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Most countries cannot do without the imposition of tax, to boost its revenue generation. There are many definitions given to taxation by different authors. However, taxation can be explained as a weapon used by any Government to share from the wealth of an individual or corporate body. Hence, it can be concluded that taxation is generally an imposition. Taxation is a system of imposing a compulsory levy on all income, goods, services and properties of individuals, partnership, trustees, executors, and companies by the government. This system is supported by law. Tax: itself is an amount of money that you must pay to the government according to your income, property, goods etc. that is used to pay for public services and perform other social responsibilities. Therefore, taxes are one of the major sources of government revenue. Three major characteristics of tax are as follows:i. Tax is a compulsory contribution imposed by the government on the people in the country. Any person who refuses to pay is liable to punishment. ii. Tax is a contribution to defray the cost incurred by the state. i.e. to provide goods, public utility services and so on. iii. Tax is not levied in return for any specific service rendered by the government to the tax payer. That is individual cannot ask for any special benefit from the state in return for the tax paid by him. FORM OF TAXES The two main forms of taxes are as follows:(a) Direct taxes (b) Indirect taxes
DIRECT TAXES These are taxes levied on the income of individuals and business firm and which is actually paid by the person in which it is legally imposed. Examples are as follows:(i) Personal Income Tax:- This is a tax on the income of employees, sole traders, partnerships and pensioners. 1
(ii) Company Income Tax:- This is a tax charged on the profit/income of companies which are usually corporate economic entities. (iii)Petroleum Profit Tax:- This is a tax levied on companies or entities that engage in prospecting for, or the extraction and transportation of oil or natural gas. (iv) Capital Gain Tax:- This is a tax on the gains arising from the disposal of items of capital nature of companies, individuals and non-corporate bodies. INDIRECT TAXES These are taxes levied on goods and services. Examples of indirect taxes are:(i) Import duties (ii) Export duties (iii)Excise duties (iv) Value Added Tax (VAT) (v) Entertainment, Pool and Casino Taxes.
REASONS WHY GOVERNMENT LEVY TAXES i. To generate revenue. ii. To re-distribute income in a society. In a society where there is great disparity in income distribution, aggregate demand will fall. Government can pursue a tax system that imposes heavy burden on people within high income brackets and use the tax revenue to provide subsidy for goods normally consumed by the low income earners. iii. To discourage consumption of goods that are considered to be socially undesirable such as goods that are inimical to health. iv. To meet government‟s social, economic and political obligations such as the building of roads, hospitals, schools, electricity, water and other amenities. v. To control inflation through fiscal measures. vi. To promote export:- a reduction in tax of exported goods will be an additional incentive to exporters and will create room for more exports. vii. To stimulate growth and development in an economy. Tax policies like tax concessions, tax holidays could be pursed for rapid industrialization. viii. To preserve foreign exchange reserves:- taxes that reduce import and encourage export will ensure this. 2
employed people should be kept for the tax authority to examine. ADMINISTRATION:.adequate accounting records of businessmen. 3. Accounting records:. The government can use tax to raise the prices of imported goods so that they can be at the same level than prices of home made goods. Literacy: It is believed that educated people can read and understand the tax law and would therefore co-operate fully in reading consensus with tax authority on tax liability 3 . To protect infant industries in the country. 4.A good tax system must be easy to administer. Voluntary Compliance:. Political will: There must be a political will.ix. CERTAINTY:. 5. 2. FACTORS THAT ENHANCE EFFICIENCY OF TAX ADMINISTRATION 1. Voluntary compliance could be better achieved if people are satisfied with the way government spends its revenue by providing adequate social amenities and economic infrastructures. certain and scientific. 4. Competent and honest staff: There is need for every honest and dedicated staff who must posses‟ sufficient technical and administrative competence to be able to practicalise the tax law. which is sincere and honest to ensure that everybody pays tax irrespective of social status.The payer must not experience great cost or inconvenience simply because he wants to comply with the tax obligation. 5. as may be modified from time to time.the people should voluntarily pay tax rather than being coerced to pay. 2. It must be possible to know the tax base and it must be possible to collect the tax once levied. 3. EQUITY:.A good tax system must ensure that it does not make the situation worse off. CONVENIENCE:. professionals and other self.The tax must not be arbitrary nor should the amount payable be influenced by prejudice or personal feelings. People in the same circumstances must pay the same tax. ECONOMIC PRINCIPLE:. QUALITIES OF A GOOD TAX SYSTEM 1. A good tax system must therefore encourage the keeping of accurate.The procedure must be objective. For example two competent people applying the same tax law to the same individual and given the same information must arrive at the same liability. honest and reliable accounts.
(i) Foreign Employment Foreign employment is an employment. As a result of the above. there is need for definite rules to enable each taxpayer to know where to discharge his/her tax obligations and to reduce or eliminate friction between the various tax authorities. the duties of which are performed wholly or partly on behalf of an Employer who is in a Country other than Nigeria. Nigerian Employment Nigerian employment is any employment that satisfies the following: Duties are wholly performed in Nigeria. even if it is from an employment by a Government in Nigeria. and The Employer is in Nigeria. the Employee is not in Nigeria for a period or periods amounting to 183 days or more in any twelve months period commencing in a calendar year and ending either within that same year or the following year (ii) the remuneration of the Employee is liable to tax in that other Country. The gain or profit arising from Nigerian employment is taxable in Nigeria. (b) Individuals within the country are free and prone to movement within the country and to pursue their business endeavors wherever they choose in order to maximize their earnings. The gain or profit from a foreign employment shall not be deemed to be derived from Nigeria if. This is so for the following two reasons: (a) There are many taxing authorities and many taxing statutes. DETERMINATION OF RESIDENCE The determination of residence is very central to personal income taxation under the Nigerian laws. The gain or profit from any employment performed in Nigeria shall be deemed to be derived from Nigeria whether the gains or profits from the employment are received in Nigeria or not. The following rules are to be observed in the determination of residence under the Personal income Tax Act CAP P8 LFN 2004.whereas it will take a lot of time of deal with an illiterate tax payer who cannot even understand and complete the simplest income returns. 4 .
it is important to point out that no tax can be assessed on any individual whose residence in a tax territory cannot be proved for a year of assessment. Guest or Rest House or other places for temporary lodging.It must also be noted further. the duties of which are wholly or mainly performed in Nigeria. These categories of Taxable Persons include: 5 . Meanwhile. shall be assessable to tax by the Federal Inland Revenue Service rather than by any State of the Federation. or who. On the other hand. Where an Individual has more than one place of residence in a year of assessment. by the nature of their duties. An individual who holds foreign employment shall be deemed to be resident in the territory in which the principal office of his Employer is located. are subject to constant movement both in and outside Nigerian borders. and any period of his temporary absence from Nigeria. an individual who holds a Nigerian employment shall be deemed to be resident in the territory in which he has a place or principal place of residence during a year of assessment. The principal place of residence can be defined as the place where the individual normally resides. A place of residence in relation to an individual is a place available for domestic use in Nigeria on a relevant date and does not include Hotel. it is important to determine the principal place of residence of the Individual. shall be deemed to be derived from Nigeria during any period of leave of the Employee from the employment. (iv) Federal Subjects Those referred to as Federal Subjects are those who earn incomes that are subject to Nigerian Income Tax but who are not resident in any State in Nigeria. (iii) Other Employments An employee whose remuneration is subject to income tax in Nigeria for a year of assessment but who is not deemed to be a Nigerian resident shall be deemed to hold a foreign employment and if he has no Employer's principal office. that the gains or profits from any employment.
certain Societies or Persons. Similarly. 6 . Where the individual Pensioner has no place of residence in Nigeria and he is wholly paid by the Government of a territory in Nigeria. he is deemed resident in that territory. and Any Trustee or Executor under any settlement. Residents of the Federal Capital Territory. he cannot be taxed under the Personal Income Tax Act (PITA). Section 1 of PITA imposes tax on the income of: individuals. Members of the Nigerian Police Force. may not be taxed. Where the pension is not a Nigerian pension. (v) Pensioners The following rules of residence apply to Pensioners: Nigerian Pensioners are deemed resident in their places or principal place of residence as at 1st of January in the year of assessment. CHARGEABLE PERSONS Every human being or association of human beings resident in the appropriate tax jurisdiction and engaged in trade or business or obtaining taxable remuneration are ordinarily regarded as taxable. Members of the Nigerian Armed Forces. Trust or Estate. Abuja. the earner shall be deemed resident in the territory in which the principal office of the pension fund or other person authorizing the payment in Nigeria is situated. It follows from the above. provided they refrain from engaging in trade. because of their nature or the nature of their activities. Officers of the Nigerian Foreign Service. Communities and Families. The above categories of Persons are taxed by the Federal Inland Revenue Service rather than by any State in which they may be temporarily resident. Foreign Residents who earn incomes in Nigeria. that if a person has no income or has receipts that are not taxable.
(c) Bonuses. profession or vocation carried on by the Chargeable Person. excluded from taxation-. o There are certain test prescribed by law to which the above chargeable income must be subjected to and by which their allow ability or otherwise will be determined under the Personal Income Tax Act. businesses. there are two broad categories of incomes and these are earned and unearned incomes. derived from. These incomes include. brought into or received in Nigeria. (a) Earned Incomes 7 . however. (b) Salaries. o Any sum paid in respect of maintenance or education of a child. interests or discounts (f) Any other profits. o Medical or dental expenses incurred by an employee. gains or other payments. (e) Dividends.CHARGEABIE INCOMES Chargeable incomes are the incomes on which Chargeable Persons are to be assessed to tax under PITA. wages. o Cost of passage to or from Nigeria incurred by an employee. The Act provides that income tax is payable on incomes accruing in. (a) Gains or profits from any trade. allowances or other gains or profit from employment. (d) Gains or profits including any premium arising from a right granted to any other persons for the use of occupation of any property. premiums or other perquisites granted to an employee. fees. o Re-reimbursement to an employee for expenses incurred by him which does not constitute a profit or gain. o Any compensation for loss of employment. TYPES OF INCOME Generally. The following are.
include the following. (e) The income of any ecclesiastical. vocation or employment. Earned incomes include profits. Mainly. the Deputy Governor or anybody acting in those capacities. (g) Pension granted to a Person under the provisions of the Pensions Act relating to widows and orphans. (b) Unearned Incomes These are incomes derived from sources other than employment. intellectual or artistic exertion. earnings from trademark. registered under the Trade Union Act. etc. (b) All consular fees received on behalf of a foreign state or by a consular officer or employee except where the officer is a Nigerian. charitable or educational institution of a public character. (i) Gratuities. earned incomes. carried on or exercised by him. business or reward for services rendered. the Governor of a state. 8 . (c) An income in respect of which tax is remitted or exempted under the provisions of the Diplomatic immunities and Privileges Act. (j) The income of a Cooperative Society. It means incomes that were earned through physical.in relation to an individual. business. mean incomes derived from atrade. profession. amongst others: (a) The official emoluments of the holders of the office of the President. unearned incomes are investment incomes such as rental incomes. (d) The income of a Local Government or Government Institution. EXEMPT INCOMES Exempted incomes under the Personal Income Tax in Nigeria.President. It also includes gifts. salaries. wages. working in Nigeria. (h) The income of a trade union. bonuses. dividends. patents. royalties. inheritance and bequeathals. Vice . etc. (k) The income of a statutory or registered friendly society. as opposed to those earned passively through investment. commission. (f) Wound and disability pension granted to members of the Armed Forces or of any recognized national defense organization.
loans raised in the United Kingdom. (o) Dividends paid to a person by a company incorporated in Nigeria provided: (i) the equity participation of the person in the company paying the dividend is either wholly paid for in foreign currencies or by assets brought into Nigeria between 1st January. They are other benefits received by an employee apart from the normal salary and allowance. 9 . equipments. and (ii) If the asset is rented or hired. (n) Interests accruing to a person not resident in Nigeria. BENEFITS IN KIND OR PERQUISITES Benefits -In-Kind are benefits provided by the Employer to an Employee(s). furniture. These benefits include: (a) Provision of Assets Where assets such as motor vehicles.1992. Perquisites are benefits not monetized. These interests are on Government loans from international institutions. the benefit is the rent or hiring charge paid to the Landlord or Hirer. 1987 and December 31. (iii) The tax free periods for (i and ii) above are limited to 5 years in the case of agricultural and agro-allied companies and 3 years for others beginning from the year of assessment following the year the capital was brought into Nigeria. (ii) The person to whom the dividends are paid owns not less than 10% of the equity share capital of the company. the benefit is 5% of the cost of the asset. the amount of benefits-in-kind is determined as follows: (i) If the asset is owned by the Employer.(l) A sum withdrawn or received by an employee from a pension. (m) The income of a person other than a citizen of Nigeria from employment in technical assistance scheme with the Government of the Federation or a State. etc are provided for the use of an Employee by the Employer. deposit accounts or transfers made wholly in foreign currencies. provident or other retirement or other benefits scheme. fund or society approved by the Joint Tax Revenue Service.
etc for the advantage of an Employee. Wash-man. such amounts are deemed to be additional income in the hands of the Employee. the tax-free rent allowance increased to N150. such amount will be considered as an allowable deduction for company tax purposes to a maximum of 100% of the Employee's basic salary per annum. (c) Domestic Servant Where the employer engages the services of Steward. 000 per annum or 28% of basic salaries. House-Maid. NON-TAXABLE ALLOWANCES The Personal Income Tax Act specifically exempts some allowances from tax. allowable allowance was increased N15. whichever is higher. telephone bills and others to an Employee. (ii) Asset Rented: amount of rent paid. 000. (d) Provision of Utilities Where the Employer pays any amount in respect of energy consumption bills. These allowances include: House Allowance From 2001 to date. Driver. 10 . NB With effect from 1996. the cost incurred in form of remuneration by the Employer to these people shall be regarded as benefits-in-kind in the hands of the Employee and thereby liable to tax.(b) Provision of Accommodation An Employee that is favored with the use of an accommodation by the Employer would be deemed to have enjoyed a sort of benefits-in-kind from such employment. where the Employer pays rent of the Employee's residence directly to the Employee's Landlord. Transport Allowance (a) Between 1999 and 2000 tax years. The benefits derived are determined as follows: (i) Asset Owned: the annual rate or ratable value of the asset is used for the purpose.
The reliefs include: (a) Personal. 000 per annum Leave Allowance/Grant: . the allowance was increased to the higher of 3. They are deductions allowed to an individual taxpayer in a year of assessment to reduce the Chargeable Income of such individual.maximum of 10% of annual basic salary. [c) Wife Allowance This allowance was given to every married man up to 1991 assessment year but was abolished with effect from 1992. The allowance is in addition to personal allowance. 000 per annum N10. tax-free allowance was increased toN20. Before 1998 tax year.000 plus 20% of earned income. The allowance is calculated on Earned Income. 000 per annum Entertainment Allowance: . This allowance is granted to both residents and non-residents and could also be referred to as earned income allowance. the allowance is &5. Allowable amount of personal allowance are as follows: With effect from 1998 to date.(b) From 2001 to date. probably to eliminate discrimination against women. (b) Disabled Person Allowance This is an allowance granted to a Taxpayer who is disabled and who uses special equipment and the services of an attendant in the course of his paid employment. Allowance This is granted to every Taxpayer who cams income irrespective of his/her age.000 and 20% of earned income.N6. [d) Children Allowance 11 .000 Meal Allowance: Utility Allowance: N5. it was the lower of 12.000 or 10% of earned income with effect from 1998. RELIEFS Reliefs are meant to reduce the tax burden of the Individual in recognition of his personal financial responsibilities.
(f) Life Assurance Allowance This allowance is given in respect of life insurance premium paid by an individual during the preceding year of assessment for himself or for his wife. up to a maximum of four. (v) No deduction shall be granted in respect of a married child whatever his/her age. the tax authority reserves the right to apportion the allowance between those persons. NB: The above includes any contribution made to an approved pension. can still claim the full allowance in respect of the children of the deceased husband. donations made to a research center or company floated exclusively for research purposes are allowed as relief. (vi) No deduction shall be granted to a husband and his wife in respect of the same set of children. (iv) If the child is more than 16 years of age. (ii) The child shall be maintained by the individual in the preceding year of assessment (iii)The child shall be less than 16 years of age on the first day of the preceding year. (viii) Where the cost of maintaining a child is shared between two or more persons. and 10% of the taxpayer's chargeable income. 12 . the allowance can still be granted. (vii) No additional allowance will be granted on account of educational cost on any of the children. With effect from 1996. the (g) Donation to Research & Development Companies With effect from January 1st 1987. The amount claimable is the lower of: (i) (ii) Actual amount of donation. Conditions for claiming the allowance are: (i) The number of children shall not exceed four. allowance is the actual amount of premium paid. who re-marries. (ix) A widow. provident or other retirement benefit scheme or fund.This is granted to any Taxpayer who on the first day of the preceding year maintained a natural offspring or an adopted child. if the child is still receiving full time instruction in a recognized educational institution or was under article ship or indenture in a trade or profession.
13 . a company‟s accounting year is the period for which it prepares its annual accounts. which incidentally is the same as the government fiscal year. This is applicable only to a person whose source of income in a year of assessment is from employment.000 @ 20% Above £160. While adjusted profit is computed based on the accounts of a company for whatever period covered by such accounts (normally twelve months). July 1 – June 30).000® 25% ASCRETAINMENT OF ASSESSABLE/ TOTAL PROFITS The assessable profit of a company is its adjusted profits or part thereof that is assessed to companies‟ income tax in an assessment year. An assessment year.000 @ 5% Next £30. 000 in 1998. January 1. The earned income that was exempted from tax was increased to N10.000 @ 10% Next £50. assessable profits is determined and assessed to tax in an assessment year. Such a person will not be required to file any tax returns but he is not exempted from minimum tax of 0.December 31) or commence in a year and end the following year (for example. TAX TABLES With effect from 2001 1st £30. It is usually a twelve (12) months period which may begin and end in the same year (for example. is a calendar year running from January 1 of a year to December 31.000® 15% Next £50. Conversely. 000 in 1997 and subsequently to N30.MINIMUM TAX Minimum Tax was introduced to ensure that Taxpayers do not escape being taxed due to heavy capital allowances and reliefs.5% of his total income. of the same year.
It profit and loss account for the year ended December 31. that is. 2002 1. ILLUSTRATION Pako Limited is a company which commenced business on January 1. that is. Each tax year is called an assessment year. 2003 showed a profit of N2million. the company had a adjusted profit of N3million for the year ended December 31. SUBSISTING BUSINESS The basic principle underlying the concept of “Basis of assessment „ is that the assessment profit for a year of assessment shall be company‟s profits. the assessable profit for all relevant years is as follows:Assessment year Basis Period 14 Assessable Profit . adjusted profit for its accounting year ended in the preceding year of assessment. It runs from 1st January to 31st December every year. 1990. The basis of assessment will be preceding year basis or actual or a combination of the two.2 million You are required to determine the basis of assessment and assessable profit dor a. This is what is popularly referred to as the “preceding year basis” (PYB) of assessment. SUGGESTED SOLUTION On preceding year basis. The company‟s adjusted profits for the two previous years are as follows:N Year ended December 31. the question that arises is “how do we determine the assessment year when the profit of an accounting year is assessable to tax”? This question forms the kernel of the concept of “Basis of Assessment”. 2001 Year ended December 31. It means the profit assessment in a year is the company‟s profit.5milliom 2. 2003.BASIS OF ASSESSMENT Since adjusted profit is computed based on a company‟s accounting year while the assessable profit is determined and assessed to tax in an assessment year. adjusted profit for its twelve (12) months accounting period ended in the preceding tax year. relevant years of assessment. After applying the rules for allow ability of expenses and taxability of income.
then. However.5million 2.) (ii) 2nd year Assessable profit is profit of the first Twelve 12 months from the date of commencement of business. the basis of assessment in the 3rd year is the same as in the 2nd year of assessment. Basis of Assessment en Commencement of Business 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: Assessment year (i) 1st year Basis pence for assessment assessment profit is the actual profit from date of commencement of Business to December 31 following.0million It should be noted that the above basic principle will only apply where a company has been in business for some years and there is no change of accounting date. that is. In these circumstances. (iii) 3rd year Assessable profit is the profit of a Twelve months (normal} Accounting period ended in the Preceding year of assessment. It cannot be strictly applied where a company has just commenced business. to the end of the first year of assessment.2million 3. The above rules can be illustrated using the following example:- ILLUSTRATION 15 . where no norms accounting period ended in the preceding tax year. or there is cessation of business. the company may not have a twelve (12) months accounting period ended in the previous tax year and therefore unable to strictly apply the FYB of assessment Special rules are provided for under C1TA to take care of each of the peculiar situations stated above. or a change of accounting date.N 2002 2003 2004 1/1/01-31/12/01 1/1/02-31/12/02 1/1/03-31/12/03 1.
500 16.5m 1993 1/10/91 – 30/9/92 1994 1/7/92 – 30/6/93 Total Assessable Profits 8. accounts are prepared to June 30 of each year. 1991 and prepared the first set of accounts to June 30.75 5.million You are required to determine the basis period as well as the assessable "profits for the first 4 years of assessment SUGGESTED SOLUTION Tax Year 1991 1/10/91 – 31/12/91 1992 1/10/91 – 30/9/92 Basis period Working Assessable Period N‟000 3/9/x/N5m 1/10/91 – 30 /6/92 1/7/92-30/9/92 3/12 x N3. 48 months due to overlap in basis period for assessment as demonstrated below:- N‟000 N‟000 Total assessable profits for assessment years 16 16.667 Note: In the application of the above rules. Therefore.LBS Ltd commenced business on October 1.917 . 1992 – N5million Year ended June 30. 1993 – N3.875 5.000 N‟000 1. some of the profits assessable on the company may suffer tax more than once. For instance in the above illustration.917 5. that is. The company‟s adjustment profits are as follows: 9 months period of June 30.875 3. the actual profits of the company for a period of twentyone (21) months was assessed to tax over four assessment years. 1992.
Notice of intension to exercise the right must be given in writing to FBIR: 2. 3.417 In order to reduce the effect of overlapping basis period on the taxpayer. must be-given in writing within twelve months after the end of the third year of assessment if the taxpayer so decides.500 Profits assessed more than once due to overlapping basis period 8. 4. 31/12/94 31/12/95 31/12/96 7. namely: . The conditions to be satisfied to be able to exercise this right of election are as followings: 1. Notice to revoke the right of election. The notice must be given within two years after the end if the second year of assessment.Actual profits of 21 months. 17 .600 You are required to compute the assessable profits for all relevant years assuming the company takes advantage of any option open to it to minimize its tax liability.000 18. The election to be assessed on actual basis must be for the second and third years together and not for one or the other.000 24.1991-1994 (see above) Less: .000 3. ILLUSTRATION OBJ Limited commenced business on 1 June 1993 and profits were as follows: N Seven months ended Year ended Year ended Year ended 31/12/93.000 9. there is a provision which confers a right of election on the taxpayer to have the assessable profits for the second and third assessment years revised to actual basis.500 8.9 months to 30/9/92 -12 months to ended 30/9/93 5.
the tax-payer exercises the option of election but at cessation. Yo Yo whose business profits have been going down and down for the Past few years decided to cease operations permanently on the 31st March 19X5.Cessation of Business Cessation Provision: In a situation where a business ceases to operate i. The adjusted profits are as follows: 18 . assessment is raised on the greater of: (a) The actual profit of that year And (b) The preceding year's profit of that year of assessment. The assessment for this year is raised on the profit from the 1st of January of this year in which cessation occurs to the date of cessation. the following provisions will apply:- (i) Year of Assessment in which Cessation occurs: The year of assessment in which cessation occurs is known as the ultimate year. It is further provided that the power to revise to actual profit in the penultimate year rests exclusively with the Inland Revenue Authorities.e. (ii) Penultimate Year The penultimate year is the year proceeding the year of cessation. Examples 1 Question Mr. the business discontinues. At the commencement of business. For the penultimate year. it is the Revenue authorities‟ option.
19 .000 Year ended 31st June 19X4 115. CHANGE OF ACCOUNTING DATE There are a number of reasons why any business may wish to change its accounting date.000 Year ended 31st June 19X3 127. The greater of these two aggregates will be the likely choice of the Tax Authority. It is important to note that the three vital years are: (i)The year of assessment in which the accounting date becomes different from the date of the earlier years. The Act provides that the Tax Authorities have the power to decide the basis of computing the tax liability for the year in which the change occurs and the two following years of assessment. In practice.000 You are required to compute the assessments for the relevant years. a business may take over the operations of another and as a result wish to change the accounting date of that taken over to its own. the provisions of section 30 (2) of the Companies Income Tax Act 1961 apply. These reasons may be: (a) Because of the need to synchronize the accounting date of the subsidiary with that of the holding Company. This is known as the year of assessment in which the change occurs. (b) Because of the general convenience of stock taking at a particular period of the year. be it a sole trader. Where a change of accounting date takes place.000 Period to 31st March 19X5 27. calculations are made on both the old dates and the new dates. (ii) The next two years of assessment following that in which the change occurs. Of course.N Year Ended 31st June 19X2 118. ( c ) Again. partnership or a limited liability company. the Authority makes its decision on the best advantage to the Tax Authority.
000 It is required that you make all necessary computations as would be expected by the Tax Authorities. Suddenly it decided to adopt 31st December as its new accounting date with effect from 19X2.Question Changer Enterprises which had always been inconsistent has been changing and changing. 000 N60. 20 . From the books of accounts. 000 N80. 000 N25. It had regularly made up its annual accounts to30th September of each year. 000 N80. it is observed that the adjusted profits are as follows: Year ended 30th September 19x0 Year ended 30th September 19x1 Year ended 30th September 19x2 Period ended 31st December 19x2 Year ended 31st December 19x3 Year ended 31st December 19x4 N70. 000 N79.
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