123 TUTORIAL QUESTIONS on
acc 214-TaXATION1
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123 TUTORIAL QUESTIONS ON ACC 214-TAXATION 1
TOPIC 1: THE GENERAL PRINCIPLES OF TAXATION.
1. An individual earns N600,000 annually and pays tax at a flat rate of 10%. Calculate Tax Payable.
2. A worker earns N1,200,000 per annum.
First N500,000 at 5%
Next N500,000 at 10%
Balance at 15%
Required: calculate Total Tax Payable
3. A trader sells goods worth N250,000. VAT rate is 7.5%. Calculate VAT
4. Out of 1,000 taxpayers, 120 evade tax. Calculate Evasion Rate
5. Government collected N900 million as tax revenue at a collection cost of N90 million. Calculate Efficiency Ratio.
6. Define taxation and state five objectives of taxation.
7. Mention two types of equity in taxation.
8. What is VAT? State five advantages and disadvantages of taxation.
9. Explain the four canons (principles) of taxation.
10. Discuss the importance of taxation to economic development
11. Explain the canons (principles) of taxation in Nigeria.
12. Differentiate between direct and indirect taxes in tabular form.
13. An individual earns N800,000 per annum and is taxed at a flat rate of 12%. Calculate the tax payable.
14. A worker earns N1,500,000 annually. The tax rates are:
First N600,000 at 5%
Next N600,000 at 10%
Balance at 15%
Calculate the total tax payable.
15. A trader sold goods worth N400,000. VAT rate is 7.5%. Calculate the VAT payable.
16. Out of 1,200 registered taxpayers, 180 failed to pay tax. Calculate the tax evasion rate.
17. The government collected N1.2 billion as tax revenue at a collection cost of N120 million. Calculate the tax collection efficiency ratio.
18. A government introduces a progressive tax system.
(a)
Identify the principle of taxation applied.
(b) State one advantage of this system.
19. A government introduces PAYE to deduct tax directly from workers’ salaries.
(a)
Identify the canon of taxation applied.
(b) State one advantage of this system.
20. An individual earns N900,000 per annum and pays tax at a flat rate of 10%.Calculate the tax payable.
21. A worker earns N1,800,000 annually. The tax rates are:
First N600,000 at 5%
Next N600,000 at 10%
Balance at 15%
Calculate the total tax payable.
22. Goods valued at N500,000 are sold at a VAT rate of 7.5%. Calculate the VAT payable.
23. Out of 2,000 registered taxpayers, 300 failed to pay tax. Calculate the tax evasion rate.
24. Government collected N2 billion as tax revenue at a collection cost of N200 million. Calculate the tax collection efficiency ratio.
TOPIC 2: THE ADMINISTRATIVE MACHINERY AND INCOME TAX
REGULATIONS IN NIGERIA.
25.
Monthly
salary = N120,000
Tax rate = 10%
Required: Calculate:
(a) monthly tax payable.
(b) Net salary
26. Company
profit = N2,000,000
CIT rate = 30%
Required: Calculate Companies Income Tax payable.
27. Tax
payable = N200,000
Penalty rate = 5%
Required: Calculate:
(a) Penalty
(b) Total Amount Payable
28. Define the following terms:
(i) Administrative machinery of taxation
(ii) Income tax
29. State five tax authorities involved in income tax administration in Nigeria.
30. Explain five functions of the Federal Inland Revenue Service (FIRS).
31. An employee earns N150,000 per month.
Tax rate is 10%.
Required: Calculate:
(a) Monthly tax payable
(b) Net monthly income
32. Explain five functions of the State
Internal Revenue Service (SIRS).
33. A self-employed trader earns N900,000 per annum.
Tax rate is 10%.
Required: Calculate the annual income tax payable.
34. Distinguish between Personal Income Tax and Companies Income Tax in tabular form.
35. A company made a taxable profit of N3,000,000.
Companies Income Tax rate is 30%.
Required: Calculate the Companies Income Tax payable.
36. Explain five income tax regulations
applicable in Nigeria.
37. A taxpayer failed to pay tax of N120,000 on time.
Penalty is charged at 5%.
Required:
Calculate:
(a) Penalty
(b) Total amount payable
38. State and explain five offences
under income tax regulations in Nigeria
39. Monthly salary of a worker is N200,000.
PAYE rate is 12%.
Required: Calculate:
(a) Monthly tax payable
(b) Annual tax payable
40. Monthly salary of a worker is N550,000.
PAYE rate is 12%.
Required: Calculate:
(a) Monthly tax payable
(b) Annual tax payable
(c) Net Salary monthly
(d) Net Salary annually
41. Ten distinctions between Personal Income Tax and Companies Income Tax.
TOPIC 3: THE DETERMINATION OF RESIDENCE.
42. Define the following terms:
(i) Residence
(ii) Tax authority
43. State five reasons why
determination of residence is important in taxation.
44. Explain five rules for determining the residence of individuals in Nigeria
45. Mr. Musa works in Lagos State but lives permanently in Ogun State.
His annual income is N1,000,000.
Tax rate is 10%.
Required:
(i) Determine his state of
residence
(ii) Calculate his annual tax
payable
46. Explain five rules for determining
the residence of companies in Nigeria.
47. A company made a taxable profit of N4,000,000.
Companies Income Tax rate is 30%.
Required: Calculate
the Companies Income Tax payable.
48. Distinguish between residence and nationality.
49. An itinerant trader stayed in Osun State for 21 days each month for 5 months in a year.
Required:
(i) Determine whether the trader is
resident in Osun State
(ii) Calculate annual tax payable
if income is N600,000 and tax
rate is 10%
50. Explain five problems associated with determining residence in Nigeria.
51. A self-employed person earns N900,000 per annum.
Tax rate is 12%.
Required: Calculate annual tax payable.
52. State and explain five importance of proper determination of residence.
53. Mr. Okeke earns N80,000 monthly.
Tax rate is 10%.
Required:
(i) Monthly tax payable
(ii) Annual tax payable
TOPIC 4: THE PERSONAL RELIEFS AND ALLOWANCES.
54. Write
short notes on the following:
(a) Pension contribution
(b) Gratuity
(c) National Housing Fund
(d) Life Assurance
55. Define personal reliefs and allowances.
56. State five objectives of personal reliefs and allowances.
57. Explain the Consolidated Relief Allowance (CRA).
58. Mr.
Musa earns a gross annual income of N3,000,000.
You are required to calculate his Consolidated Relief Allowance (CRA).
59. List five personal reliefs and allowances available to individual taxpayers in Nigeria.
60. Given the following information for Mrs. Ayo:
Gross Income: N2,500,000
Pension Contribution: N200,000
Life Assurance Premium: N100,000
Calculate her Taxable Income.
61. Using the taxable income from Question 60, compute the Tax Payable at a flat rate of 10%.
62. Given the following information for Mr. Famous:
Gross Income: N8,750,000
Pension Contribution: N700,000
Life Assurance Premium: N350,000
Calculate:
(a) Taxable Income.
(b) The Tax Payable at a flat rate of 10%.
(c) Total Allowable Deductions
(d) Consolidated Relief Allowance (CRA).
63. Given the following information for Mr. Famous:
Gross Income: N9,850,000
Pension Contribution: N650,000
Life Assurance Premium: N450,000
Calculate:
(a) Total Allowable Deductions
(b) Consolidated Relief Allowance (CRA).
(c) Taxable Income.
(d) The Tax Payable at a flat rate of 10%.
TOPIC 5; THE SOURCES OF INCOME AND THOSE EXEMPTED FROM TAX.
64. Define the term income as used in Nigerian tax law.
65. List five sources of taxable income in Nigeria.
66. State five categories of income exempted from tax under Nigerian tax law.
67. Explain the difference between taxable income and exempt income.
68. Explain compensation for loss of office.
69. Calculate the taxable income of an employee given relevant figures.
70. Mr. Tunde earned the following in 2025:
|
Description |
Amount (N) |
|
Basic Salary |
1,500,000 |
|
Housing Allowance |
500,000 |
|
Transport Allowance |
200,000 |
|
Gratuity |
250,000 |
|
Pension Contribution |
180,000 |
Required: Compute Mr. Tunde’s taxable income.
71. Mrs.
Adesua received ₦15,000,000 as compensation
for loss of office in 2025. Determine:
(a) The exempt portion
(b) The taxable portion of the
compensation.
72. Mr. Ade received the following income in 2025:
Salary N1,200,000
Rent from property N300,000
Interest on bank deposit N100,000
Gratuity N150,000
Pension contribution N120,000
Required: Compute Mr. Ade’s total taxable income
73. Mrs. Bello received N12,000,000 as compensation for loss of office.
Required: Determine the taxable portion.
74. Mr. Ade earned the following in 2025:
Basic Salary N1,200,000
Housing Allowance N400,000
Transport Allowance N200,000
Gratuity N300,000
Pension Contribution N180,000
Required: Calculate Mr. Ade’s taxable income.
TOPIC6: ALLOWABLE AND DISALLOWABLE DEDUCTIONS AND HOW TO COMPUTE ADJUST INCOME.
75. Mr. Olalere earned in 2025:
|
Description |
Amount (N) |
|
Basic Salary |
1,500,000 |
|
Housing Allowance |
500,000 |
|
Transport Allowance |
200,000 |
|
Pension Contribution |
150,000 |
|
NHF Contribution |
50,000 |
|
Life Assurance Premium |
40,000 |
|
Personal Entertainment |
30,000 |
Required: Compute Mr. Olalere’s adjusted income.
76. Mrs. Adebayo earned:
|
Description |
Amount (N) |
|
Gross Business Profit |
3,000,000 |
|
Rent on Business Premises |
400,000 |
|
Salaries to Staff |
500,000 |
|
Electricity (Business) |
100,000 |
|
Capital Expenditure on Equipment |
250,000 |
|
Personal Drawings |
200,000 |
Required: Compute Adjusted Income for tax purposes
77. Define allowable deductions and give five examples.
78. Define disallowable deductions and give five examples.
79. Explain the meaning of adjusted income in taxation.
80. State ten common allowable deductions for an employee in Nigeria under the Personal Income Tax Act (PITA).
81. Compute the adjusted income of an employee with the following:
Basic Salary N1,000,000
Housing Allowance N300,000
Transport Allowance N100,000
Pension N120,000
NHF N50,000
Personal expenses N20,000
82. Mr. Femi received the following income:
Salary N1,200,000
Rent from property N300,000
Interest from bank N100,000
Pension Contribution N120,000
Life Assurance Premium N40,000
Personal Travel N50,000
Required: Compute Adjusted Income.
TOPIC 7: BASIS OF ASSESSMENT.
83. Define basis of assessment in taxation.
84. State three types of assessment bases used for companies.
85. Explain the difference between PAYE basis and accounting period basis.
86. Compute annual assessable income for an employee earning N180,000 monthly with pension deduction of N12,000 monthly.
87. ABC Ltd made a profit of N4,500,000. Allowed deductions totaled N1,200,000. Compute adjusted profit and tax at 30%.
88. Mr. John earns the following monthly income in 2025:
|
Description |
Amount (N) |
|
Basic Salary |
200,000 |
|
Housing Allowance |
50,000 |
|
Transport Allowance |
20,000 |
|
Pension Contribution |
10,000 |
Required: Compute Mr. John’s annual assessable income for tax purposes.
89. Mrs. Ade earns the following income in 2025:
Salary N1,800,000
Rent from property N400,000
Interest on bank deposit N100,000
Pension contribution N120,000
Life Assurance Premium N30,000
Required: Compute Mrs. Ade’s adjusted income.
90. ABC Ltd has the following for the year ended 31st December 2025:
|
Description |
Amount (N) |
|
Gross Profit |
6,000,000 |
|
Salaries to Staff |
900,000 |
|
Rent |
500,000 |
|
Electricity |
120,000 |
|
Depreciation (Non-deductible) |
300,000 |
Required: Compute:
(a) Adjusted profit for assessment
(b) Tax payable at 30%
91. List ten types of taxpayers and state the basis of assessment applicable to each.
TOPIC 8; COMMENCEMENT AND CESSATION PROVISIONS.
92. Define the terms commencement and cessation provisions in taxation.
93. State five (5) circumstances
under which taxation commences
for:
(a) Individuals
(b) Companies
94. Explain the importance of commencement and cessation provisions in taxation
95. Mr. Ade started a business on 1st March 2025. His projected annual profit is N1,800,000. Compute his taxable income for the year ended 31st December 2025
96. Mrs. Bola ceased her business on 30th September 2025. Her annual income for 2025 was N2,400,000. Compute her taxable income for the year ended 31st December 2025
97. A company was incorporated on 1st July 2025 and started business immediately. The company’s estimated annual profit is N6,000,000. Determine the taxable income for the first year (ending 31st December 2025).
98. Explain the procedure for computing taxable income for part-year operation and calculate the taxable income for Mr. Tunde who started a business on 1st May 2025 with an expected annual profit of N1,440,000.
TOPIC 9: THE EFFECTS OF CHANGE IN ACCOUNTING DATES.
99. Define change in accounting date and explain why a business may implement it.
100. Explain the effects of changing accounting dates on financial statements.
101. A business changes its year-end from 31st December to 30th June. Rent paid for the year ended 31st December was ₦180,000. Compute the rent expense for the 6-month short period.
102. How should accrued expenses and prepaid income be adjusted after changing the accounting date?103. Define the term change in accounting date and explain five reasons why a business may change its accounting date.
104. List five effects of changing accounting dates on financial statements.
105. Explain the accounting treatment of prepaid expenses and accrued income when the accounting date is changed.
106. State five advantages of changing the accounting date.
107. A company changed its accounting year-end from 31st December 2024 to 31st March 2025. The following information is available:
Annual rent for 2024 = N120,000
Salaries per month = N40,000
Required: Compute:
(a) Rent expense for the 3-month short
period (Jan–Mar 2025)
(b) Total salaries expense for the 15-month
extended period (Jan 2024 – Mar 2025)
108. A business received annual insurance premium of N180,000 on 1st January 2024 for the
year ending 31st December 2024. The company changes its year-end to 31st March
2025. Compute the insurance expense
for:
(a) Year ending 31st December 2024
(b) Short period ending 31st March 2025
109. A
company earned annual rent of N360,000
for the year ended 31st December 2024. The accounting date was changed to 31st
March 2025. Determine:
a) Rent income for 12 months ending 31st December 2024
b) Rent income for 3-month short period ending 31st March 2025
TOPIC 10: RELIEF FOR LOSSES.
110. Define relief for losses and explain its importance.
111. Distinguish between trading loss and capital loss.
112. Explain terminal loss relief.
113. A business made a loss of N350,000 in 2024 and a profit of N500,000 in 2025. Compute the taxable profit for 2025.
114. A business recorded the following results:
|
Year |
Profit / (Loss) N |
|
2023 |
(200,000) |
|
2024 |
300,000 |
|
2025 |
250,000 |
Required: Compute the taxable profit for 2024 and 2025.
115. A trader incurred a loss of N500,000 in 2024 and made a profit of N300,000 in 2025.
116. A business ceased operations in 2025. It incurred the following losses:
|
Year |
Profit / (Loss) N |
||
|
2022 |
400,000 |
|
|
|
2023 |
300,000 |
|
|
|
2024 |
(250,000) |
|
|
|
2025 |
(150,000) |
|
|
Required: Compute the terminal loss relief.
117. Define relief for losses and explain its relevance to taxation.
118. A trader recorded the following results:
|
Year |
Profit / (Loss) N |
|
2023 |
(300,000) |
|
2024 |
450,000 |
|
2025 |
350,000 |
Required:
Compute the taxable profit for 2024 and
2025 after applying loss relief.
119. State and explain five conditions under which loss relief may be granted.
120. Write ten distinctions between trading loss and capital loss.
121. Explain terminal loss relief.
122. A business incurred a loss of ₦600,000 in 2024. In 2025, it made a profit of N400,000.
Required:
a) Amount of loss relieved in 2024
b) Loss carried forward to 2025
123. A business ceased operations in 2025. The following results were obtained:
|
Year |
Profit / (Loss) N |
|
2021 |
500,000 |
|
2022 |
400,000 |
|
2023 |
(300,000) |
|
2024 |
(200,000) |
Required:
Compute the terminal loss relief.
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