Understanding Taxable Income in the Nigeria Tax Reform Act 2025 - TOSJOHN CONSULTING is live! скачать в хорошем качестве

Understanding Taxable Income in the Nigeria Tax Reform Act 2025 - TOSJOHN CONSULTING is live!

Here’s a clear list of the kinds of individual taxable income under the Nigeria Tax Act, 2025 and the specific sections that support each, based on the officially published Act and authoritative summaries: 📌 1. Definition of Taxable Income (Section 28) Law Reference: Nigeria Tax Act, 2025, Section 28 — “Total income of an individual” What it says: Taxable income for an individual is the aggregate of the following categories before deductions: Assessable profits from trade, business, profession, or vocation Employment income (salaries, wages, bonuses, allowances, benefits) Income from investing activities (dividends, interest, rent, royalties, etc.) Profits or income from any other source Chargeable gains from disposal of assets (capital gains) This section also defines total deductions that reduce taxable income (e.g., allowable losses, capital allowances, exempt income). 📌 2. Employment Income Supported by: Nigeria Tax Act, 2025, Section 4 / Section 28 Included items: Salaries & wages Allowances, fees, bonuses, pensions, perquisites Benefits-in-kind These fall under “employment income” as part of the individual’s taxable income. 📌 3. Business & Professional Income Supported by: Section 28 (aggregate of business profits) Income from: Trade, business operations Professional services Vocational earnings These are assessed under the assessable profits category. 📌 4. Investment Income Supported by: Section 28 This includes: Dividends Interest Rents from property Royalties and similar investment returns All fall under “income from investing activities.” 📌 5. Chargeable Gains (Capital Gains) Supported by: Section 28 Gains on disposal of assets (e.g., property, securities) are counted as taxable income under “chargeable gains.” Important: These gains are now taxed under the personal income tax structure, not a separate Capital Gains Tax rate as before. 📌 6. Other Sources of Income Supported by: Section 28 This catch-all includes items such as: Prizes and winnings Honoraria Grants Digital or virtual asset income Anything not expressly excluded but generating gains or economic benefit. Global Tax News 📌 7. Chargeable Income After Deductions (Section 30) Law Reference: Nigeria Tax Act, 2025, Section 30 After aggregating all income (Section 28), eligible deductions reduce taxable income to chargeable income. Examples of deductions include: Contributions to National Housing Fund National Health Insurance Scheme contributions Pension contributions Loan interest for owner-occupied home development Annuity or insurance premiums These deductions are allowed before applying tax rates. 📌 8. Personal Income Tax Rates (Section 58 & Fourth Schedule) Law Reference: Section 58 & Fourth Schedule of the Nigeria Tax Act, 2025 Once chargeable income is determined, it is taxed at progressive rates: Chargeable Income (₦) Tax Rate First ₦800,000 0% Next ₦2,200,000 15% Next ₦9,000,000 18% Next ₦13,000,000 21% Next ₦25,000,000 23% Above ₦50,000,000 25% These graduated tax bands replaced the older Personal Income Tax Act regime. 🧾 Summary of Taxable Income Categories with Supporting Sections Legal Basis in Nigerian Tax Act 2025 Taxable Income Category Assessable business profits Section 28 (aggregate definition) Employment income Section 28 (employment) Investment income Section 28 (investing activities) Capital gains (chargeable gains) Section 28 (chargeable gains) Income from any other source Section 28 (other income) Net (chargeable) income after reliefs Section 30 (deductions) Tax rates on chargeable income Section 58 & Fourth Schedule Contact us: TOSJOHN CONSULTING Chartered Accountants | Accounting | Audit | Tax | Advisory | CAC Compliance | Business development | Tech-Driven business solutions https://tosjohnconsulting.com Contact/WhatsApp: +234 7056898048, +234 8150775328