How Important Is Filing Of My Personal Income Tax (PIT)?

Hi there

It’s another week to experience a smooth and enlightening ride on your favourite Tax Thursday bulletin. Grab your chair, sit back and relax as I share with you a few benefits you can enjoy from filing your Personal Income tax (PIT).

 It doesn’t matter how good the structure of the PIT system is; low compliance will result in regressive outcomes. However, these outcomes can be avoided if everyone fulfil one of their obligations as an income earner, which is to file for their PIT.

The importance of filing for the personal income tax cannot be overemphasised. However, some of the benefits includes:

• It Enables You Claim Your Tax Refund

When you pay excess tax on some of your income, your filed PIT allows you seek a refund for the extra tax paid, only if you file your income tax returns in a timely manner.

• Helps In Moving Forward Capital Losses

When certain losses are incurred in a financial year, it doesn’t mean that you have to skip filing of your returns since it has brought down your taxable income. You can carry forward your losses set them off against future incomes, but you can only do this if your PIT is filed before the deadline date.

• It Makes Loan Easily Accessible

The PIT serves as proof of income as it indicates all your earnings in a year. Because of this reason, financial institutions usually request for the PIT tax clearance details and having it can be a catalyst in speeding up the acceptance of your loan request.

The deadline for the PIT is around the corner and every filing is expected to be done on or before 30^th March, 2021. However, I will reference one of Taxaide newsletter recent publications that can enlighten you on how you should go about your PIT. See below;

1. What is to be filed? The PIT Returns is a self-report on all income (employment and other incomes) you earned from all sources in the 2020 calendar year.
   
   
2. Who is required to file? While the law requires everyone to file their PIT Returns (regardless of whether their employers volunteered their information in the PAYE Returns filing process), some IRS, for example, Lagos State, for administrative reasons, only currently require the following categories of persons to file PIT Returns:
   
   a. Persons that the IRS considers to be high net-worth individuals (HNIs). Typically, the IRS may write to these persons and require them to file their PIT Returns. It is no defence to claim that since one’s details were part of the PAYE Returns process, there is no need to file the PIT Returns. The obligation to file is statutory and more so required if a letter to file is received from the IRS.
   
   b. Persons who earn other incomes outside of their employment income; which employment income, you would recall, was captured in their employers’ PAYE Returns. Such other incomes include: directors fees, rental income, dividends, interests et.al. Anyone in this category is required to separately file his or her PIT Returns declaring such income.
   
   c. Self-employed persons.
   Please see this link to access a Public Notice issued by the Lagos State IRS on this issue.
   
   
3. How is the filing to be done? While the IRS of most States require you to fill and submit your PIT Returns Form with them, some have proceeded to automate the process. You can please visit https://taxaide.com.ng/pit-return-form/pit for the PIT Returns Form of most States in Nigeria. In Lagos State, PIT Returns Forms are to be filled and filed electronically at: www.etax.lirs.net. Please note that you require a Taxpayer Identification Number (Payer ID) to assess this service from the Lagos State IRS. Please reach out to Taxaide if you or anyone in your organization is without a Payer ID. We are happy to assist with the process of obtaining one.
   
   
4. What can Taxaide do for you? At Taxaide, we manage the tax affairs of persons who require us to privately manage their PIT accounts and compliances with their relevant IRS. This category includes HNIs, entrepreneurs, C-suite executives, expatriates, et.al.  We are accordingly able to, on a confidential basis, advice and assist you with your tax compliances and tax authority engagements. Our seamless, efficient, and effective PIT Management service entails doing the following and more:
   a. providing  tax advice to ensure your compliance and tax efficiency;
   b. utilizing our strong relationships with the IRS to resolve any issues on your compliance or tax pay-out; and
   c. ultimately ensuring you timely obtain your clearance certificates and record updates.
   
   
5. As at today, our operations extend to all States in Nigeria, including the FCT. We also assist Clients with dual or multiple tax residencies (that is, persons, who in addition to Nigeria, maintain tax residence in other jurisdictions) to manage their Nigerian tax obligations, taking full benefit of the tax rebate options afforded them by law. At the heart of all our tax services, is to ensure that our Clients sustainably minimize their tax payouts while ensuring optimal compliance.

Please reach out to us for your PIT Management needs. For more information on Personal Income Tax Returns Filing and all tax-related issues, please do not hesitate to contact us at:

Tel: +234 700 TAXAIDE (0700 829 2433), +234 1 631 0971

WhatsApp: +234 810 701 7274

Email: pitdesk@localhost, business@localhost