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ICAN Taxation 2022 past questions and answers

This 2022 ICAN Taxation set has 20 practice questions. Try these 5 free sample questions, tap a question to reveal the answer and explanation. Then practise the whole 2022 set with instant marking.

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Sample ICAN Taxation 2022 questions

1. A state is introducing a new levy for small traders. Its notice identifies who must pay, the amount due, the payment date and the appeal route before the levy takes effect. Which principle of a sound tax system is most directly demonstrated?
  1. Economy
  2. Convenience
  3. Certainty
  4. Productivity

Answer: C. Certainty

Certainty means the taxpayer can know the amount, timing and manner of payment. Convenience concerns how payment is collected, while economy concerns the cost of collection.

2. For 2022 PAYE, assume cash salary and allowances are taxable employment income, while a properly documented reimbursement of an actual business expense is not remuneration. Tola receives annual salary of N2,400,000, a cash housing allowance of N480,000 and N90,000 reimbursement for documented work travel. What is her taxable employment income before personal reliefs?
  1. N2,880,000
  2. N2,970,000
  3. N2,490,000
  4. N2,400,000

Answer: A. N2,880,000

Salary plus cash housing allowance is N2,400,000 + N480,000 = N2,880,000. The N90,000 substantiated business-expense reimbursement is excluded under the rule stated; including it is the main error.

3. For 2022 under CITA, a small company with annual gross turnover of N25,000,000 or less is taxed at 0%; a medium company with turnover above N25,000,000 and not above N100,000,000 is taxed at 20%; a large company with turnover above N100,000,000 is taxed at 30%. A company has annual turnover of N22,000,000 and taxable profits of N3,000,000. What is its applicable company income tax rate?
  1. 20%
  2. 0%
  3. 30%
  4. 7.5%

Answer: B. 0%

Turnover of N22,000,000 is within the stated small-company threshold, so the applicable CIT rate is 0%. The 20% and 30% rates apply to medium and large companies, respectively.

4. A Nigerian company preparing its 2022 CITA computation has sales of N100,000,000, allowable operating expenses of N80,000,000 and capital allowances of N5,000,000. Assume there are no other adjustments, brought-forward losses or other deductions. What amount is its taxable total profit for CIT purposes?
  1. N20,000,000
  2. N100,000,000
  3. N5,000,000
  4. N15,000,000

Answer: D. N15,000,000

Taxable total profit under the assumptions is sales less allowable expenses and capital allowances: N100,000,000 - N80,000,000 - N5,000,000 = N15,000,000. Using sales alone or omitting capital allowances overstates the tax base.

5. In a 2022 monthly VAT return, a registered business makes N12,000,000 of standard-rated taxable sales exclusive of VAT and has N450,000 of eligible input VAT supported by valid invoices. Use the Nigerian VAT rate of 7.5% and assume no other adjustments. What net VAT is payable for the month?
  1. N900,000
  2. N1,350,000
  3. N450,000
  4. N350,000

Answer: C. N450,000

Output VAT is 7.5% x N12,000,000 = N900,000. Deduct eligible input VAT of N450,000 to obtain net VAT payable of N450,000; N900,000 ignores the credit.

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