This is quite insightful, how ever I still have little comprehension of the concept and terminologies... Can you pls create a simulated example of how this can be applied, it will help us have a real-time understanding of how it truly works. I duly appreciate your effort
Good job as usual sir. It's your second video I'm watching and I've found them quite enlightening. One other relief that helps to reduce taxes is mortgage interest. Employees with mortgages on their owner-occupied houses can claim relief on the interest paid on the mortgage.
You should have told us as well that under the FA 2020 any increment to Life premium, Pension, NHF etc will significantly reduce the CRA base hence the CRA becomes lower while the Taxable Income increases. The higher the taxable income the higher the PAYE. Also, no employer would want to arbitrarily increase its employee pension contribution because it will have to bear a proportionately higher employer contribution. The key relief item that could lead to a lower PAYE is the 20% of gross pay in the CRA. Anything you can do to keep CRA base higher enough so that the 20% of it is high is the best option to me.
@@segunakiode Ok. Thanks. In my place of work, the govt still still collect tax from people who earns 20k or less monthly as income. I objected to it but my boss said she is not aware of it. In a case like this, how do I go about it?
Thank you very much for your lecture. Is foreign income taxable in Nigeria? Ie. If I work remotely for a company outside Nigeria which I am paid in a foreign currency, do i get taxed?
The principle of Personal Income Tax is that such income is taxed at source. For PAYE in Nigeria, the employer deducts the tax at source. My experience with foreign income is that it will be taxed at source. For example TH-cam deducts tax from my AdSense revenue before the remaining is paid to me. Hence, I do not need to pay tax on it again in Nigeria to avoid Double taxation. I will expect a similar application to your remote work platform. Hope this helps?
@Abayomi Ayinde - Benefits in kind is usually borne by the employer and the employee enjoys it. So it is not a cash element or income to the employee. Hence, it is not subjected to PAYE Tax.
Please can you make me understand, how using the entire salary of an employee in calculating pension (as against using the sum of Basic, Housing and Transport) increases the Employer's contribution to pension?
@Ogunbiyi Oluwatosin - Let me answer with a simple example. 10% of BHT (100,000) is 10,000 while 10% of total gross salary (500,000) is 50,000. You will agree with this, that it will be more cost to the Employer contribution to pensions when the entire gross salary is used to compute pensions as against using only BHT components. Hope it is clearer now?
@Samuel Osho - a reduction in the Basic, House and Transport Allowance would reduce the tax relief as regards Pensions and NHF, which will lead to more Taxable Income and PAYE Tax. Hope that answers your question.
Great one Segun, I just subscribed to get more of insightful videos like this. Well done. I noticed, you did not mention in the Video that Employee take home will also reduce with increased pension percentage, while employer pay more employees take home also reduces because they have to pay more too. Also with voluntary contribution, just like NHF, take home drops. The good news (I guess that is why you did not mention these) is that all the drops in take home will eventually constitute long time savings for the employee. Once again, great job, I learnt from it as I always do from all your videos.
@Nasir Kolawole - thank you for subscribing. To your question, I did mention that there is need to do some pay simulations to get something workable. It is a twin-evil situation.
Thank you for this insightful video. I noticed the Life Insurance premium you mentioned was the individual premium paid. What if the Organization pays a Group Life Insurance premium and Health Insurance( HMO)? Can that be added to increase the total relief? Thank you.
@Anurika Ezennaya - glad you found the video insightful. To your question, ONLY the individual life insurance premium counts as a Tax relief for the purposes of PAYE Tax Computation.
📌Remember to drop your comment and to subscribe to my channel for more videos. 😀
Great Video Sir.
@Mayowa Awoyemi - Thanks!
This is quite insightful, how ever I still have little comprehension of the concept and terminologies...
Can you pls create a simulated example of how this can be applied, it will help us have a real-time understanding of how it truly works.
I duly appreciate your effort
Good job as usual sir. It's your second video I'm watching and I've found them quite enlightening. One other relief that helps to reduce taxes is mortgage interest. Employees with mortgages on their owner-occupied houses can claim relief on the interest paid on the mortgage.
@Tunde Wale-Temowo - thank you for your kind words! 🙏
Yes, "Mortgage Interest" is another overlooked tax relief. Thanks for adding that as well. 🙂
Thank you for the exposition @Segun Akiode. Interesting perspectives🙌🏾🙌🏾
@Oluwaseye Adewuyi - glad you found it valuable. 🙂
You should have told us as well that under the FA 2020 any increment to Life premium, Pension, NHF etc will significantly reduce the CRA base hence the CRA becomes lower while the Taxable Income increases. The higher the taxable income the higher the PAYE.
Also, no employer would want to arbitrarily increase its employee pension contribution because it will have to bear a proportionately higher employer contribution.
The key relief item that could lead to a lower PAYE is the 20% of gross pay in the CRA. Anything you can do to keep CRA base higher enough so that the 20% of it is high is the best option to me.
Thank you for your thoughts.
Good day Sir. Is legal for someone who earns less than the minimum wage to pay tax?
The Finance Act 2020 has exempted individuals earning less than the minimum wage from PAYE Tax.
@@segunakiode Ok. Thanks. In my place of work, the govt still still collect tax from people who earns 20k or less monthly as income. I objected to it but my boss said she is not aware of it. In a case like this, how do I go about it?
@@luckyosayande2157 they only collect because your organisation deduct it. Section 37 of the Finance Act 2020 is clear on this.
@@segunakiode Exactly my thought. Thanks for the prompt response. Keep up the good work. God bless you
Thank you very much for your lecture.
Is foreign income taxable in Nigeria?
Ie. If I work remotely for a company outside Nigeria which I am paid in a foreign currency, do i get taxed?
The principle of Personal Income Tax is that such income is taxed at source. For PAYE in Nigeria, the employer deducts the tax at source.
My experience with foreign income is that it will be taxed at source. For example TH-cam deducts tax from my AdSense revenue before the remaining is paid to me. Hence, I do not need to pay tax on it again in Nigeria to avoid Double taxation.
I will expect a similar application to your remote work platform. Hope this helps?
Is pension the only place you can increase voluntary contributions? I thought you could across pension and housing as tax deductible?
Yes, only Pensions has provision for "Voluntary Contributions".
Gud morning sir... Thanks for the insightful video, .my question is that hw do we treat benefit in kind as regards the redefined gross income!
@Abayomi Ayinde - Benefits in kind is usually borne by the employer and the employee enjoys it. So it is not a cash element or income to the employee. Hence, it is not subjected to PAYE Tax.
My organisation doesnt have nhf on the payroll, what should I do sir?
NHF is a statutory requirement. Advice your organisation as such.
Please can you make me understand, how using the entire salary of an employee in calculating pension (as against using the sum of Basic, Housing and Transport) increases the Employer's contribution to pension?
@Ogunbiyi Oluwatosin - Let me answer with a simple example.
10% of BHT (100,000) is 10,000 while 10% of total gross salary (500,000) is 50,000.
You will agree with this, that it will be more cost to the Employer contribution to pensions when the entire gross salary is used to compute pensions as against using only BHT components.
Hope it is clearer now?
Please, what is the implication of reducing the basic, housing and transport allowances on tax payable for the same gross salary?
@Samuel Osho - a reduction in the Basic, House and Transport Allowance would reduce the tax relief as regards Pensions and NHF, which will lead to more Taxable Income and PAYE Tax. Hope that answers your question.
Great one Segun, I just subscribed to get more of insightful videos like this. Well done. I noticed, you did not mention in the Video that Employee take home will also reduce with increased pension percentage, while employer pay more employees take home also reduces because they have to pay more too.
Also with voluntary contribution, just like NHF, take home drops.
The good news (I guess that is why you did not mention these) is that all the drops in take home will eventually constitute long time savings for the employee.
Once again, great job, I learnt from it as I always do from all your videos.
@Nasir Kolawole - thank you for subscribing.
To your question, I did mention that there is need to do some pay simulations to get something workable. It is a twin-evil situation.
Pls is there any law or regulation that guides the percentage of BHT components adopted by organizations..
@Olatomide Oladimeji Agboola - there is no such law or regulation. BHT components is left to the employer's discretion.
@@segunakiode thanks alot
Thank you sir. quite insightful.
Glad it was helpful!
Thank you for this insightful video. I noticed the Life Insurance premium you mentioned was the individual premium paid. What if the Organization pays a Group Life Insurance premium and Health Insurance( HMO)? Can that be added to increase the total relief? Thank you.
@Anurika Ezennaya - glad you found the video insightful.
To your question, ONLY the individual life insurance premium counts as a Tax relief for the purposes of PAYE Tax Computation.
@@segunakiode Ok, Thank you.
@@liz_anuri
I found your comment very useful.
How can I reach you?
Thanks for this clarification
@Victorial Olowonefa - Glad it was helpful!
Insightful as usual... 🙌🏽
@Olawunmi Oludimine - thanks for your kind words. 🙂
Hello Sir. Thanks for this video!
Are there any specific percentages for PAYE tax according to the Finance act of 2020 ?
@Alexander Nwamiro - I covered the Finance Act 2020 and PAYE Tax in another video. You can watch it here - th-cam.com/video/sxY5aeSDRG8/w-d-xo.html