…Pensioners will pay tax on other incomes
…Expert gives tips on what to do with profit in companies to escape taxes
Professionals who handle personal income tax computation have begun drilling sessions in Port Harcourt, Rivers State, in preparation for the new tax regime.
The drilling was organized by the Institute of Chartered Accountants of Nigeria (ICAN) Obio/Akpor and District Society in Port Harcourt headed by Chioma Obianuju Ojukwu, lecturer in the University of Port Harcourt.
Highlights of the webinar include clarification that being a pensioner did not exempt taxes on other incomes apart from pensions payments. It was made clear that profits from any investments from one’s pension/gratuity would be taxed.
Another highlight was that those rushing to incorporate companies because of the N100m exemption from tax should know that private incomes of the directors would be exposed to personal income tax, according to a tax expert, Kennedy Iwundu, a university lecturer.
In her welcome remarks, Ojukwu said interpreting and computing the new taxes have been a big challenge requiring technical abilities and competences, saying it calls for integrity. The pioneer chairman commended participants, saying they have chosen to stay ahead of change.
The moderators, George Peters, an associate professor, who is the District’s pioneer technical secretary and accounting lecturer in the Rivers State University, and his assistant, Anita Amieye, prompted the chairman of session, Oyebade Oyedepo, a board member of the Oyo State Anti-Corruption Agency, to action. The session chairman gave the history of personal income tax (PIT) from the ancient times and said the new law has only broadened, harmonized, and modernized the tax regime.
He said the training session was an attempt to transit from theory to practice in terms of learning to compute PIT in the new law.
In drilling the professional accountants, Kennedy Iwundu showed why he is a fellow of chartered institute of taxation, and an associate professor of Forensic Accounting with 18 years consulting experience and author of many papers on forensic accounting with huge research backgrounds. He said he has found out that chartered accountants were craving for training on the new tax law more than other professionals in the tax space.
Saying the essence of the ongoing trainings around the country was to help professionals file tax returns and know where to claim reliefs, he said the new tax law targets high networks but seeks relief to smaller earners. He pointed major changes in PIT to include relief that is now total of N500,000 for rent instead of 20% of income plus N200,000.
He said the new law was undergoing review that may manifest within one year.
He harped on non-employment income, saying taxpayers must disclose such incomes even if their employers had filed tax returns for them based on their salaries, but that they must go to the State Internal Revenue Service (SIRS) to file further returns and be assessed.
He said bank transfers would betray anyone trying to hide income. The expert warned that it was important for persons to file for incomes they received to avoid penalties which he said is N100,000 in first one month of non-filing and N50,000 for every next month one did not file.
He made some examples and helped to compute what anyone earning N3m per month would likely pay; showing a monthly tax of about N487,000. He also named national housing fund, national health insurance scheme, life assurance premium, pension, and mortgage interest on owner-occupier as exemptions and rent as a relief. “Anything else is taxable”.
He gave complicated explanations on investments and withholding taxes, saying it would not be an end to taxing. “Withholding income deducted at source does not stop more taxes at the end of the day on profit from investments”.
He explained that crypto currency transactions are now taxable, but that compensation below N50m is not to be taxed. He also explained the new residency tax clauses
The expert responded to a barrage of questions from the enthusiastic participants. He made it clear that all individuals must file tax returns, even if they will be exempted from paying.
