Good Day Vone

Any value captured on the Perks Tax screen, can be flagged for Gross Income. Type PD ( Perks Definition) to activate the flag. Double click on the N under the Gross Inc column to change this to a Y.

With specific regards to the Life Assurance, this value may be captured as a negative amount on the Perks tax screen. Negative amounts does not show on the lookup screens on the TAX screen, although the relevant total on the TAX screen is correct. This will be fixed in a future release. 

Kind Regards

Kavitha

Dear Kavitha

I am aware they can all be marked as gross income. My question relates to marking it as a deduction for gross income to determine the correct CRA as per the recent changes in legislation.  Furthermore, the suggestion of adding it as a negative doesn't solve the issue of having the correct calculation of the CRA. The premium should lessen the gross income deduction prior to the calculation of CRA.

Good Day Vone

Hope that you are well.

Upon further investigate, I agree that the above will not work. Apologies for this.

I have created an alternative, should you prefer to use this method. Please refer to the Knowledgebase article below:

How can I add a private Life Assurance correctly on my Nigeria payroll, such that it appears as a Tax deductible as well as reduces the Gross Income?

Please let me know if this works.

Kind Regards 

Kavitha

Dear Kavitha, I will have a look at the solution presented. Thank you.

On another note not sure if you would be able to assist,  the excel Nigeria PAYE 2021 calculator issued by SAGE has a formula issue, upon investigation I found that line 17 which references relief for life insurance premiums isn't taken into account when calculating the gross income. If you add it into Line 15 deductions the gross income calculates correctly.

Good Day Vone

May I please ask that you send us the exact calculator you are using with the calculation, as well as the Tax screen for an employee, as an example. Our support team will check and take this further. 

Kindly email the query through to [email protected]

Kind Regards

Kavitha

Good Day Vone

May I please ask that you send us the exact calculator you are using with the calculation, as well as the Tax screen for an employee, as an example. Our support team will check and take this further. 

Kindly email the query through to [email protected]

Kind Regards

Kavitha

Hi Kavitha, this is the PAYE calculator I am referring to.  I highlighted where the issue is, irrespective of if an amount is added under the Relief for life insurance premium, the gross income (GI) remains the same, which is incorrect. It should lessen the GI. Adding it in the above line "Deductions" accounts for it correctly.

Nigeria PAYE Calculator 2021.xlsx

Good Day Vone

Please rather use the attached calculator which was changed to accommodate the new definition for Gross income. 

1. Definition of Gross Income

Section 33(2) of PITA

“ “gross income” means income from all sources less all non-taxable income, income on which no further tax is payable, tax-exempt items listed in paragraph (2) of the sixth schedule and all allowable business expenses and capital allowances.”

 Sixth Schedule (2)

(2)  Tax Exempt: The following deductions are tax exempt—

(a) National Housing Fund Contribution, (b) National Health Insurance Scheme (c) Life Assurance Premium (d) National Pension Scheme (e) Gratuities

On the payroll, gross income is the basis for calculating the Consolidated Relief Allowance (CRA) and the 1% minimum tax. The new definition means that the gross income = taxable income less deductions specifically mentioned in paragraph 2 of the Sixth Schedule.

8880.Nigeria PAYE Calculator 2021.xlsx

Please let me know if this helps.

Kind Regards

Kavitha