Question Tag: Tax Reliefs

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PT – Nov 2024 – L2 – Q4b – Tax Implication of Gift under Income Tax Act

Advise on the tax implications of receiving a gift from a spouse under the Income Tax Act.

Question

Madam Tanaa is an employee of Tapoli Brewery Ghana LTD. Her husband, who is a retired staff of Tapoli Brewery LTD, gifted her a brand-new Toyota Camry costing GH¢270,000 on their 20th wedding anniversary. Madam Tanaa is worried about the tax implication of the gift and has approached you as a student learning tax at the Institute of Chartered Accountants, Ghana.

Required:
Advise Madam Tanaa on the tax implications of the gift of a Toyota Camry she received from her husband on their wedding anniversary, including the various options available to her.

Answer

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Tags: Gift tax, Income Tax, Spousal Gifts, Tax Exemptions, Tax Reliefs
Level: Level 2

Topic: Income Tax Liabilities
Series: Nov 2024

ATAX – May 2023 – L3 – Q5 – Capital Gains Tax (CGT)

Analyze the tax implications of asset disposal and re-acquisition for Fashion Stitches Ltd.

Question

Fashion Stitches Limited, Lagos, is a private limited liability company specializing in sewing and sales of clothes and allied materials for medium and upper-class clients in highbrow areas of the country.

The company has a core sewing staff, while other employees frequently travel to major cities such as Abuja, Kaduna, Ibadan, and Port Harcourt to receive orders from clients.

While reviewing their activities for the first quarter ended March 31, 2022, the Operating Officer noted that the recent increase in travel and staff costs, which had risen by over 150% compared to the corresponding period in 2021, negatively impacted the company’s financial performance.

Management decided to relocate the business to the Federal Capital Territory (FCT), Abuja, where over 75% of their clients reside. The move is planned for November 15, 2022, involving the disposal and re-acquisition of some assets required for the business.

The following transactions took place between April and October 2022:

Property Disposal and Acquisition:
- The property (land and building) in Lagos, acquired in 2008 for N18,220,000, was sold for N65,100,000.
- Incidental costs of disposal included:
  - Estate valuer’s fee: N1,627,500
  - Renovation expenses: N1,800,000
  - Advertisement cost: N250,000
- A new property was purchased in the FCT for N80,000,000.
Disposal and Re-Acquisition of Sewing Machines and Equipment:
- Sewing machines and tailoring equipment, bought between 2015 and 2019 for N3,300,000, were disposed of for N2,800,000.
- New machines and equipment were acquired for N7,130,000.
Disposal and Re-Acquisition of Generating Set:
- A 10 KVA generating set, which cost N1,500,000 in 2017, was disposed of for N1,900,000.
- Another generating set was acquired for N2,450,000.

Answer

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Tags: Asset Re-Acquisition, Capital gains tax, Tax Reliefs
Level: Level 3

Topic: Capital Gains Tax (CGT)

AT – May – 2018 – L3 – SC – Q7 – Tax Incentives and Reliefs

Information on corporate tax reliefs and incentives, with specific focus on start-ups and export-oriented businesses in Nigeria.

Question

Mr. Nwatakaibeya, who studied in Germany and had been working there for over 20 years, finally returned to Nigeria in 2015. He has saved some funds to start a new business and incorporated Nwatakaibeya Investments Limited in January 2016. However, since his return, he has been overwhelmed by reports of start-up and existing businesses that shut down due to harsh economic conditions.

He has read in newspapers that, as part of the government’s commitment to improve the ease of doing business in Nigeria, the Federal Government has periodically reviewed and enhanced reliefs and incentives available to corporate taxpayers. This has given him hope, and he is eager to gather more information to avoid potential challenges.

Given his concerns about the current business environment in Nigeria:

a. Explain briefly SIX reliefs and incentives available to corporate taxpayers. (12 Marks)
b. Outline THREE conditions a company must fulfill to qualify for tax incentives for export-oriented business. (3 Marks)

(Total 15 Marks)

Answer

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Tags: Corporate Incentives, Ease of Doing Business, Export Incentives, Federal Tax Policy, Tax Reliefs
Level: Level 3

Topic: Tax Incentives and Reliefs
Series: MAY 2018

ATAX – Nov 2018 – L3 – Q4a – Tax Incentives and Reliefs

Explanation of Foreign Direct Investment and incentives for foreign investors in Nigeria.

Question

(a) Write a short note on Foreign Direct Investment (FDI) and incentives available to foreign investors in Nigeria.

Answer

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Tags: Economic growth, FDI, Foreign Investment, Incentives, Investment Protection, Nigeria, Tax Reliefs
Level: Level 3

Topic: Tax Incentives and Reliefs

AT – Nov 2022 – L3 – Q5 – Taxation and Corporate Governance

Analyze the tax implications for Yemmysea Beverages Limited’s proposed merger and acquisition arrangements, covering scenarios where a company absorbs another, a merger results in business cessation, and a business is sold or transferred. Additionally, explain the regulatory powers of the FIRS in mergers and acquisitions.

Question

In its bid to increase market power, growth, and enhance operating economies, the Board of Directors of a medium-sized beverage company, Yemmysea Beverages Limited, located in Abeokuta, is considering proposals for a merger or acquisition with another business entity in the same industry. The Chairman of the Board found all the proposals attractive.

However, the Financial Accountant advised that the Board should consider the tax implications associated with each proposed merger or acquisition arrangement. To address this, a reputable tax consulting firm, experienced in mergers, acquisitions, and reorganizations, was recommended to provide expert analysis.

Your firm has now been approached to offer professional advice on the tax implications of each of the following merger or acquisition arrangements:

Proposal 1: When an existing company absorbs another existing company.
Proposal 2: When a merger results in the cessation of business.
Proposal 3: When a business is sold or transferred.

Required:

As the company’s Tax Consultant, submit a report to the Managing Director explaining the following:

Tax implications when an existing company absorbs another existing company.
(5 Marks)
Tax implications when a merger results in the cessation of business.
(3 Marks)
Tax implications when a business is sold or transferred.
(3 Marks)
The powers of the Federal Inland Revenue Service (FIRS) on issues concerning mergers and acquisitions of companies.
(4 Marks)

Total: 15 Marks

Answer

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Tags: Asset Transfer, Business Cessation, Capital Gains Tax (CGT), Compliance, Corporate Restructuring, FIRS Authority, Merger and Acquisition Tax Implications, Stamp Duty, Tax Reliefs, VAT
Level: Level 3

Topic: Taxation and Corporate Governance
Series: NOV 2022

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)

Answer

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Tags: Benefits in kind, Employment Income, Income Computation, Tax Reliefs
Level: Level 2

Topic: Personal Income Tax
Series: MAY 2024

PT – Nov 2021 – L2 – Q2e – Tax Administration

Distinguish between defined benefit schemes and defined contribution schemes.

Question

Distinguish between defined benefit schemes and defined contribution schemes.

Answer

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Tags: Defined Benefit, Defined Contribution, Pension Schemes, Retirement Benefits, Tax Reliefs
Level: Level 2

Topic: Tax Administration
Series: NOV 2021

AT – NOV 2021 – L3 – Q1c – Tax Planning

Outlines tax planning measures that can be used to reduce tax liability for a sole proprietorship business.

Question

Evaluate FOUR (4) tax planning measures that you can adopt in your desire to form a sole proprietorship business. (4 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Personal Deductions, Sole Proprietorship, Tax Planning, Tax Reliefs, Tax Savings
Level: Level 3

Topic: Tax planning
Series: NOV 2021

PT – Nov 2024 – L2 – Q4b – Tax Implication of Gift under Income Tax Act

Advise on the tax implications of receiving a gift from a spouse under the Income Tax Act.

Question

Required:
Advise Madam Tanaa on the tax implications of the gift of a Toyota Camry she received from her husband on their wedding anniversary, including the various options available to her.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Gift tax, Income Tax, Spousal Gifts, Tax Exemptions, Tax Reliefs
Level: Level 2

Topic: Income Tax Liabilities
Series: Nov 2024

ATAX – May 2023 – L3 – Q5 – Capital Gains Tax (CGT)

Analyze the tax implications of asset disposal and re-acquisition for Fashion Stitches Ltd.

Question

The company has a core sewing staff, while other employees frequently travel to major cities such as Abuja, Kaduna, Ibadan, and Port Harcourt to receive orders from clients.

The following transactions took place between April and October 2022:

Property Disposal and Acquisition:
- The property (land and building) in Lagos, acquired in 2008 for N18,220,000, was sold for N65,100,000.
- Incidental costs of disposal included:
  - Estate valuer’s fee: N1,627,500
  - Renovation expenses: N1,800,000
  - Advertisement cost: N250,000
- A new property was purchased in the FCT for N80,000,000.
Disposal and Re-Acquisition of Sewing Machines and Equipment:
- Sewing machines and tailoring equipment, bought between 2015 and 2019 for N3,300,000, were disposed of for N2,800,000.
- New machines and equipment were acquired for N7,130,000.
Disposal and Re-Acquisition of Generating Set:
- A 10 KVA generating set, which cost N1,500,000 in 2017, was disposed of for N1,900,000.
- Another generating set was acquired for N2,450,000.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Asset Re-Acquisition, Capital gains tax, Tax Reliefs
Level: Level 3

Topic: Capital Gains Tax (CGT)

AT – May – 2018 – L3 – SC – Q7 – Tax Incentives and Reliefs

Information on corporate tax reliefs and incentives, with specific focus on start-ups and export-oriented businesses in Nigeria.

Question

Given his concerns about the current business environment in Nigeria:

(Total 15 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Corporate Incentives, Ease of Doing Business, Export Incentives, Federal Tax Policy, Tax Reliefs
Level: Level 3

Topic: Tax Incentives and Reliefs
Series: MAY 2018

ATAX – Nov 2018 – L3 – Q4a – Tax Incentives and Reliefs

Explanation of Foreign Direct Investment and incentives for foreign investors in Nigeria.

Question

(a) Write a short note on Foreign Direct Investment (FDI) and incentives available to foreign investors in Nigeria.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Economic growth, FDI, Foreign Investment, Incentives, Investment Protection, Nigeria, Tax Reliefs
Level: Level 3

Topic: Tax Incentives and Reliefs

AT – Nov 2022 – L3 – Q5 – Taxation and Corporate Governance

Analyze the tax implications for Yemmysea Beverages Limited’s proposed merger and acquisition arrangements, covering scenarios where a company absorbs another, a merger results in business cessation, and a business is sold or transferred. Additionally, explain the regulatory powers of the FIRS in mergers and acquisitions.

Question

Your firm has now been approached to offer professional advice on the tax implications of each of the following merger or acquisition arrangements:

Proposal 1: When an existing company absorbs another existing company.
Proposal 2: When a merger results in the cessation of business.
Proposal 3: When a business is sold or transferred.

Required:

As the company’s Tax Consultant, submit a report to the Managing Director explaining the following:

Tax implications when an existing company absorbs another existing company.
(5 Marks)
Tax implications when a merger results in the cessation of business.
(3 Marks)
Tax implications when a business is sold or transferred.
(3 Marks)
The powers of the Federal Inland Revenue Service (FIRS) on issues concerning mergers and acquisitions of companies.
(4 Marks)

Total: 15 Marks

Answer

Find Related Questions by Tags, levels, etc.

Tags: Asset Transfer, Business Cessation, Capital Gains Tax (CGT), Compliance, Corporate Restructuring, FIRS Authority, Merger and Acquisition Tax Implications, Stamp Duty, Tax Reliefs, VAT
Level: Level 3

Topic: Taxation and Corporate Governance
Series: NOV 2022

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

Answer

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

PT – Nov 2021 – L2 – Q2e – Tax Administration

Distinguish between defined benefit schemes and defined contribution schemes.

Question

Distinguish between defined benefit schemes and defined contribution schemes.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Defined Benefit, Defined Contribution, Pension Schemes, Retirement Benefits, Tax Reliefs
Level: Level 2

Topic: Tax Administration
Series: NOV 2021

AT – NOV 2021 – L3 – Q1c – Tax Planning

Outlines tax planning measures that can be used to reduce tax liability for a sole proprietorship business.

Question

Evaluate FOUR (4) tax planning measures that you can adopt in your desire to form a sole proprietorship business. (4 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Personal Deductions, Sole Proprietorship, Tax Planning, Tax Reliefs, Tax Savings
Level: Level 3

Topic: Tax planning
Series: NOV 2021

Question Tag: Tax Reliefs

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PT – Nov 2024 – L2 – Q4b – Tax Implication of Gift under Income Tax Act

Advise on the tax implications of receiving a gift from a spouse under the Income Tax Act.

You're reporting an error for "PT – Nov 2024 – L2 – Q4b – Tax Implication of Gift under Income Tax Act"

ATAX – May 2023 – L3 – Q5 – Capital Gains Tax (CGT)

Analyze the tax implications of asset disposal and re-acquisition for Fashion Stitches Ltd.

You're reporting an error for "ATAX – May 2023 – L3 – Q5 – Capital Gains Tax (CGT)"

AT – May – 2018 – L3 – SC – Q7 – Tax Incentives and Reliefs

Information on corporate tax reliefs and incentives, with specific focus on start-ups and export-oriented businesses in Nigeria.

You're reporting an error for "AT – May – 2018 – L3 – SC – Q7 – Tax Incentives and Reliefs"

ATAX – Nov 2018 – L3 – Q4a – Tax Incentives and Reliefs

Explanation of Foreign Direct Investment and incentives for foreign investors in Nigeria.

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AT – Nov 2022 – L3 – Q5 – Taxation and Corporate Governance

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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.

You're reporting an error for "TAX – May 2024 – L2 – SA – Q1 – Personal Income Tax (PIT)"

PT – Nov 2021 – L2 – Q2e – Tax Administration

Distinguish between defined benefit schemes and defined contribution schemes.

You're reporting an error for "PT – Nov 2021 – L2 – Q2e – Tax Administration"

AT – NOV 2021 – L3 – Q1c – Tax Planning

Outlines tax planning measures that can be used to reduce tax liability for a sole proprietorship business.

You're reporting an error for "AT – NOV 2021 – L3 – Q1c – Tax Planning"

PT – Nov 2024 – L2 – Q4b – Tax Implication of Gift under Income Tax Act

Advise on the tax implications of receiving a gift from a spouse under the Income Tax Act.

You're reporting an error for "PT – Nov 2024 – L2 – Q4b – Tax Implication of Gift under Income Tax Act"

ATAX – May 2023 – L3 – Q5 – Capital Gains Tax (CGT)

Analyze the tax implications of asset disposal and re-acquisition for Fashion Stitches Ltd.

You're reporting an error for "ATAX – May 2023 – L3 – Q5 – Capital Gains Tax (CGT)"

AT – May – 2018 – L3 – SC – Q7 – Tax Incentives and Reliefs

Information on corporate tax reliefs and incentives, with specific focus on start-ups and export-oriented businesses in Nigeria.

You're reporting an error for "AT – May – 2018 – L3 – SC – Q7 – Tax Incentives and Reliefs"

ATAX – Nov 2018 – L3 – Q4a – Tax Incentives and Reliefs

Explanation of Foreign Direct Investment and incentives for foreign investors in Nigeria.

You're reporting an error for "ATAX – Nov 2018 – L3 – Q4a – Tax Incentives and Reliefs"

AT – Nov 2022 – L3 – Q5 – Taxation and Corporate Governance

You're reporting an error for "AT – Nov 2022 – L3 – Q5 – Taxation and Corporate Governance"

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.

You're reporting an error for "TAX – May 2024 – L2 – SA – Q1 – Personal Income Tax (PIT)"

PT – Nov 2021 – L2 – Q2e – Tax Administration

Distinguish between defined benefit schemes and defined contribution schemes.

You're reporting an error for "PT – Nov 2021 – L2 – Q2e – Tax Administration"

AT – NOV 2021 – L3 – Q1c – Tax Planning

Outlines tax planning measures that can be used to reduce tax liability for a sole proprietorship business.

You're reporting an error for "AT – NOV 2021 – L3 – Q1c – Tax Planning"

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