Musa earned a gross income of ₦4,000,000 in the year. What is his consolidated relief allowance?
A₦800,000
B₦1,000,000CORRECT
C₦840,000
D₦1,200,000
ICANTaxationPersonal Income Tax: Reliefs and Computation2022
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Why the answer is B, and why the others tempt you.
The consolidated relief allowance is the higher of ₦200,000 or 1% of gross income, plus 20% of gross income. Here 1% of ₦4,000,000 is ₦40,000, which is lower than ₦200,000, so the CRA is ₦200,000 + (20% × ₦4,000,000 = ₦800,000) = ₦1,000,000.
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