Topic: Personal Income Tax

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  • 20 Marks

TAX – May 2021 – L1 – SB – Q3 – Personal Income Tax (PIT)

Definitions and explanations related to the taxation of employment income as per the Personal Income Tax Act.

The Personal Income Tax Act Cap P8 LFN 2004 (as amended) defines employment to include any appointment or office whether public or otherwise for which remuneration is payable. An employer shall register with the relevant tax authority for the purposes of deducting income tax from its employees with or without formal notification or direction by the relevant tax authority.

Required:
a. Define an “itinerant worker”. (2 Marks)
b. Explain the conditions for taxation of income from employment. (10 Marks)
c. State the penalties payable by employers who failed to file returns of emoluments paid to employees in the preceding year on January 31, of each year, with the relevant tax authority. (8 Marks)

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  • 20 Marks

TAX – May 2018 – L2 – Q1a – Personal Income Tax

Compute the Personal Income Tax payable by an individual based on salary, allowances, pension, and other income details.

Alhaji Tijani Bello is married and has six children aged between 4 and 21 years. All except Phillip aged 21 are still in school. The following details were obtained from his employment records:
(i) He retired from his previous employment with Standard Chartered Company Limited on September 30, 2015. He was on an annual salary of N6,630,000.
(ii) On October 1, 2015, he took up a new employment with Rehoco International Consulting on a salary of N9,600,000 per annum, transport allowance of N480,000 per annum, and rent allowance of N660,000 per annum.
(iii) From October 1, 2015, he will be on a pension income of N960,000 per annum from his pension fund administrators.
(iv) Contributions to the National Housing Fund and National Pension Scheme are N195,000 and N615,000, respectively.
(v) Alhaji Tijani Bello has a Life Assurance Policy on his life with the sum assured of N7,500,000 and an annual premium of N660,000.
(vi) He lived with his wife and two aged parents on whom he spent a total sum of N1,500,000 per annum.
(vii) Alhaji Tijani Bello received dividends from his publicly quoted investment on the Nigeria Stock Exchange as follows:

Date Amount (N)
1/1/2014 600,000
1/7/2014 720,000

Required:
a. Compute the Personal Income Tax payable by Alhaji Tijani Bello for the relevant year of assessment.

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  • 8 Marks

TAX – May 2019 – L2 – Q3b – Personal Income Tax (PIT)

Identify the tax authority for Mr. Muhammed and calculate his income tax liability based on salary and deductions.

In 2016, Mr. James Muhammed lived at Ojodu Abiodun village, Ogun State and worked for the Federal High Court, Ikeja, Lagos State, on an annual salary of N1,600,000. Mr. Muhammed contributes to an approved pension scheme at the appropriate rate of 8% and also pays a life assurance premium equivalent to 5% of his annual salary.

Required:
(i) Identify the relevant tax authority to which he will be subjected to tax. (2 Marks)
(ii) Compute his personal income tax liability for the relevant assessment year. (6 Marks)

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  • 10 Marks

TAX – Nov 2018 – L2 – SA – Q1b – Personal Income Tax (PIT)

Explain the national housing fund, contributory pension scheme, and national health insurance scheme contributions.

In accordance with the Personal Income Tax Act CAP P8 LFN 2004 (as amended), you are required to write short notes on:
(i) National Housing Fund Contribution (3 Marks)
(ii) Contributory Pension Scheme (4 Marks)
(iii) National Health Insurance Scheme Contribution (3 Marks)

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  • 20 Marks

TAX – Nov 2018 – L2 – SA – Q1a – Personal Income Tax (PIT)

Calculate the personal income tax payable by Dr. Ogungbemi for the relevant year of assessment.

Dr. Alade Ogungbemi retired from the service of Oyo State Government after attaining 60 years of age on July 31, 2017. He secured an employment with TUC Foods Limited as human resources manager, effective August 1, 2017.

The following details were provided:

  1. Salary: January 1 – July 31, 2017: N420,000 per month
  2. New employment: N4,800,000 per annum
  3. Pension income, effective August 1, 2017: N840,000 per annum
  4. Transport allowance (new employment): N120,000 per annum
  5. Rent allowance (new employment): N720,000 per annum
  6. Contributions to national housing fund and contributory pension fund scheme at 2½% and 7½% of gross income, respectively
  7. Rental income received (gross):
    • July 19, 2015: N240,000
    • December 1, 2015: N120,000
    • July 4, 2016: N360,000
    • December 4, 2016: N420,000
  8. Dr. Ogungbemi is married and has four children. All except one, aged 20 years, are still in school.
  9. Dr. Ogungbemi has a life assurance policy with a sum assured of N7,500,000 and an annual premium of N460,000. His aged parents live with him, and neither of them has an income.

Required:
Compute the personal income tax payable by Dr. Ogungbemi for the relevant year of assessment.

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  • 20 Marks

TAX – May 2021 – L1 – SB – Q3 – Personal Income Tax (PIT)

Definitions and explanations related to the taxation of employment income as per the Personal Income Tax Act.

The Personal Income Tax Act Cap P8 LFN 2004 (as amended) defines employment to include any appointment or office whether public or otherwise for which remuneration is payable. An employer shall register with the relevant tax authority for the purposes of deducting income tax from its employees with or without formal notification or direction by the relevant tax authority.

Required:
a. Define an “itinerant worker”. (2 Marks)
b. Explain the conditions for taxation of income from employment. (10 Marks)
c. State the penalties payable by employers who failed to file returns of emoluments paid to employees in the preceding year on January 31, of each year, with the relevant tax authority. (8 Marks)

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  • 20 Marks

TAX – May 2018 – L2 – Q1a – Personal Income Tax

Compute the Personal Income Tax payable by an individual based on salary, allowances, pension, and other income details.

Alhaji Tijani Bello is married and has six children aged between 4 and 21 years. All except Phillip aged 21 are still in school. The following details were obtained from his employment records:
(i) He retired from his previous employment with Standard Chartered Company Limited on September 30, 2015. He was on an annual salary of N6,630,000.
(ii) On October 1, 2015, he took up a new employment with Rehoco International Consulting on a salary of N9,600,000 per annum, transport allowance of N480,000 per annum, and rent allowance of N660,000 per annum.
(iii) From October 1, 2015, he will be on a pension income of N960,000 per annum from his pension fund administrators.
(iv) Contributions to the National Housing Fund and National Pension Scheme are N195,000 and N615,000, respectively.
(v) Alhaji Tijani Bello has a Life Assurance Policy on his life with the sum assured of N7,500,000 and an annual premium of N660,000.
(vi) He lived with his wife and two aged parents on whom he spent a total sum of N1,500,000 per annum.
(vii) Alhaji Tijani Bello received dividends from his publicly quoted investment on the Nigeria Stock Exchange as follows:

Date Amount (N)
1/1/2014 600,000
1/7/2014 720,000

Required:
a. Compute the Personal Income Tax payable by Alhaji Tijani Bello for the relevant year of assessment.

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  • 8 Marks

TAX – May 2019 – L2 – Q3b – Personal Income Tax (PIT)

Identify the tax authority for Mr. Muhammed and calculate his income tax liability based on salary and deductions.

In 2016, Mr. James Muhammed lived at Ojodu Abiodun village, Ogun State and worked for the Federal High Court, Ikeja, Lagos State, on an annual salary of N1,600,000. Mr. Muhammed contributes to an approved pension scheme at the appropriate rate of 8% and also pays a life assurance premium equivalent to 5% of his annual salary.

Required:
(i) Identify the relevant tax authority to which he will be subjected to tax. (2 Marks)
(ii) Compute his personal income tax liability for the relevant assessment year. (6 Marks)

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  • 10 Marks

TAX – Nov 2018 – L2 – SA – Q1b – Personal Income Tax (PIT)

Explain the national housing fund, contributory pension scheme, and national health insurance scheme contributions.

In accordance with the Personal Income Tax Act CAP P8 LFN 2004 (as amended), you are required to write short notes on:
(i) National Housing Fund Contribution (3 Marks)
(ii) Contributory Pension Scheme (4 Marks)
(iii) National Health Insurance Scheme Contribution (3 Marks)

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  • 20 Marks

TAX – Nov 2018 – L2 – SA – Q1a – Personal Income Tax (PIT)

Calculate the personal income tax payable by Dr. Ogungbemi for the relevant year of assessment.

Dr. Alade Ogungbemi retired from the service of Oyo State Government after attaining 60 years of age on July 31, 2017. He secured an employment with TUC Foods Limited as human resources manager, effective August 1, 2017.

The following details were provided:

  1. Salary: January 1 – July 31, 2017: N420,000 per month
  2. New employment: N4,800,000 per annum
  3. Pension income, effective August 1, 2017: N840,000 per annum
  4. Transport allowance (new employment): N120,000 per annum
  5. Rent allowance (new employment): N720,000 per annum
  6. Contributions to national housing fund and contributory pension fund scheme at 2½% and 7½% of gross income, respectively
  7. Rental income received (gross):
    • July 19, 2015: N240,000
    • December 1, 2015: N120,000
    • July 4, 2016: N360,000
    • December 4, 2016: N420,000
  8. Dr. Ogungbemi is married and has four children. All except one, aged 20 years, are still in school.
  9. Dr. Ogungbemi has a life assurance policy with a sum assured of N7,500,000 and an annual premium of N460,000. His aged parents live with him, and neither of them has an income.

Required:
Compute the personal income tax payable by Dr. Ogungbemi for the relevant year of assessment.

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