QUESTION TWO
Chief Emeka 200L was employed by ABC Trading Company Limited as the Administrative Manager on January 2, 2018. The details of his salary per annum are as follows:
Basic salary
Housing allowance
Transport allowance
Utility allowance
Meal allowance
N
48,000,000
4,800,000
1,200,000
420,000
Clothing allowance
Leave allowance
Additional information:
(i) In 2016, he obtained a loan to build a property for commercial purposes on which he receives a rent
of N9,600,000 per annum.
(ii) Expenses on the property are as given below
General rate
Water rate
Insurance premium paid
Repairs
Agents Commission
2017
2018
N
N
67,500
70,000
96,000
97,000
189,000
197,500
480,000
480,000
(iii) Capital allowance on the building was agreed with the Federal Inland Revenue Services (FIRS) at
N840,000.
(iv) Based on the terms of the loan agreement, Chief Emeka 200L pays N600,000 monthly, out of which N500,000 is for repayment of principal and N100,000 as interest on loan.
(v) He received dividends (gross) as follows on:
1/6/2017
30/11/2017
30/5/2018
31/10/2018
N600,000
N650,000
N720,000
N780,000
(iii) Capital allowance on the building was agreed with the Federal Inland Revenue Services (FIRS) at N840,000.
(iv) Based on the terms of the loan agreement, Chief Emeka 200L pays N600,000 monthly, out of which N500,000 is for repayment of principal and N100,000 as interest on loan.
(v) He received dividends (gross) as follows on:
1/6/2017
30/11/2017
30/5/2018
(vi) He has a life assurance policy for N7,800,000, on which he pays N710,000 annually as premium.
31/10/2018
(vii) In 2018, his employer remitted on his behalf the following mandatory deductions:
Contribution to national housing fund
Contribution to national health insurance fund
Contribution to pension scheme
(viii) Chief Emeka 200L is happily married with six children, all of school age.
(ix) His widowed mother lives with him and he spends N1,200,000 per annum to maintain her.
Required: Compute the income tax payable by Chief Emeka 200L for the relevant assessment year. (15 Marks).
