Ican 2025 Taxation Question 4

Segun, Alao and Kishi have been in partnership for a long time before incorporating a limited liability company, Success Nigeria Limited, to take over the business of the partnership. The limited liability company has been carrying on the same business of the partnership which is manufacturing of tyres. The Directors of the company met and observed that the tax compliance requirements about limited liability companies are more intricate and very different from those of partnerships. In order not to run foul of the relevant laws, it was decided that a Tax Consultant should be appointed to handle its tax matters. You have been appointed as the Tax Consultant and you were provided with an extract of the financial statements of the company for the year ended June 30, 2024, as follows: N N Gross profit 87,500,000 Less Building fund 1,600,000 Senior staff club house 3,200,000 Depreciation 7,200,000 Salaries and wages 12,200,000 Directors’ remuneration (Non-Executive) 2,200,000 Directors’ remuneration (Executive) 5,300,000 Donation to Red Cross Society 360,000 32,060,000 Net profit 55,440,000. Other information includes: (i) Commission received of ₦2,400,000 has not been taken into account (ii) Capital allowance agreed with the Revenue was ₦2,750,000 (iii) Bad debt of ₦3,200,000 was recovered.