NAME: AKINGBESOTE VICTORIA MODUPE

MATRIC NO: 178750057

DEPARTMENT: ACCOUNTING
COURSE CODE: ACC 427
COURSE TITLE: ADVANCED TAXATION 1

QUESTION 1 A Limited

Computation of Capital Gain Tax Payable

Sales proceed {Blue House} 3 250 000

Less: Expenses [150 000]

3 100 000

Less: Original cost of acquisition [1 875 000]

1 225 000

CGT: 1225000*10% 122 500

OUESTION 2 B Limited

Computation of Capital Gain Tax Payable

Sales proceed 1 125 000

Less: Cost of asset [625000*3/4] [468 750]

Capital Gain 656 250

CGT[10%*656250 65 652

QUESTION 3 C Limited

Computation of Capital Gain Tax Payable for 2019 Year of Assessment

Sales proceed [Oyo/Ibadan] 6 250 000

Less: Cost relating to disposal [1 250 000]

Cost of asset [3 125 000]

Capital Gain 1 875 000

CGT [10%*1875000] 187 500

QUESTION 4 D Limited

Computation of Capital Gain Tax Payable for 2019, 2020 and 2021 Year of Assessment

Sales proceed 2 000 000

Cost of Acquisition [1 600 000]

Less: Professional charges [140 000]

Capital gain 260 000

CGT [260000*10%] 26000

CGT per instalment 26000

5 =5200

YOA Date of instalment CGT

2019 30/6/19 5200

2020 1/1/20 5200

2020 1/7/20 5200

10400

2021 1/1/21 5200

2021 1/7/21 5200

10400

QUESTION 5 E Limited

Computation of Capital Gain Tax Liability

Sales proceed 5 000 000
Cost of acquisition (3 125 000)
1 875 000
Less bad debt incurred (750 000)
Capital Gain 1 125 000
CGT (1125000*10%) 112 500

QUESTION 6
F Limited
Computation of Capital Gain Tax Liability After Payment for 24 Instalments
Sales price 625000
Less cost of asset:
Deposit 125 000
Instalments paid (24*125000) 3 000 000
Less interest element (117500*24) (2 820 000) (305 000)
Capital gains 320 000
CGT (320000*10%) 32 000

Computation of Capital Gain Tax Liability After Full Payments for all the Instalments
Sales price 650000
Less cost of the asset:
Deposit 125 000
Instalments paid (36*25000) 4 500 000
Interest element (117500*36) (4 230 000) (395000)
Capital gain 255 000
CGT (255000*10%) 25 500

Workings:
Deposit 125 000
Total payable by instalments (36*25000) 4 500 000
Total hire purchase price 4 625 000
Less cash price (395 000)
4230 000

Interest element = 4230000

36 =117500
N. B: 36= number of instalment payment
 QUESTION 7
G Limited
Computation of Capital Gain Tax Liability
Sales proceed 4 000 000
Less: Cost relating to disposal (43 750)
Cost of asset (Wk 1) (4 050 000)
93 750

Workings:
Cost of Asset
Deposit 750 000
Instalments for 2 years (125000*24 months) 3 000 000
Interest element on instalment (12500*24 months) 300 000
4 050 000

QUESTION 8

H Limited
Computation of Capital Gain Tax Payable for the Relevant Year of Assessment
Assuming the equipment was sold after the payment instalments on November 3, 2016
payment
Sales price 8 4700 000
Less cost of the asset:
Deposit 4 9875 000
Instalments paid (10 months*1750000) 17 500 000
Interest element (306250*10 months) (3 062 500) (64 312 500)

Capital gain 20 387 500

CGT (20387500*10%) 238 750

Computation of Capital Gain Tax Payable for the relevant year assessment assuming the
equipment was sold after the payment of instalments on August 4, 2017

Sales price 86 800 000

Less cost of asset

Deposit 49875000

Instalment paid (19month*1 750 000) 33250000

Interest element(19month*306 250) ( 5818750) (77 306 250)

 capital gain 94 93750

CGT(10%*9493750) 94 9375

B: ALLOWABLE AND DISALLOWABLE EXPENSES IN NIGERIA

Deductions allowable (Section 14) are:

a) Cost of acquisition or purchase price, including all costs incidental to the purchase,

b) Improvement costs wholly, exclusively and necessarily incurred,

c) Cost wholly, exclusively and necessarily incurred in establishing, preserving or defending

the owner’s title to a right over the asset; and

d) Incidental costs of disposal. These include: 264

i. Fees, commissions or remuneration paid for professional services of surveyor or valuer;

auctioneer, accountant; agent and or legal adviser;

ii Cost of transfer or conveyance (including Stamp Duties);

iii. Advertisement cost to find a seller/buyer; and

iv. Cost reasonably incurred to make any valuation or apportionment required for the purpose
of computing the capital gains including expenses in ascertaining market value where required.

Disallowable Expenses

Sums allowable as deductions in computing the profits or gains or losses of a trade for income
tax purposes are not allowable under Section 14 above (Section 15). Insurance premiums on the asset
are not allowable – Section 16.

C Year of Assessment

A year of assessment in relation to Capital Gains Tax means, a year beginning with 1 January
and ending with 31 December in the same calendar year with effect from 1969.

D Connected Persons

In tax practice, certain persons are treated as being so closely involved with each other that
they have to be viewed as the same person or that transactions between them need to be treated
differently from those ‘at arm’s length’. These persons are referred to as ‘connected
persons’.
Transactions between such persons may be as artificial or fictitious for the purpose of determining 270
the tax liability arising there from. This implies that the revenue can make whatever adjustments as it
considers necessary to counteract the reduction of liability to tax that could otherwise result from such
transactions.

QUESTION 9

OPEYEMI AND LAWRENCE

A Computation of capital gain tax payable in 2018

Sales proceed 7 500 000

Cost of acquisition (7 500 000)

Capital gain ------

QUESTION 10 J AND CO LTD

Computation of amount rolled over in 2016 year of assessment

LAND/ BUILDING GENERATOR

Amount re-invested 14 600 000 1 800 000

Cost of old asset (12 100 000) (3 000 000)

2 500 000 -----

B Computation of capital gain tax payable in 2016 year of assessment

LAND/ BUILDING GENERATOR

Capital gain(wk1) 2 500 000 1 000 000

Amount rollover (2 500 000) (- - -)

--- 1 000 000

CGT at 10% ---- 100 000

WORKINGS: Computation of capital gain in 2016 year of assessment

LAND/BUILDING PLANT AND MACHINE GENERATOR

Sales proceeds 14 600 000 23 500 000 4 000 000

Cost of acquisition ( 12 100 000) (24 400 000) (3 000 000)

2 500 000 ----- 1 000 000

QUESTION 11 K AND SON LTD

A Chargeable Assets

i) Options, debts and incorporeal property generally;

ii) Any currency other than Nigerian currency; and

iii) Any form of property created by the person disposing of it, or otherwise coming to be owned

without being acquired

iv) stock and shares of every description (excluded from chargeable assets with effect from 1/1/98).

B a) as if the consideration for the disposal of the old asset were (if otherwise of a greater amount

or value) of such amount as would secure that on the disposal neither a loss nor a gain accrues to him,

and

b) as if the value of the consideration for the acquisition of the new asset were reduced by the

excess of the value of the actual consideration for the which he is treated as receiving under paragraph

(a) above.

C Computation of chargeable gain

Sales proceed 37 925 000

Less incidental expenses 5 125 000

32 800 000
Cost of the asset 37 925 000 * 24 600 000 (17 503 846.15)

37 925 000+15 375 000

Chargeable gain on the asset 15 296 153.85

CGT at 10% 1 529 615.39

QUESTION 12 L LTD

A Computation of amount rolled over in 2019 year of assessment

BUILDING PLANT AND MACHINE WAREHOUSE

Amount re-invested 2 250 000 1 625 000 1 875 000

Cost of old asset (1 250 000) ( 1 500 000) (1000 000)

1 000 000 125 000 875 000

B Computation of capital gain tax payable on 2019 year of assessment

BUILDING PLANT AND MACHINE WAREHOUSE

Capital gain 1 000 000 125 000 875 000

Amount rolled over (1 000 000) (125 000) (875 000)

 QUESTION 13

M limited

Computation of capital gain tax

Sales proceed 30 000 000

Less Incidental expenses

Valuation cost 5 000 000

Agency cost 3 000 000 (8 000 000)

22 000 000

Less: Cost of asset 30 000 000 x 50 000 000 (13 636 364)

30 000 000+80 000 000

CGT @ 10% 0f 8 363 636 = #836 363.6

A. The persons liable to pay capital Gain Tax are;

1. Individuals who are residents in Nigeria shall be liable to pay Capital Gains Tax on Chargeable

assets Disposed whether situated in Nigeria or not.

2. Partners in partnership shall be liable to pay Capital Gains tax on the amount of Chargeable gain

accruing on disposal of the partnership assets. The gain is assessed on each partner on their agreed

profit sharing ratio.

 3. The personal representative of a deceased person is liable to capital gains tax for disposal of the

Deceased assets to third parties other than beneficiaries.

4. Trustees of a trust are liable to capital gains tax on the disposal of any of the assets of the trust. 5. A

limited liability company shall be liable to capital gains tax on the disposal of any chargeable assets.

The relevant tax authorities for individuals, partners, personal representative and trustees shall be

the State Internal Revenue Boards where they are residents. In the case of companies, the relevant

tax authority is the Federal Inland Revenue Service.

C. Where there is a part disposal, the cost of that part of asset disposed and that of the undisposed

part shall be apportioned. The cost to be apportioned to the part disposed shall be in the proportion

that the consideration for the disposal bears to the total value of the whole asset on the date of

disposal. The value of whole asset on that date is the consideration received in respect of the part

disposed plus the market value of the part of the asset which remains undisposed (Section 17). Thus

if ‘A’ is the consideration received in respect of that part disposed of, and ‘B’ is the market

value of the part which remains undisposed, then the apportionment will be based on the formula:

A+B

Which shall be applied in computing the cost and /all other sums allowable as a deduction in

computing the amount of the gain accruing on the disposal, the remainder being attributable to the

property which remains undisposed of.

QUESTION 14

N limited

Computation of capital gain tax payable

Sales proceed 2 925 000

Cost of acquisition: 1 Jan (1 250x 400) (500 000)

2 Nov (2 250x 400) (900 000)

1 Nov 2020 (2 500 x500) (1 250 000)

Capital gain 275 000

CGT @ 10% 27 500