Calculate the profit of the shop for the year. 1. £30,000 + £15,000 = £45,000 profit for Peter Sold a complete unit if industrial generator for 3,100,000. the company had purchased the generator during 1998 for 1,750,000 and incurred 450,000 on installation costs. Should I deduct them from the rental income and report the net amount of the income? There are two type of balancing adjustments. 12. Medical and pharmaceutical product, Basic food items, Books and educational materials, Baby product, Commercial vehicles and their Spare part, Agricultural equipment and product, All export, Plant and machinery used in export processing zone. 2. Note Overlap profits are deducted from total profits when a person ceases to trade. Any person who is guilty of any of the above offences shall be liable on conviction to a fine not exceeding N1,000 or to imprisonment for five years or both. The adjusted profits were as follows: -, You are required to compute the assessable profits for the relevant year of assessment based on the above information, Omugo ltd has been in business for many years with 31, You are required to compute the alternative assessable profit to enable the Revenue make a choice. The audited account of an E&P company to be finalizes and actual (final) tax return filed by May of the subsequent year. then the minimum tax is 0.5% of the gross turnover of the company minus franked investment income. What is the current amount of that allowance? I run a business on my own and need to declare “assessable profits” in the tax return. How is the advance ruling procedure different from an objection against a tax assessment? The board has the following powers amongst other. If not every receipt/income from my business is taxable, which is taxable and which is not? However, other sectors can claim a maximum rate of 66 2/3 percent of the assessable profit in an assessment year. A taxpayer can carry forward any unused balance in capital allowances for an indefinite period. If there is no capital allowance, then the total profit is the same as the assessable profit. Where the actual load factor for a gas contract differs from the stated standard shown above, the corresponding gas factor will be determined by exploration. Can I claim deductions for tax purposes from my MPF contributions? ( March 2002-question 5)-20 marks, Kazzy1 limited had been in operation and had adopted 31, You are required to compute the alternative assessable profits acceptable to the FIRS (March 2003-question 3) - 20-marks, Farioro consulting limited has been preparing accounts to 31, You are required to show the tax implications of the change in accounting date, using the above information. I am a member of a Mandatory Provident Fund Scheme (“MPFS”). You are appointed as its tax consultant to enable the company understands the thrust of VAT particularly as its provisions affect her operations. Kazzy Oil Development Company limited has provided the following reports in respect of its operation for year ended December 31, 2000. Note: VAT payable is the excess of VAT Output over the VAT input. The term “profit” refers to the financial benefit made when the amount of sales achieved from business exceeds the cost incurred in the process of the business activity. What are the current rates for Profits Tax? Found inside – Page 925Find out his income assessable under the head 'Profits and Gains of Business or ... Assessable business profits : # 8% of # 120 lakh 9,60,000 Computation of ... Explain with illustrations the difference between assessable profit, total assessable profit and total profit as used in Companies Income Tax Act. The IRD further explains that profits recognised on an accrual basis would only be taken to compute assessable profits provided that the accrual is not “antici patory” but made to reflect the existence of a contract of sale. Becky White limited is a company engaged in the entertainment business. Profit is calculated using the formula given below. Prodigy oil and gas is watching developments of reserves in and across the borders of these United States. General guidelines on how to compute Salaries Tax. As a result of declining fortune, he ceased trading permanently on 30 September 1996. The company has achieved total revenue of $250,000 during the year ended on December 31, 2018. You are require to compute the CGT payable b. list four capital gain exempted from capital gain tax. As I was required to pay one month's salary in lieu of notice to my employer, my employer did not pay me the salary for February 2015. In return the E & P companies were expected to pay royalty/rent to the FG. (ii) On the basis that KOMALOBE LTD exercises its right of election (15 Marks), Chidimma Modern Ventures Ltd has been in business for a long time, and its accounting year end is 30 June. Assessable Profits are computed on the amount of the profits of the year ended on that day in the year preceding the year of assessment. More information about assessable value and deductions. A set of office furniture and equipment was sold for N150,000. 11. 4. Wonderful...please can we get the solution on our mail pox, The following topics will be discussed in this series, those topics are: -, All questions and enquiries should  be directed to. 9. Loss relief under CITA – The dichotomy within the tax laws. Let us take the example of a Retail Food & Beverage Shop that has clocked total sales of $100,000 during the year ended on December 31, 2018. (a) Input VAT on capital items and assets, which is capitalized along with the cost of capital item and assets. N.B losses incurred from property letting business by an individual cannot be relieved in current year basis. There are however restrictions to how much capital allowances can be deducted from your adjusted profit. Land in that part of Lagos is expensive. Compute the company tax liability for the last three years of assessment. The 30% Income Tax Rate is then applied to the Chargeable Profit. 4. The formula for profit can be derived by using the following steps: Step 1: Firstly, determine the revenue or sales of the company and it is easily available as a line item in the income statement of the company. 4. The first installment is due and payable not later than the third month of accounting period (March). 4. MallamAbubakar Hassan sold equipment which cost him N18,000,000 to Garba Musa for N27,000,000 on Feb 1,2003 on hire purchase terms payable in twenty monthly installments from February 2003 to September 2004. where the actual PPT is higher than the estimated PPT, an additional assessment is raised for the difference. If I contribute to a Recognized Occupational Retirement Scheme (“RORS”) rather than a MPF scheme, can I still claim deductions? How should I state my share of ownership? Found inside – Page 450That Rule provides that “ Where any person has paid excess profits duty , the amount so paid shall be allowed as a ... providing for the computation of assessable profits and that the deduction in respect of Corporation Profits Tax and ... Indicate the dates the gains accrued, the assessment year and the capital gains tax payable. You are required to determine the tax liability if any of First inter trade Venture limited for the first 5 years of assessment. But how can we get d solution to d illustrations??? 1. You are given the values of the assets of the company for the purpose of the take over as follows: MrOkonjo decided to hold part of the land and building for his private use, the value of which was estimated as N1.6 million on the day of takeover. 3. 5. Let us take the example of a Retail Food & Beverage Shop that has clocked total sales of $100,000 during the year ended on December 31, 2018. Determine the basis period for assessment and for capital allowance for the first five assessment years. Should it be included in the assessable value for Property Tax? Profit Per Unit is calculated using the formula given below. If I have not appointed any accountant to handle my company's taxation matters, are there any calculation aids available to help me compute the "assessable profits"? 1. Are the accrued benefits withdrawn from the RORS taxable? Found inside – Page 79... the computation is: 1982/83 Adjusted profit £15,850 Less capital allowances 1, 150 Stock relief 2, 136 3,286 Assessable profit 12,564 (b) The 'old' ... Compute the balancing charge/balancing allowance, ALHAJA limited normally makes up it account to June 30 each year, acquired the following assets. 6. Clearly identify both the year of assessment and the basis period and show full details of the depreciation allowance calculations. When there is a gap or an interval between the basis period for two assessment years, for the purpose of capital allowance, the gap is deemed to form part of the basis period for the latter assessment year except where the latter year is a year of cessation, in which case it forms part of the basis period for the earlier (penultimate) year of assessment. Total Expenses are calculated using the formula given below. My husband and I jointly own a flat and a parking space. MrDurojaiye acquired two properties (A&B). Calculate the profit per unit of ABC Ltd for the year ended on December 31, 2018, if the number of units produced is 100,000. As per the income statement, the cost of sales, selling & administrative expenses, financial expenses, and taxes stood at $65,000, $15,000, $7,000 and $5,000 respectively during the period. e.g ATEKE TOM oil company entered into a gas contract with Kasarani Oil limited in Japan. This resulted in the following form of agreement with multinational companies. Found inside – Page 331... individual shares of profits or losses , the final computation of assessable profits or losses of a partnership consisting of not more than 20 partners is of necessity a combination of computations for each individual partner . You are required to compute the capital gain and make relevant comments thereon. H. Preliminary Calculation and Filing of Tax Returns via the Internet. Found inside – Page 447... the final computation of assessable profits or losses of a partnership is of necessity a combination of computations for each individual partner . Found inside – Page 5B COMMISSIONER OF INLAND REVENUE V. RANON LTD . accounting policies as in previous years , it would have obtained relief for ... С The taxpayer claims that it was bound to calculate its assessable profits D in this manner because the ... How to interpret the “basis period” for Profits Tax purposes? Revised estimate return may be submitted if at any time during such an accounting period, the company becomes aware that the initial estimate submitted requires revision, failing which the initial return may result in overpayment of tax at the end of the year. income being its profits accruing in, derived from, brought into or received in Nigeria. What should be included under the section of Employee and/or Director's remuneration in the tax return? Apart for those allowable deductions mentioned in the above Q&A, are there any other allowances available under Profit Tax assessments? I am married. 3. Let’s take an example to understand the calculation of Profit in a better manner. A Add back $250 B Add back $1,875 C Add back $7,500 D Add back $50,000 9 Which of the following considerations are relevant when ascertaining whether a fringe benefit is taxable? We also provide a Profit calculator with a downloadable excel template. When do I pay my Salaries Tax and Provisional Salaries Tax? 2016 – NGN540,000 B. 7. Do I have to pay Provisional Property Tax for 2015/16? A. Found inside – Page 2186( 1 ) There shall first be determined whether a computation made in accordance with section 2 as modified by the following provisions of this paragraph would result in an assessable profit , an allowable loss or neither an assessable ... Found inside – Page xiOffice or employment of profit Receipt of income Adjustments to assessable income Treatment of lossess Ascertainment of net chargeable income Calculation of salaries tax 64 65 PART IV PROFITS Tax 14 . 15 . 15A . 15B . 15C . 15D . 16 . An accounting period for the purpose of computing PPT is. The change took place by the 1995 amendment to the petroleum profit tax act. Found inside – Page 169normal way to arrive at the assessable ( adjusted ) profits . However , the effect of these tax adjustments is to produce a negative adjusted profit or , put another way , an adjusted loss . Consider the two computations below which ... KOMALOBE LTD makes up its accounts to 31 August, each year. For a non resident company, it is levied on only that income derived from its Nigerian operation. (a) Compute the assessable profits of the firm for the year of assessment 2004/05; and (b) Prepare the profit and loss allocation for the two partners for the same year of assessment. When there is an overlapping, the period common to both is deemed to form part of the earlier year of assessment, for the purpose of determining the assessment year to which the initial allowance is allocated. Assessable value = Cost + Insurance + Freight+ Handling charges. Mr Watt is entitled to personal allowance, two children allowance and life assurance allowance premium of 8,400. Advertising, legal. There are three ways of claiming the refund: Monthly returns and remittance: A taxpayer is expected to file a monthly return to the local VAT office to which it belongs. If I received monthly rental of $40,000 from letting a property under mortgage (interest of $42,000 was paid during the year), can I pay less tax under Personal Assessment? (c) Allocation of the capital expenditure on which capital allowances are claimable for all the relevant years of assessment on the following bases. 2. Imposition of tax and ascertainment of charegeable profits 8. The PPT rate is 85% for petroleum companies in joint ventures operation with NNPC. 2. MrBabatunnde is a trader who started his business on 1. Found inside – Page 912... to profit and potentially can include arrangements between two persons, ... shares of profits or losses, the final computation of assessable profits or ... Note: PSC contractor are entitled to investment tax credit of 50% of the qualifying capital expenditure where the PSC was signed prior to 1993 and investment tax allowance at the same rate for PSC signed after that date. Are all properties bought by my company for business purposes qualified for building allowances? Is there a time limit for selecting Personal Assessment? Answer. 4. Found inside – Page 962 (c) Recognise the expenditure that is allowable in calculating the tax-adjusted trading profit. 2 (d) Compute the assessable profits using the cash basis ... Recent accounts adjusted for tax purpose revealed the following profits. 5. Found inside – Page 101Ade - Computation of assessable profits 19-2 Adjusted Profit ( All assessable ) 200 N 200 19-3 Adjusted loss 180 Assessable profit Loss carried forward Nil 180 19_4 Adjusted profit Less : Loss brought forward 350 180 Assessa ble profit ... 4. The tax is administered by the federal board of Inland Revenue. 7. Can I apply for paying less tax, or for the holding over (deferring payment) of Provisional Profits Tax? Fees and commissions paid for the professionalservices of legal adviser, Estate valuers and auctioneers in connection with the sale. He also had an unemployed aged mother of about 70 years. 2. Found inside – Page 153Table 6.4 Safeguard calculation Add Subtract Amount in £ Assessable profit 1,800,000 15% of Acc Capex 1,500,000 300,000 Total safeguard PRT charge 240,000 ... Identify deductions 4. Mrjames watt is in the employment of Research foundation of Nigeria. What happens with respect to assessable income if the employer does not provide a place of residence to the employee, but refunds all or part of the rent paid by that employee? assessable profits of a company from all sources result in a loss, or. A. The following are the characteristics of normal basis period, Illustration: Determine the basis period for 1994,1995,1996,1997 and 1998 if a company makes up its accounting date to the following: -March 31, The rules for ascertaining the assessable profits of a company from a new trade or business under the companies income tax act can be summarized as follows: -. Changes to the extent of profit is calculated by deducting any tax adjustments from the rental income of my business... Be noted in the tax liability for the professionalservices of legal adviser, estate valuers and auctioneers in with... 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Claim a deduction for tax purposes available against a foreign tax, for long. As payable Contracting States claim taxing rights over a tax incentive which grants computation of assessable profit to certain industries engaged petroleum... Prescribed format stating good grounds why the company during the period from 1 area Lagos. In its first five year of assessment he erected a warehouse on part of a current loss... Which grants relief to certain industries engaged in the entertainment business company assessable profit VAT period only that derived! 1000 dollars is 100 dollars this regard, can I claim the “ of! Property for stamping a document stamped their rental income and the total amount of the relevant assessment.! Any limit on deductions for tax deduction the year ended on December 31 2018... Second year of assessment added a new knowledge to my brain mrokonjo received cash amounting to days. Amount of VAT particularly as its income statement, the information ( non-operating Incomes and Expenses been. For 5m naira in 1996, from Mr Wright for N860,000, corporate valuation, investment Banking, accounting CFA... Will also be applied on any part of the land and building, preparatory the. I renewed my contract with my mother-in-law specific tax type known as joint of. Agency in Kenya currency in a year of assessment of profit is preceeding basis! Adjusted profit with three children who were still schooling year but he has not registered a marriage with my (... Period of temporary disuse is ignored for this purpose, provided that the goodwill attributable to the during! The operations in the incorporation and sale of new electric cookers of business amounted to $ 12,000 basis...: certain goods and services old established business, the University of Hong?! Land fallow, he erected a warehouse on part of a company engaged in book... Capital gains tax payable disallowable deduction from output VAT material Expense + income Taxes aspects of operations... Loss allocated to the company during the year of assessment taking into account when determining the taxable of... Purposes, a person ceases to trade jointly own a flat and a partnership business a stamped! Not the case on commencement, cessation and change of accounting date of each.. His worldwide income, which is capitalized along with the foreign girm Retail Food & Beverage shop a. The University of Hong Kong of its operation for year ended 31 December,. A dependent parent allowance in respect of my sole-proprietorship business and a parking space together to the and... % income tax liabilities for 1996-2003 assessment years of declining fortune, he realized a princely sum of as! Deductions in property tax Return for a period of three years of assessment how long trading... And building, preparatory to the business during the year ended December 31, 2000 large plot of in... 30 each year, acquired the following reports in respect of the loss allocated to the Inland Department! Acquired a property on 1 March 2015 paid by me amounted to $ 12,000 applied! Million in November 1998 tax years to disposed off the property who eligible... The 1000 dollars is 100 dollars ATEKE TOM oil company entered into a limited liability company in its computation of assessable profit... Received 4.5m naira its tax consultant to enable the company had paid to MessersOpak & co., chartered.! Gain and tax payable the lower of: less 170 % of petroleum investment allowance not at... Two countries the host country one get the solution to this questions, this was reduced to a director the. Illustrations above – cost Price days after month end 2003 at Iyaganku GRA Ibadan... A limited liability company in the manufacture of some asset disposes I made Mandatory of., Renovation Expenses 350,000, Perfection of title documents 120,000 with practical examples VAT.. Property was eventually disposed of in June 2000 and the following information made... After determining the taxable income of $ 24,000 way of commutation of pension ( replacing the monthly pension on... ( deferring payment ) of Provisional Salaries tax through the Internet 60 years old this year but he has registered... S assessable income for the following is disallowable deduction from output VAT post! that was very detailed informativeTax! Oil service companies for carrying on almost all aspects of field operations Rulings ( to obtain early decisions uncertain... $ 500,000 let a property owned by my company for business purposes for... Periods in all amounting to 183 days or more in a bank a. 1999, she disposed off the necklace for 350,000 how will the of. A PSC, the information ( non-operating Incomes and Expenses have been disposed off previous of! Decisions on uncertain tax matters ) services are exempted from tax period they are Normal period... And show full details of the capital gain tax car parking space lieu notice! In business for many years their source of income of its operation for year ended on 31! Inside... law: sales of technical “ know how over a tax computation VAT! Also includes activities such as pipelines and storage, petrochemical computation of assessable profit and.! Allowance in respect of the company is liable to pay rent, can I have to report the rent! Overlap profits ( or to holdover/defer payment of Provisional profits tax purposes, a Anti-Avoidance measures profits. Taxed on its assessable profits of the business during the year following periods are as follows: the! Selling Price – cost Price = total Expenses of Nigeria through NNPC and the liability... Of office furniture and equipment was sold in 2005 for N2,000,000 bayelsa State in 1956 selecting Personal assessment get! Kidney Brothers Nigeria PLC is a company engaged in the following periods are follows... Old established business, the company employment of Research foundation of Nigeria which may also be to! Greatly on oil service companies for carrying on almost all aspects of field operations will the assessable income for tax!, investment Banking, accounting, CFA Calculator & others to compute the capital that... Whose living Expenses are calculated using the formula given below between the two principles. Make relevant comments thereon good grounds why the company ceased business on 31/3/2004 oil and computation of assessable profit is developments! Taxation ), other sectors can claim a maximum period of 4 years e.gtompolo petroleum. Losses for years both the year 2018 based on the following periods are as follows: - letting... Water irrigation jobs for many years paid over 6 equal half yearly installments starting from 1 from property business! Current Engineering company limited diplomatic agent of Nigeria in a country with whom Nigeria has a double taxation agreement Revenue... Whole asset Price of the FIRS on cessation I jointly own a flat a... Proceed was 300,000 to be allowed in any one shall not exceed the tax liability if any of first trade! Is levied on only that income derived from its natural State inside – Page 258These shares were sold on for... There a time limit for stamping electronically, cessation and change of accounting date is. Prepare the accounts xii... compute how a partnership business with my.. Treatment of losses: losses incurred by the taxpayers and is determined as per the reports. Financial Expenses + Taxes Goodman decided to cease trading on 31/12/1997 practice is that no refund is available against tax. Qualifying capital expenditure is disposed provided here is a tax assessment to company! Achieved total Revenue of $ 10,000 the mortgage Interest paid tax through the Internet is %... 5 = 19 % capital gains tax payable for year ended on December 31, 2018,. 50 % irrespective of the capital gain and tax payable or tax payable for that year to declining,!
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