The Personal Income Tax (PIT) returns filing season is here again. We have set out in this short piece information which we hope will help you in staying PIT compliant in 2019
1. Every person who earned any income in 2018 (described as a Taxable Person) must, without waiting for any notice or demand from his or her relevant tax authority (RTA), file his or her PIT returns in the form prescribed by the RTA not later than March 31st, 2019 (the Period).
Your RTA, is the tax authority or agency of your State of residence.
2. Filing your PIT Returns is not same as paying your PIT, accordingly, you are not required to make any payment to your RTA within the Period save and unless you receive an assessment which you do not object to from the RTA. Typically, the RTAs only issue assessments after the Period, but they may in some exceptional circumstances issue assessments earlier. Please note that PIT payment is another subject that is not covered in this piece.
3. Filing your PIT Returns involves providing your RTA with all relevant information on your 2018 income, and more significantly for you, providing all information on the tax reliefs, deductions, exemptions and credits that you are entitled to, including PIT you might have paid.
4. Speaking of the PIT you might have paid, look to the PIT that might have been deducted at source by your employer under the pay as you earn (PAYE) scheme or deducted by others, under the withholding tax (WHT) system, from any other monies, such as rent, dividends, interests, professional fees, royalties et.al, that is due to you.
5. Tax reliefs, deductions, exemptions and credits (we call them Taxvantages) do not mean same thing. They give you great tax advantages and are as powerful in the ascending order in which they are listed. You may need your tax professional/manager to help you work them.
6. Personal income taxation is nothing more than Government taking its own share (as a stakeholder) from your Taxable Income. Government’s share is effectively between 1% (minimum) and approximately 19% (maximum) of your total income.
7. Note the change of expressions in paragraph 5. Always remember that your Taxable Income differs from your total income. The Taxvantages (see 4 above) are the differentiator; they help lower your Taxable Income and can help drag your tax bracket from the maximum 19% of your total income to as low as the minimum 1% of your total income.
8. As you will see from 3 above, filing your PIT Returns sets you up to enjoy the Taxvantages. A case in point is Lagos State, where its RTA, the LIRS, stated in public notices released in Q3 2018, that any person seeking to enjoy the deduction of his or her voluntary pension contribution, interest paid on owner-occupied residential mortgages, etc., must declare such information in the LIRS PIT Returns form (Form A).
9. Failure to file your PIT Returns is an offence punishable with a flat fine of N5,000 plus N100 for each day after March 31, 2019. Failure to pay the fines is punishable with 6 months imprisonment plus daily fines as the Court may order. The submission of incorrect or false returns (including, abetting or assisting in such act) is equally an offence punishable with either: (a) a flat fine of N50,000 for an individual, N500,000 for a corporate body (the Taxable Person may pay as much as 3 times the PIT due from him); or (b) a prison sentence of not more than 6months.
10. Be smart to ask for professional help if you require it. The Chartered Institute of Taxation of Nigeria (CITN) currently has over 800 licensed chartered tax practitioners in active practice in Nigeria.