Andy-Tech Business Consulting

Either starting fresh, new or taking a continuation from where you stopped, a new week is an opportunity to review your business standing position...

And when you think of structure and regulatory compliance, that's where Andy-Tech comes in.

Send a dm to us today at Andy-Tech for your business regulatory compliance like registration, TIN and Tax related activities to Trademark ™️, Copyright and the likes.

Have a blessed week.

No better time to start your compliance journey as a business owner than now.

Send us a dm to begin your registration and other compliance journey.

Some of the facts and the false of tax under the Personal Income Tax for businesses either registered as enterprises or unincorporated...

First, before we dive in, know that under the personal income tax, we have two forms of assessments which are P.A.Y.E and Direct Assessment.

PAYE which means Pay As You Earn is for people in formal setting/employed labour market while the direct assessment is for those in trades but are either registered as enterprises or unregistered, or self employed/petty traders.

Also, under the personal income tax, taxable income is derived from gross income and not just on your earnings in formal setting or on your one trade and that's why we have self assessment which covers your whole income source either from active or passive income and not just one source of income.

Now, let us get started:

1. Is capital allowance claimable under the personal income tax?

Yes, it's claimable with the following conditions: first, that they fall under QCE(Qualifying Capital Expenditures). Second, the assets must be purchased in the proprietor(s) name and not in the business name since under the law, sole proprietorship has no what we call legal/corporate personality so it cannot stand on its own. Third, for assets that are up to and above 5 million, they need the Certificate of Acceptance from the Ministry of Interior which is issued by the Inspectorate Division of the ministry to claim the allowance.

2. Does the tax law allow me to pay myself a salary and base my taxable income on the salary I pay myself?

No! The law doesn't see your business as a separate entity from you under the direct assessment of the personal income tax. You are taxed at the profit of the business and not the salary you pay yourself. So, you are not expected to pay yourself a salary since you are the business and the business is you. In fact, you are charged at the graduate rate also known as progressive order; the higher you earn, the higher you pay (the higher the profit, the higher the tax)

3. Does the tax law allow me to claim expenses under the personal income tax?

Yes, the tax law allows you to claim expenses as a business owner that either registered as a business name or unregistered. Although, this is tricky and still remains an argument among the Tax scholars as it seems the tax agency has the power to decide on what is qualified... and not. However, Section 20(1) (formerly Section 24 in older versions) of the personal income tax sets the general rule that any expense "wholly and exclusively incurred in the production of income" is deductible when computing the income or loss of an individual or unincorporated business.

Section 20(1)(a) & (b) permits the deduction of interest paid on loans borrowed and used as capital for generating business income.

Section 20(1)(c) & (d) allows for the deduction of rent for business premises and expenses incurred for the repair of business premises and equipment.

Section 20(1)(e) provides for the deduction of bad debts that are proven to have become irrecoverable during the relevant assessment period.

PS: It's painful the initial and original writing of this got deleted while I was writing it on Facebook and I didn't have the back up for it since it was being written off head hence, this released version is not as full as the original.

Anyways, the purpose of the sections of tax law quoted are for research purposes and to also have a strong evidence to support your claim wherever it's needed maybe defending yourself before the tax authority.

Please, don't forget to reference me when this is copied.

Also, for your tax consultation, don't forget to send a dm to us at Andy-Tech Business Consulting and we also run the best business regulatory compliance firm in Nigeria.

~ Daniel

Don't be like Sandra, Sandra has lost many contracts, grants, business facilities, partnerships and many more opportunities.

Sandra thought she was under a spell; unknown to Sandra, all the rejections she got was as a result of not registering her business.

Imagine missing out on life changing opportunities simply because of not registering your business.

Send us a dm today at Andy-Tech to get started with your own business registration and other business compliance.

Running a business at the risk of going to jail is risking...

Stop letting customers pay into your personal account... This can send you to jail when they send illicit money to your account to buy goods and services from you.

Register your business, use the documents to open a business account in the business name and have peace of mind.

Send us a dm today at Andy-Tech to begin your business registration...

Have a restful weekend!