ICAN 2024 Advanced Taxation | Mixed

{ "title": "Extract from the financial statements for the year ended December 31, 2022", "content": "Gross turnover: Domestic sales 147,500 Export sales 200,100 Other operating income 3,300 Total gross turnover 350,900 Deduct: Staff salary 122,600 Ground rent paid to the State government 3,200 Motor running expenses 1,750 Audit and accountancy fee s 1,000 Repairs and maintenance 5,800 Depreciation of assets 38,240 Rent paid 1,850 Power and lightning 5,400 Legal cost 5,000 Rates (water) 2,100 Allowance for doubtful debts 10,500 Donations 4,000 Interest and other finance costs paid 15,600 Income tax provision 23,400 General expenses 5,900 246,340 Net profit 104,560" }

{ "title": "Additional Information", "content": "(i) Export sales 20% of the export sales was made to the parent company at the prevailing international market price.\n(ii) Other operating income: N’000 Dividend received (net) 2,700 Profit from disposal of non-current asset 600 3,300\n(iii) Repairs and maintenance: N’000 Repairs of plantation equipment 1,200 Repairs to premises (non-industrial building) 900 Expansion to warehouse (industrial building) 3,700 5,800\n(iv) Rent paid: This is in respect of accommodation for the newly employed General Manager, whose basic salary is N4,800,000.\n(v) Legal cost: N’000 Cost of income tax appeal 850 Cost of debt collection 1,300 Cost of acquiring new lease 1,700 Renewal of old lease 1,150 5,000\n(vi) Allowance for doubtful debts: N’000 Specific provisions 5,230 General provisions 7,870 Bad debts recovered (2,600) 10,500\n(vii) Donations: N’000 Palm Oil Research Institute 1,400 National Library 600 Cocoa Research Institute of Nigeria 1,000 Women Society of the host community 1,000 4,000\n(viii) Interest and other finance costs paid In January 2022, the company obtained a loan facility of N100 million from the parent company for the purpose of expansion of the business at a competitive interest rate of 12% per annum. The duration of the facility is 10 years. The company is expected to pay interest due for the first 3 years, while from years 4 to 10, both principal and interest dues are to be paid at the end of each year. The balance as shown in the financial statements is attributed to other finance cost and bank charges paid to domestic deposit money banks on various accounts operated by the company.\n(ix) General expenses: N’000 Wedding gift to staff 350 Fine imposed on a company’s driver for traffic offense 150 Haulage expenses 3,200 Transport and travelling 2,200 5,900\n(x) Schedule of prior years’ turnover and assessable profits: Year ended December 31 Turnover Assessable profit N’000 N’000 2018 154,400 78,750 2019 198,600 95,120 2020 310,300 142,800 2021 314,900 166,900\n(xi) Schedule of qualifying capital expenditure incurred: Date of acquisition Asset type Amount N’000 August 31, 2017 Plantation equipment 4,600 August 31, 2017 Industrial building 12,000 August 31, 2017 Non-industrial building 9,000 January 1, 2018 Motor vehicles (3) 8,400 January 1, 2018 Furniture and fittings (10) 1,500 February 14, 2021 Motor vehicles (2) 5,600 June 12, 2022 Furniture and fittings (10) 2,000 July 8, 2022 Research and development 7,000" }

{ "title": "Additional Information", "content": "(i) Data on crude oil; condensate from associated gas sold; and natural gas liquid from associated gas sold; Category Quantity (million barrels) Actual price USD Fiscal price USD Crude oil 5.25 70 72 Condensate from associated gas 3.61 45 44 Natural gas liquid from associated gas 2.80 38 40\n(ii) Omitted from the records was a balancing charge of N1, 500,000 made from disposal of an old oil equipment platform;\n(iii) Allowance for doubtful debts: N’ million Specific provisions 900 General provisions 1,500 2,400\n(iv) Donations and subscription: N’ million Recognised orphanage homes 3.0 Host community’s cultural group 2.0 Subscription to oil and gas association 1.0 6.0\n(v) General expenses: N’ million Penalty for gas flare 250 Printing of stationery items 140 State government levy 110 500\n(vi) Agreed capital allowances: N’ million Brought forward 167 For the year 2,105 2,272\n(vii) Production allowance: N’ million Onshore operations 900 Shallow water operation 1,700 2,600\n(viii) The exchange rate averaged N520 to 1 USD during the year; and (ix) Assume the tax liabilities are to be paid in domestic (Naira) currency." }

{ "title": "Additional Information", "content": "(i) The Ottawa branch is a wholly owned Nigerian company.\n(ii) All the items classified in miscellaneous expenses are allowable for tax purposes.\n(iii) Capital allowances as agreed with the Nigerian tax authorities comprise: N’000 Lagos operations 6,800 Ottawa operations 9,900\n(iv) The exchange rate used in the conversion of the Canadian operation’s transactions to Nigerian currency (Naira) is fair and appropriate.\n(v) There is no double taxation agreement between Nigeria and Canada." }