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Good morning to all my friends, this week i will be talking on personal Income Tax. ..................so friends let's talk.

Pay as you Earn (PAYE)
This is governed by the State Board of Internal Revenue. PAYE is a deduction from employee salaries at a graduated rate depending on the Income. It is so structured that the higher you earn, the more tax an individual pays. It is the responsibility of the Employer to deduct these taxes before paying the employee. All such deductions are to be remitted to the State Revenue Board monthly. The Income is subject to some allowances and reliefs before arriving at the assessable income to be taxed. The employee is issued with a Tax Clearance Certificate at the end of the year as evidence of having paid taxes.

The revised PAYE Rates as effective from February 2012 are as follows:
Total relief of:-
N200,000 + 20% Gross Income
Assessment Table
1st N300,000 7%
Next N300,000 11%
Next N500,000 15%
Next N500,000 19%
Next N1600,000 21%
Additional 24%

N.B If your company is interested in processing the staff E-TCC , kindly contact me through my email address. labiola@yahoo.com

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I stand to be corrected, you monthly P.A.Y.E is. 8900 and Pension is 8% of your Gross pay......

Jarus:
Your actual PAYE, based on new Personal Income Tax Act (PITA) which took effect June 2012, is calculated thus:

GROSS ANNUAL PAY= 120,000*12 = 1,440,000
Less Reliefs & Allowances
- Pension 7.5% of Annual Basic, Housing & Transport = 792,000*7.5% = 59,400
- Consolidated Relief Allowance = 200,000+ 20%*1,440,000 = 488,000
NB: Monetised medical allowance is not accepted as a relief

TAXABLE PAY = Gross pay - Reliefs = 1,440,000 - 59,400 - 488,000 = 892,600

TAX

First 300,000 @ 7% = 21,000
Next 300,000 @ 11% = 33,000
Remainder 292,600 @ 15% = 43,890

TOTAL ANNUAL TAX = 97,890
Monthly Tax = 8,157.50

NOTE: I converted to annual, did the calculation in annualized figures, and reconverted to monthly, because I don't have time to be dividing by 12 at every stage. The relief and tax rates are stated in annual terms. It will result in same thing, except for months you earn extra income like christmas bonus, 13th month etc.

Meanwhile, your company is only postposing evil day. It can't escape the tax. When the authorities come and carry out audit, they will not only recover at actual rate, but also impose penalty and interest, which, together, can be up to 31%. For a small company, this can hit his P&L seriously in the year of audit, except he has been making provision.

baby6: Please can you explain the computation of PIT with respect to employeee
i mean how a coy can structure basic salary and allowances so that you end up paying little tax.

thanks

You should have two payrolls, One for tax officials showing and the other payroll showing the actual amount you pay you staff. De.knollconsulting@yahoo.com for further details.

Givemejoy: I stand to be corrected, you monthly P.A.Y.E is. 8900 and Pension is 8% of your Gross pay......

PAYE: Don't know what you're talking about
PENSION: Check the date of the post to know why it's 7.5% of BHT

Jarus:

PAYE: Don't know what you're talking about
PENSION: Check the date of the post to know why it's 7.5% of BHT

I am thinking since it is now consolidated relief allowance-you add both basic and allowance, apply the graduated income to get taxable income and it is from your gross pay you apply the (8%).


300,000@7%=21,000
300,000@11%=33,000
352,000@15%=52,000
106,800-Annually
106,800/12=8,900-Monthly
Pension 8% of gross pay.
NB:In Lagos state, the minimum tax you can pay is #250,that is, if you are earning 15,000 or less you are paying #250.

Please, I stand to be corrected.

Question. How do one reduce a company's basic salary and allowances and pay little tax.

Givemejoy: I am thinking since it is now consolidated relief allowance-you add both basic and allowance, apply the graduated income to get taxable income and it is from your gross pay you apply the (8%).


300,000@7%=21,000
300,000@11%=33,000
352,000@15%=52,000
106,800-Annually
106,800/12=8,900-Monthly
Pension 8% of gross pay.
NB:In Lagos state, the minimum tax you can pay is #250,that is, if you are earning 15,000 or less you are paying #250.

Please, I stand to be corrected.

Question. How do one reduce a company's basic salary and allowances and pay little tax.

Always check the date of a post Pls. You still don't get it. I made that post in 2012 or so, the new Act that increased that rate to 8% was just gazetted in August 2014.

Jarus:

Always check the date of a post Pls. You still don't get it. I made that post in 2012 or so, the new Act that increased that rate to 8% was just gazetted in August 2014.

Yes sir. thanks. you did not answer the other question.

@ Jarus

Please, Do Farmers pay Tax? My Farm (Poultry Farm) is a registered Company since July this Year, I have my TIN number, but don't know how to go about this Tax issue and how is it calculated ?

safex101:
@ Jarus

Please, Do Farmers pay Tax? My Farm (Poultry Farm) is a registered Company since July this Year, I have my TIN number, but don't know how to go about this Tax issue and how is it calculated ?

Yes they do. Is your company limited liability or an enterprise. There is what we call direct assessment that is paid by the owner of this business once in a year.

Givemejoy:
Yes they do. Is your company limited liability or an enterprise. There is what we call direct assessment that is paid by the owner of this business once in a year.

My company is a limited liability Coy. How does the direct assessment work? Thanks

safex101:


My company is a limited liability Coy. How does the direct assessment work? Thanks

The same way Payee is calculated.

safex101:


My company is a limited liability Coy. How does the direct assessment work? Thanks

Hello, you are expected to pay taxes, company income taxes as well as personal income taxes. The income of the company is subjected to tax under the company income tax which is payable to the federal inland revenue service, while the income of individuals ( workers and owner of the business) is subjected to personal income tax with is payable to the state internal revenue service where your based.
If you need further clarification don't hesitate to ask.
Do have a lovely day.
doseni@yahoo.com

Does additional voluntary pension contribution qualify as part of the consolidated relief allowance? I had an argument on this with an LIRS official recently. She insisted we cannot claim the voluntary pension contribution as part of the employee's relief but our PFA told us it qualifies as a relief. Please educate me on this.

Also, for the purpose of determining the CIT, please how do I compute the figure to be used as disallowed expenses in respect of stamp duty? I think there is a formula used by the tax people for this

Ronkuns:
Does additional voluntary pension contribution qualify as part of the consolidated relief allowance? I had an argument on this with an LIRS official recently. She insisted we cannot claim the voluntary pension contribution as part of the employee's relief but our PFA told us it qualifies as a relief. Please educate me on this.

This is the first time am hearing this, but let me be quick to add that pension is pension. Let me do a little research.

Ronkuns:
Does additional voluntary pension contribution qualify as part of the consolidated relief allowance? I had an argument on this with an LIRS official recently. She insisted we cannot claim the voluntary pension contribution as part of the employee's relief but our PFA told us it qualifies as a relief. Please educate me on this.

Pension does not qualifies as CRA

safex101:
@ Jarus

Please, Do Farmers pay Tax? My Farm (Poultry Farm) is a registered Company since July this Year, I have my TIN number, but don't know how to go about this Tax issue and how is it calculated ?

you prepare farm account.

@ronkus... voluntary pension contribution qualify does not qualify as CRA. However, it is a tax deductible expense when computing the PAYE for such an employee.

Got a qualified tax trainee opportunity in a small audit firm. I have a few questions.
1. What can I do to really understand professional tax accounting in and out and to be a genuis in the field?

2.My career goal is to become a CFO of a big organization. Can tax accounting really help to achieve that?

3.Can I really be sound in the field without a big four experience and is it really possible to move from small firms to big four?

I know I can always count on you all for insightful and candid advice.

Jarus:
@ Fixed

Sir Jarus! I greet you. Pls I would like to become a chartered tax man. Planning to register with CITA, hopefully pass their exams and become chartered. I need info as regards this. What are the requirements? I learnt you ll register with 10k..after this 10k, what are the other things one would surely pay for in the process? As a graduate of accounting, would there be exemptions for me? What are the benefits of becoming a chartered tax man you feel I don't know? Like how many months/years will the whole thing take if one passes their exam @ every first try? Looking forward to hearing from you soon. Thanks

midolian:
Sir Jarus! I greet you. Pls I would like to become a chartered tax man. Planning to register with CITA, hopefully pass their exams and become chartered. I need info as regards this. What are the requirements? I learnt you ll register with 10k..after this 10k, what are the other things one would surely pay for in the process? As a graduate of accounting, would there be exemptions for me? What are the benefits of becoming a chartered tax man you feel I don't know? Like how many months/years will the whole thing take if one passes their exam @ every first try? Looking forward to hearing from you soon. Thanks

I don't know anything about registration fees, but I guess 40k max for each diet.

If you pass at first attempts, you can finish it in one and half years.

As an accounting grad, you will get exemption for one or 2 subjects.

Jarus:



I don't know anything about registration fees, but I guess 40k max for each diet.

If you at first attempt, you can finish it in one and half years.

As an accounting grad, you will get exemption for one or 2 subjects.

Thank you.

i am told to show FIRS receipt of input vax before it can be deducted from output tax. suppliers' invoice alone is useless. what can we do?pls. enlighten me.

redyu:
i am told to show FIRS receipt of input vax before it can be deducted from output tax. suppliers' invoice alone is useless. what can we do?pls. enlighten me.

Keep waiting .tks.

Good morning, pls I'm a fresh graduate and a newly qualified chartered accountant and I'm in dear need a tax trainee job. Pls I don't mind if anyone here can be of help. Thanks in anticipation and have a wonderful day.

i am told to show FIRS receipt of input vax before it can be deducted from output tax. suppliers' invoice alone is useless. what can we do?pls. enlighten me.
Very interesting question, I am also in same dilemma

redyu:

Keep waiting .tks.

Very interesting question, I am also in same dilemma

redyu:
i am told to show FIRS receipt of input vax before it can be deducted from output tax. suppliers' invoice alone is useless. what can we do?pls. enlighten me.

Very interesting question, I am also in same
dilemma