Personal Income Tax (PIT) Analysis: Assessable Income – Personal Income Equation for Tax purposes:
Table of Contents
- For the Employee: Assessable income may equal Adjusted income
- For Sole Proprietor: Assessable income may equal adjusted profit + adjusted income. For this Sole proprietor Adjusted income/Profit – Capital Allowance = Taxable Income/Profit. This may be the same for the Employee who runs a business outfit or owns property and gets investment incomes.
- The Wage Employee with unearnd income,
- Sole Proprietor, and
- The Wage Employee who has unearned incomes.
Personal Income Tax (PIT) Analysis: Assessable Income – Assessable Income/Profit:
The relevant section provides that ” … there shall be charged and payable an annual education tax which shall be assessed, collected and administered in accordance with the provisions of this Act”.
Further provision is that ” Education tax which is at a rate of 2% shall be charged on the assessable profits of a company registered in Nigeria..”.
For the Wage Worker his income equation should be :
Personal Income Tax (PIT) Analysis: Assessable Income – For those in business, the income equation should be:
But where capital allowance is involved it becomes:
The Gross Profit:
- Wages and salaries;
- Business income;
- Percentage ownership;
Furthermore, click here
- Interests and dividends.
- Contribution to the National Pension Fund;
- Life Assurance payments;
- Contribution to the National Health Insurance Scheme;
- Contribution to the National Housing fund; Gratuities;
- Dividends and interests from quoted companies;
- Rent and business expenses;
- Bad debt recovered, and ;
- Consolidated relief allowance.
Make these CALLS, please:
- Call us for Updates
- Call us for your tax challenges and assignments for your Tax clearance certificate
- Again, call us for Referrals.
Founder/Managing Partner of Complete Full Marks Consultants Ltd. An Economist turned Chattered Accountant and Tax Practitioner with over 37 years of industrial experience.