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ICAN Advanced Taxation 2025 past questions and answers

This 2025 ICAN Advanced Taxation set has 19 practice questions. Try these 5 free sample questions, tap a question to reveal the answer and explanation. Then practise the whole 2025 set with instant marking.

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Sample ICAN Advanced Taxation 2025 questions

1. A Nigerian company has annual turnover of ₦80,000,000. Its company income tax (CIT) taxable profit after capital allowances is ₦10,000,000, and its tertiary education tax (TET) assessable profit is also ₦10,000,000. For this question, CIT rates are 0% for turnover not exceeding ₦25,000,000, 20% for turnover above ₦25,000,000 and not above ₦100,000,000, and 30% above ₦100,000,000; TET is 3% of assessable profit. Ignoring all other taxes, what is the combined CIT and TET liability?
  1. ₦2,000,000
  2. ₦2,300,000
  3. ₦3,000,000
  4. ₦2,600,000

Answer: B. ₦2,300,000

The company falls in the 20% CIT band, giving ₦2,000,000, and TET is 3% × ₦10,000,000 = ₦300,000. Total liability is ₦2,300,000; option A omits TET.

2. A Nigerian parent company makes a taxable profit while its wholly owned Nigerian subsidiary incurs a trading loss in the same accounting year. Under the CITA framework applicable to the October/November 2025 diets, which treatment is correct for ordinary company income tax?
  1. The parent may deduct the subsidiary's loss because it owns all the shares.
  2. The group files one consolidated return and pays tax only on the net group result.
  3. The subsidiary's loss is automatically surrendered to the parent, but only if both companies use the same auditor.
  4. Each company computes and files its own tax position; the subsidiary's loss is not automatically offset against the parent's profit.

Answer: D. Each company computes and files its own tax position; the subsidiary's loss is not automatically offset against the parent's profit.

Nigeria's ordinary CITA system assesses companies separately and does not provide general group loss consolidation. Wholly owning a subsidiary does not make its loss deductible by the parent, so A and B incorrectly assume group relief.

3. A Nigerian company declares a gross dividend of ₦8,000,000 to a non-resident shareholder. Assume the domestic withholding tax rate on dividends is 10% and no tax treaty reduces that rate. How much withholding tax should the payer deduct?
  1. ₦800,000
  2. ₦400,000
  3. ₦1,600,000
  4. ₦8,000,000

Answer: A. ₦800,000

Withholding tax is ₦8,000,000 × 10% = ₦800,000. The gross dividend is the withholding base; option B applies half the stated rate.

4. A Nigerian company and its associated foreign company are subject to the Nigerian transfer-pricing arm's-length rule. The Nigerian company incurs ₦4,000,000 of service costs and charges its affiliate ₦6,000,000. Reliable comparable data support a cost-plus markup of 15% for this service. What is the best arm's-length adjustment to the Nigerian company's service expense deduction?
  1. Increase the deduction by ₦1,400,000, to ₦7,400,000.
  2. Make no adjustment because the parties signed a contract.
  3. Reduce the deduction by ₦1,400,000, to the arm's-length fee of ₦4,600,000.
  4. Disallow the full ₦6,000,000 without considering comparable pricing.

Answer: C. Reduce the deduction by ₦1,400,000, to the arm's-length fee of ₦4,600,000.

A cost-plus fee at the stated comparable markup is ₦4,000,000 × 1.15 = ₦4,600,000. The ₦6,000,000 charge exceeds that benchmark by ₦1,400,000, so the expense deduction is reduced by that amount; a contract alone does not displace the arm's-length test.

5. An employee asks whether placing investments in a family trust automatically removes all Nigerian personal income tax. For this question, assume the PITA treatment depends on the trust instrument, control, income entitlement and applicable rules for trustees and beneficiaries. Which advice is the most defensible?
  1. A trust is always tax-exempt once a deed is signed.
  2. The trust should be treated as exempt if it has more than one beneficiary.
  3. The employee should transfer assets without recording income because the trustee becomes the beneficial owner in every case.
  4. A trust does not automatically eliminate tax; establish who is chargeable under the facts and maintain records of income, distributions and withholding tax.

Answer: D. A trust does not automatically eliminate tax; establish who is chargeable under the facts and maintain records of income, distributions and withholding tax.

Tax consequences depend on the trust's actual terms and the applicable rules, so a deed alone does not create a blanket exemption. Proper attribution and records are essential; options A and B assert unsupported automatic exemptions.

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