    • Contribution to Niger Delta Development fund: 5,500
    • Contribution to Host Community Development fund: 12,000
    • Donation to widows and orphans association: 3,000
  7. Unabsorbed losses brought forward: 35,000

Required:

As the company’s Assistant Tax Manager, prepare a report for the Tax Manager that includes:

  1. Adjusted Profit and Assessable Profit: Calculate the adjusted profit and assessable profit for the first quarter of 2022 in line with the Petroleum Industry Act 2021.
    (18 Marks)
  2. Cost-Price Ratio Commentary: Provide comments on the cost-price ratio of the company, referencing the Sixth Schedule of the Petroleum Industry Act 2021.
    (2 Marks)

Total: 20 Marks

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  • 20 Marks

TAX – May 2015 – L2 – SA – Q2 – Personal Income Tax (PIT)

Tax compliance requirements and tax liability calculation for Mr. Sola Abijah based on employment and part-time income.

You have been approached by Mr. Sola Abijah, a political science graduate who did his compulsory National Youth Service in a media organization in 2009. On completion of National Youth Service in January 2010, he was offered a part-time job as a freelance writer in two international newspapers. He receives an income (net of Withholding tax) based on the articles he writes that are published by the newspapers. In March 2010, he joined a popular political party and served as the party’s temporary Public Relations Officer, also on a part-time income basis.

On 2 January 2012, he secured employment on full-time basis as Senior Manager, Corporate Affairs, in Jola Investment Enterprises on a salary of ₦12,000,000 per annum.

He was ignorant of the requirements for filing Tax Returns and paying tax to Government. He has been served a warning by the State Board of Internal Revenue (SBIR) to desist from non-disclosure of his other incomes, failing which, a Best of Judgement assessment may be raised on him by the tax inspector.

Mr. Abijah has approached you to provide tax advisory services in respect of his income tax compliance requirements and the likely tax liability that may be imposed on him by the SBIR.

The following additional information has been presented to you:

Requirements:

(a) State the difference between employment income and part-time income. (3 Marks)
(b) Explain why, when and to whom taxpayers are expected to file income tax returns. (5 Marks)
(c) Explain the circumstances that may arise to cause a tax authority to raise a Best of Judgement Assessment. (4 Marks)
(d) Compute the tax liability on Mr. Abijah’s Total Income. (8 Marks)

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