Practice ICAN taxation 2021 Past Questions | Edcrib

Question 1 View Details

Which of the following is NOT a principle of taxation?

A. Equity

B. Certainty

C. Convenience

D. Simplicity

Correct E. Residency

Correct Answer: E

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Question 2 View Details

Which of the following is NOT a source of tax laws in Nigeria?

A. Budget and pronouncement of relevant Ministries

B. The Constitution of the Federal Republic of Nigeria

C. Circulars issued by and practices of the Inland Revenue

Correct D. Opinion of a local government chairman

E. Case laws

Correct Answer: D

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Question 3 View Details

How many members of a State Board of Internal Revenue shall constitute a quorum at any meeting?

A. 10

B. 8

C. 7

Correct D. 5

E. 3

Correct Answer: D

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Question 4 View Details

Which of the following is NOT a function of the Joint Tax Board?

A. Exercise the powers or duties conferred on it by the PITA and other Acts

B. Advise the Federal Government on request, in respect of rates and capital allowances and other taxation matters, having effect throughout Nigeria in respect of any proposed amendment to PITA

C. Advise the Federal Government, on request, in respect of double taxation agreement with any other country

D. Advise the State Board on all its powers and duties

Correct E. Impose its decision, on matters of procedure and interpretation of PITA, on any State, for purposes of conforming to agreed procedures or interpretations

Correct Answer: E

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Question 5 View Details

In the development and implementation of the National tax policy, the Federal Ministry of Finance, has a pivotal role to play and shall take appropriate steps to ensure that it receives cooperation from the following, EXCEPT

A. The President and the Governors

B. Legislature

C. Ministry of Finance

D. Ministries, departments and agencies (MDAs)

Correct E. A local government Chairman

Correct Answer: E

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Question 6 View Details

When undertaking a professional activity, a tax practitioner may be faced with a conflict of interest when he

A. Undertakes a professional service for a group of companies as per his brief

B. Undertakes a professional service for a new client

Correct C. Undertakes a professional activity relating to a particular matter for two or more clients whose interests with respect to that matter are in conflict

D. Refuses to undertake a professional activity relating to a particular matter for two or more clients whose interests with respect to that matter are in conflict

E. Undertakes a professional activity relating to separate and distinct services for two different clients

Correct Answer: C

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Question 7 View Details

Within how many months after the end of an accounting year should an existing company file its tax returns with the Federal Inland Revenue Service?

A. 12 months

B. 10 months

C. 8 months

Correct D. 6 months

E. 4 months

Correct Answer: D

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Question 8 View Details

The tax payable as determined by the Tax Appeal Tribunal is payable within…………….of the date of notice of assessment, notwithstanding that an appeal may be pending on same, before the Federal High Court.

A. 6 months

B. 5 months

C. 3 months

D. 2 months

Correct E. 1 month

Correct Answer: E

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Question 9 View Details

In line with the Federal Inland Revenue Service (Establishment) Act, 2007, any excess withholding tax deducted should be refunded within………………. of the decision of the Service of refund.

A. 120 days

Correct B. 90 days

C. 60 days

D. 40 days

E. 30 days

Correct Answer: B

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Question 10 View Details

Which of the following is NOT a vatable person?

A. A firm

B. A limited liability company

C. A sole trader

D. An individual

Correct E. A public educational institution

Correct Answer: E

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Question 11 View Details

In respect of VAT, a person who fails to notify the FIRS of any change of address within one month of such change is liable to pay a penalty of

A. N25,000

B. N20,000

C. N15,000

D. N10,000

Correct E. N5,000

Correct Answer: E

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Question 12 View Details

Which of the following is NOT assessed on ad-valorem basis?

A. Share capital of companies

B. Mortgage and debenture loans

C. Property valuation

D. Promissory notes

Correct E. Admission as solicitor or notary public

Correct Answer: E

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Question 13 View Details

Which of following is NOT a function of a Commissioner of Stamp Duties?

A. He is the administrative head of the department

B. He has the duties of assessing documents on appropriate duties and imposing penalties where applicable

C. Adjudication

D. Stamping or embossments

Correct E. He varies the stamp duties rate from time to time to reflect realities

Correct Answer: E

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Question 14 View Details

The rate of import duty on live reptiles, including snakes and turtles is

Correct A. 25%

B. 20%

C. 15%

D. 10%

E. 5%

Correct Answer: A

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Question 15 View Details

Tax imposed on goods and services that are considered to be non-essentials is

A. Excise duty

B. Value added tax

C. Non-essential tax

Correct D. Luxury tax

E. Essential tax

Correct Answer: D

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Question 16 View Details

Section 24(2) of Lagos State Land Use Charge Law 2018, states that the time allowed for an appeal to the tribunal shall be……………….after the date of delivery of the demand notices

A. 90 days

B. 60 days

C. 45 days

Correct D. 30 days

E. 14 days

Correct Answer: D

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Question 17 View Details

Under the National Health Insurance Act, Cap N42 LFN 2004, an employer who has a minimum of ten employees in the private sector is expected to pay 10%, while the employee pays…………….. of his basic salary.

A. 10%

B. 8%

Correct C. 5%

D. 4%

E. 2%

Correct Answer: C

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Question 18 View Details

Which of the following is NOT a consideration that influences the identification of badges of trade?

A. The subject matter of the realisation

B. The length of period of ownership

C. The frequency or number of similar transactions

D. The circumstances that were responsible for the realisation

Correct E. The date of incorporation of the company.

Correct Answer: E

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Question 19 View Details

For an existing business, the basis of assessment is

A. Continuity basis

B. Accrual basis

Correct C. Preceding year basis

D. Actual basis

E. Succeeding year basis

Correct Answer: C

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Question 20 View Details

The minimum tax payable by a company engaged in air or sea transport business shall not be less than……………… of the full sum receivable in respect of carriage of passengers, mails, livestock or goods shipped or loaded into an aircraft in Nigeria.

A. 20%

B. 10%

C. 5%

Correct D. 2%

E. 1%

Correct Answer: D

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Question 1 View Details

Chief Adio Jaiyesimi, a Chartered Accountant, died in London after a brief illness on June 10, 2015. He was survived by four children namely: Akeem; Ayodeji; Olabisi; and Adekunle. He created a trust for the benefits of his four children. The records of the trustee for the year ended December 31, 2020, have revealed the following: \( \begin{array}{lr} & \textbf{₦'000} \\ \textbf{Assets:} & \\ \textbf{Non-current at carrying amount:} & \\ \text{Plant} & 18,000 \\ \text{Motor vehicles} & \underline{13,800} \\ & \underline{31,800} \\ \textbf{Current assets:} & \\ \text{Inventory} & 9,200 \\ \text{Receivables} & 6,300 \\ \text{Cash and cash equivalents} & \underline{2,600} \\ & \underline{18,100} \\ \textbf{Total assets} & \underline{\mathbf{49,900}} \\ \textbf{Equity and liabilities} & \\ \textbf{Capital:} & \\ \text{Tunde} & 16,300 \\ \text{Edem} & 14,700 \\ \text{Iorzua} & \underline{11,800} \\ & \underline{42,800} \\ \textbf{Current accounts:} & \\ \text{Tunde} & 1,300 \\ \text{Edem} & 1,900 \\ \text{Iorzua} & \underline{1,400} \\ & \underline{4,600} \\ \textbf{Current liabilities:} & \\ \text{Payables} & \underline{2,500} \\ \textbf{Total equity and liabilities} & \underline{\mathbf{49,900}} \\ \\ \textbf{Additional information:} & \end{array} \) (i) Fixed annuity paid to Deji, his first child 81,000 (ii) Fixed remuneration for the trustee 500,000 (iii) Variable remuneration of the trustee – 5% of gross income (iv) Allowable expenses of the trustee as agreed 60,000 (v) Capital allowances as agreed with the Revenue 395,000 (vi) Discretionary payments were made by the trustee in agreement with the trust deed as follows: Akeem 300,000 Ayodeji 250,000 Olabisi 220,000 Adekunle 180,000 (vii) One third of the distributable income is to be shared equally among the children. \(Required:\)

Requirements

(a)

Compute the net distributable income in the hand of the trustee.

(b)

Compute the assessable income in the hand of each beneficiary.

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Question 2 View Details

QUESTION 2 a. Atlat Airline Limited was incorporated in New York, USA, on June 6, 1993. It is engaged in the carriage of mails, passengers and livestock into and out of Nigeria. The company’s worldwide statement of profit or loss as at December 31, 2018, has revealed the following: \( \begin{array}{lrr} & \text{₦} & \text{₦} \\ \text{Income from passengers flown from New York to} & & \\ \text{Nigeria} & & 510,720,000 \\ \text{Income from passengers loaded and flown out of} & & \\ \text{Nigeria} & & 241,305,000 \\ \text{Income from cargo loaded into aircraft to Nigeria from} & & \\ \text{other routes} & & 181,300,100 \\ \text{Income from cargo freight from Nigeria to New York} & & 102,960,000 \\ & & \hline \\ & & 1,036,285,100 \\ \text{Operating expenses:} & & \\ \text{Staff salaries} & & \\ \text{Depreciation} & 328,000,000 & \\ \text{Use of airport facilities} & 12,750,000 & \\ \text{Hotel bills for passengers} & 49,800,000 & \\ \text{Hotel bills for airline crew} & 16,250,000 & \\ \text{Gifts to airport staff for gratifications} & 21,670,200 & 1,081,000 \\ \text{Purchase of twin engine} & 54,700,000 & \\ \text{Allowance for doubtful debts} & 11,810,400 & \\ \text{Other overhead expenses} & 7,960,000 & (504,021,600) \\ \hline & & \underline{532,263,500} \end{array} \) Additional information: (i) The Federal Inland Revenue Service is satisfied that the tax authority in New York computes and assesses a company which operates an aircraft on a basis not materially different from that prescribed by Companies and Allied Matters Act Cap C21 LFN 2004 (as amended). (ii) The tax authority in New York has certified the adjusted profit and depreciation allowance ratios. (iii) Out of the overhead expenses, N2,194,500 relates to disallowable expenses. \(Required:\)

Requirements

(a)

Compute the taxes payable in Nigeria by Atlat Airline Limited for the relevant assessment year.

(b)

“E-commerce” and e-business present a major challenge for tax administrators given the often multi-jurisdictional nature of the transactions and the potential anonymity of the parties. Based on the above, it is, therefore, crucial to give the subject a critical examination through the lenses of relevant statutes. Required: State the tax complexities of “e-commerce” and “e-business”

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Question 3 View Details

The Personal Income Tax Act Cap P8 LFN 2004 (as amended) defines employment to include any appointment or office whether public or otherwise for which remuneration is payable. An employer shall register with the relevant tax authority for the purposes of deducting income tax from its employees with or without formal notification or direction by the relevant tax authority. \(Required:\)

Requirements

(a)

Define an ”itinerant worker”.

(b)

Explain the conditions for taxation of income from employment.

(c)

State the penalties payable by employers who failed to file returns of emoluments paid to employees in the preceding year on January 31, of each year, with the relevant tax authority.

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Question 4 View Details

Under the provisions of Companies Income Tax Act Cap C21 LFN 2004 (as amended), for an expenditure to be allowable for tax purposes, it should be an expenditure incurred wholly, exclusively, necessarily and reasonably in earning the income of the company. Despite the above – stated assertion, some donations are still allowable for tax purposes. \(Required:\)

Requirements

(a)

State the conditions that must be met before a donation is allowed for tax purposes.

(b)

Mr. James Adegun has been in Japan for so many years. There is pressure from his parents in Nigeria to return to the country to take advantage of so many favourable economic policies being put in place by the government. Mr. James Adegun had a sudden meeting with you sometime in 2019 and intimated you of his desire to return to Nigeria. He was of the opinion that his business associates in Japan would be willing to invest in a free trade zone in Nigeria. Required: State SIX special tax incentives for enterprises operating in a free trade zone in Nigeria

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Question 5 View Details

In 2018, the 8th Assembly, House of Assembly, Lagos State, enacted the Land Use Charge Law 2018, to provide for the consolidation of property and land based charges and make provisions for the levying and collection of land use charge in Lagos State and for connected purposes. Required: State the offences and their penalties as stated in sections 29 and 30 of the law. b. Mr. James Ado who is a successful businessman built a house for commercial purposes at Surulere, Lagos, in 2018. You are given the following information: (i) The area of the land parcel is 3,600 square metres. (ii) The average market value of a land parcel in the neighbourhood, on a per square metre basis is N17,000 as determined by the professional valuers appointed by the Commissioner. (iii) The total developed floor area of building on the plot of land is 2,000 square metres. (iv) The average construction value of medium quality buildings and improvements in the neighbourhood, on a square metre basis, is put at N200, based on the market value of the property as determined by professional valuers. (v) The depreciation rate for the buildings and improvements of land based on age of building is put at 1%. (vi) The annual relief rate is 40%. (vii) The annual charge rate expressed as a percentage of the assessed market value of the property is 0.76% of the assessed value. Required: Compute the land use charge payable by Mr. James Ado. (Total 20 Marks)

Requirements

(a)

State the offences and their penalties as stated in sections 29 and 30 of the law. (8 Marks)

(b)

Compute the land use charge payable by Mr. James Ado. (12 Marks)

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ICAN 2021 Taxation | Mixed

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Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

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Detailed Essay Solution & Marking Scheme Available

Detailed Essay Solution & Marking Scheme Available

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