Bank Reconciliation Statement s the verification of all the entries in the bank statement with the bank book of the business. First, let understand what bank statement and cash book mean. A bank statement is the financial statement showing the details of all the transactions that the business had made through the bank account. While cash book is subsidiary book in which all cash transactions of receipts and payments are recorded.
Definition of Terms
Bank charges: This is money deducted from the entity account by the Bank to cover the cost of looking after the account.
Unpresented cheque: Is a cheque draw but not yet been presented at the drawer’s bank.
Uncleared cheque/ effect: Are bank cheque that passed through the clearing system but not yet cleared. It appears on the debit side of the cash book.
Dividend: This is direct dividend receive into bank account.
Standing order: This is an order given to the bank to pay a fixed sum of money at regular intervals from one’s bank account to a designated payee. e.g. paying rent, paying utility bill etc.
Advantage of standing order
It helps to save the repeated drawing cheque;
They help to save spending money on stationery and postage and
it is certain that payments are made on the due date.
Disadvantages of standing order
There are bank charges for such services.
Dishonoured Cheque: This is cheque rejected by Bank. Top 11 of what will give rise to dishonoured cheque
When cheques are not signed or signed incorrectly (i.e. Irregular Signature)
No date shown on the cheque
When the cheque is mutilated
Insufficient funds in the account to meet the cheque
Alteration on the cheque without endorsement by the drawer’s signature.
Stale cheque: This is one that is more than 6months old. But is still valid after 6months if confirm from the drawer by the bank.
The death of the drawer
Non-existing account
Frozen account
Posted dated cheque: When the drawer of a cheque has insufficient funds to meet the amount of the cheque but expects to have sufficient in the future date the cheque in advance of the drawing date.
When payment is stopped by government authority.
Top 5 discrepancies between cash book and bank statements?
Pay-as-you-earn is a tax deducted from employee salary account and remitted on or before the 10th day of the month following the month in which salaries were paid. See relevant sections of the Personal Income Tax Act (PITA). (S.81 of Personal Income Tax Act Cap P8 LFN 2011). S. for details
WHAT IS TAXABLE ENTITLEMENT (GROSS) OR GROSS EMOLUMENTS
This is the total amount your employer pay to you as salary including all benefits arising from employment.
It can be a inform of wages, salaries, allowances including benefits in kind, gratuities, superannuation and any other incomes derived solely by reason of employment.
All manner of allowance you earn, provided it’s not a re-imbursement of expense to you, is taxable.
Finance Act 2020, defined “gross income” as income from all sources less non-taxable income, tax-exempt items listed in Paragraph (2) of the Sixth Schedule and all allowable business expenses and capital allowance (finance-act-2020). This is addition to the Act.
For example, if you spend an amount for training outside your station and the money is refunded or reimburse through your payslip, it must be subjected to tax. All pay not intended to be taxed must not be passed through payroll. Pay like training cost, transport to attend training etc.
TAX RELIEF (TAX ALLOWANCE)
This is amounts that can be deducted from a person’s annual income to reduce the amount on which tax is paid. Or the amount of your income which is exempt from tax aside from other statutory deductions.
Consolidated relief allowance of N200, 000 or 1 per cent of gross salary or whichever is higher plus 20 per cent of gross salary.
Percentage of Gross Income Relief (PGI): This relief is graduated and it is based on your Gross income. The higher your income, the more relief you receive. PGI relief is currently 20%. For example, if your Gross income per annum is N5, 000,000 then your PGI would be N1, 000,000.
TAX EXEMPT
The tax law provides certain payroll deductions as tax exempt or non-taxable deductions. Tax exempt amount has to be removed from Gross taxable Income (earnings) before applying the tax rules to determine tax. The following deductions are not Taxable (.i.e. Tax Exempts):
Pension Deductions (employer 10% and employee 8% of Basic salary, transport and housing allowance).
National Housing Fund Deductions (Employee 2.5% of basic salary).
Life Assurance Payments (this is obtained from the employee life policy document and monthly premium payment receipt is sufficient evidence to earn the tax exempt. Section 33(3) of Finance Act 2020 added that any premium payment. stated that there shall be allowed a deduction of annual amount of any premium paid by the individual during the year preceding the year of assessment to an insurance company in respect of insurance on his life or the life of his spouse or of a contract for a deferred annuity on his own life or the life of his spouse (finance-act-2020). This is addition to the Act.
The National Health Insurance Scheme (Government 10% and employee 5% of basic salary) but employer 5% has not be implemented yet in the federal government MDAs due to Labour objections.
Gratuity.
NIGERIA TAX TABLE
for pay-as-you-earn to be done, relief allowance and tax exemptions have been granted to work with, the balance of the income shall be taxed as specified in the tax table below.
Nigerian Payroll tax table comes in annual gross bands in six rows. Each band has a percentage tax value attached to it. The tax table rates must be applied to the Net Taxable Income to get Tax Payable.
Tax table and Rates from June 2011 tax year as see below.
TAXABLE INCOME (NET)
This is derived after deducting the following from Gross Taxable Income. Some are extracted from payslip.
Gross Entitlement,
Tax Exempts, and Relief (Tax Allowance).
Apply tax table to the net amount as stated above
NON TAXABLE INCOME
End of year award
Compensation for personal injury
Any compensation for loss of office or employment
Medical or dental expenses incurred by employee
Note:
Compensation for loss office or employment
(1) Section 36(2) of Finance Act 2020 is amended by substituting for subsection 2 with a new subsection “2”.
(2) Sums obtained by a way of compensation for loss of office, up to a maximum of N10,000,000, shall not be chargeable gains and subject to tax under the Act. Provided that any sum in excess of N10, 000,000 shall not be so exempted but the excess amount shall be chargeable gains and subject to tax accordingly.
Finance Act 2020 inserted section (3) and (4)
(3) Any person who pays compensation for the loss of office to individual is required, at the point of payment of such compensation, to deduct and remit the tax due under this section to the relevant tax authority.
(4) The tax so deducted shall be remitted within the time specified under the Pay-As-You-Earn regulations issued pursuant to the personal income tax Act.
PAY-AS-YOU-EARN CALCULATION
In other word, monthly payments of Pay-As-You-Earn (PAYE) tax liabilities are to be made on or before the 10th day of the month following the applicable month (e.g. January tax to be remitted by 10th of February).
Assuming Senior Manager monthly payslip is as shown below. We look at how the statutory deductions were determined.
Taxable Income Calculation for an Senior Manager whose Gross Income is NGN 4.68 Million per annum
Below is the basis of Pay-as-you-earn calculation for a Senior Manager whose gross income is NGN 4.68 million per annum. The accountant has the responsibility to ensure that this PAYE is calculated accurately and deducted promptly
WHAT IS RESIDENCY RULE
Assuming the Senior Manager live in Rivers State but work in Abia State.
To apply residency rule, an employee’s PAYE is payable to the tax authority of the state of his/her residence. It is therefore the duty of the employer to deduct and remit it to the tax authority where the employee is resident.
If the employee is resident in Rivers State, the tax authority that is entitled to his pay-as-you-earn is the Rivers State Board of Internal Revenue.
PENALTY FOR FAILURE TO DEDUCT PAY-AS-YOU-EARN
In line with Section 74(1) of Personal Income Tax Act, 2011 states “ any person or body corporate who fails to deduct, or having deducted, fails to remit such deductions to the relevant tax authority within 30days. This will be from the date the amount was deducted or the time the duty to deduct arose. Such person shall be liable to a penalty of an amount of 10% of the tax not deducted or remitted in addition to the amount of tax not deducted or remitted plus interest at the prevailing monetary policy rate of Central Bank of Nigeria.
EXEMPTION OF MINIMUM WAGE EARNERS FROM PAYE/PIT
Section 37 of Finance Act 2020 “provided for minimum tax. The Act also provided for under the Sixth Schedule to this Act shall not apply to a person in any year of assessment where such person earns the National Minimum Wage or less from an employment (finance-act-2020)
BOOKS OF ACCOUNTS
By Section 12 of PITA 2011 stated that the keeping of books of accounts is very important. The Act stated that, if any taxable person fails or refuses to keep account, such a person shall be liable on conviction to a penalty of N50,000 for individuals and N500,000 for corporate entities.
The benefits of ICAN certificate to all area of our lives are enormous. ICAN, whose membership comprises of accountants, auditors, and accounting technicians. It was established in 1965 by Act of Parliament No. 15 of 1st September 1965 (the ICAN Act) (icanig.org). Since then, it has improved the lives of its members and the nation in general.
Being a member of ICAN make you become a professional in accountancy. Opportunities will be available to you when you become a full member of ICAN. A lot of information will be available to you to create wealth.
In the public sector, apart from increase morale and a sense of achievement, there are other things to enjoy. This report looked at two things that are considered benefits of ICAN certificate. If you are a qualified member of ICAN before you got employment cadre of the Federal Government of Nigeria, these are your benefits.
Entry-level with ICAN certificate
This means the moment you are qualified as a chartered accountant before gaining employment in the public sector, you have a chance to start in Grade Level 10.
ICAN members with certificate will still be considered for employment in the public sector in line with the provision of the existing scheme of service even without them having a first degree.
It is only ICAN and other related qualifications prescribed in the scheme of service considered for civil service appointment without a first degree.
The entry point for every ICAN member is GL 10.
Advancement of ICAN qualified members
Advancement means moving an officer up from one rank to a higher one within his class or cadre. It is not the same with conversion.
An officer who is on a Grade Level 08 advanced to Grade Level 10. It is a way, a type of promotion. The officer must possess the qualification, which the scheme of service stipulated for holders of that office.
In the case of ICAN members’ already in service, whose grade is below Grade Level 10 and who obtain ICAN qualification is qualified to be advanced to Grade level 10.
The moment that employee sits for ICAN exams and qualify. He or she is qualified to notify his or her employer of the new qualification for considerations.
Ordinarily, the promotion would have taken a minimum of 6 years if he or she passes the confirmation and promotion exams. The power of the ICAN certificate can make it possible in two years.
Conclusion
Student of accounting in higher institutions and accounting officers in the service of the Federal Government needs to take advantage of this opportunity that is made available. This qualification needs to be presented before attaining grade level 10. I
NOTE:
This post is not a legal advice. You are to carry out due diligent on your own.
Unknowingly, many agricultural programme embarked upon by government, private companies and even individual all help to reduce carbon emission from the atmosphere.
Global Landscapes Forum
Agriculture by-products can cut emission. For example, biomass can be used directly in agriculture as a fertiliser, or it can be used as a source of energy for the power, buildings, industry or transport sectors and also biogas from animal wastes could also be used as an energy source.
A tree can absorb as much as 48 pounds of carbon dioxide per year and can sequester (hide-away or isolate) 1 ton of carbon dioxide by the time it reaches 40 years old. Carbon sequestration is a natural or artificial process by which carbon dioxide is removed from the atmosphere and held in solid or liquid form. CARBON CREDIT AND CARBON TAX: OTHER SOURCES OF REVENUE FOR NIGERIA. |
Wikipedia
Reservoirs is a carbon sink if it retain carbon and keep it from entering Earth’s atmosphere. Deforestation lead to carbon emission into the atmosphere. But when the forest is regrowth that is a form of carbon sequestration, with the forests themselves serving as carbon sinks.
Conclusion
Tree planting is for our benefit. These are some benefit of tree planting to humanity. Trees give off oxygen that we need to breathe. Trees reduce the amount of storm water runoff. Trees reduces erosion and pollution in our waterways and also reduce the effects of flooding. Many species of wildlife depend on trees for habitat. Trees provide food, protection, and homes for many birds and mammals. Tree remove carbon emission from the air. de food, protection, and homes for many birds and mammals.
Carbon credit and carbon tax: Other sources of Revenue for Nigeria
Emissions that aren’t with the production of industrial and consumer goods should be taxed.
A carbon tax is one of the tool government used to check climate change. The two is emission and offset trading system (that encourage carbon credit). Government intervention is a tool to fight climate change. The government uses two methods as discussed below to put climate change in a check (Carbon Emission Accounting and Economic Growth in Nigeria).
1). QUANTITY-BASED
The Quantity-based measures depend on regulations to check climate change. The quantity-based measures are called emission and offset trading systems or cap and trade. Quantity-based measures are the most common interventions by any government.
In quantity-based believes that each country/company is assigned a fixed amount of carbon emissions which is a cap/limit by the government, measured in carbon credits. When a company emits less than permitted emissions, it can sell the rest to companies that are unable to reduce their emissions level. This method can earn companies that are meeting up with a cap limit by the government, huge revenue.
Government through the agency(NESREA ) reduces the emission caps each year to set a new pollution target and allocate new emission limits to industries. This way, companies are forced to seek other ways to meet their energy needs, thereby embracing green technology. The carbon credits of a company are rights for emission. Each unit gives the right to emit one metric tonne of CO2.
A carbon credit is a permit that allows the company that holds it to emit a certain amount of carbon dioxide or other greenhouse gases. On the 9th June 2021, at the 2021 Nigeria International Petroleum Summit (NIPS) held in Abuja, it was reported that Nigeria recorded its first proceed from carbon from the partnership of Nigerian National Petroleum Corporation and TotalEnergies.
2). PRICE-BASED
Price-based talk about carbon taxes. A carbon tax is a levy on the carbon content of fuels used. Carbon tax a tax paid on the emission of carbon (CO2) into the atmosphere by any organisation. It is a form of carbon pricing that offers a double dividend. By double dividend, it means revenue generation and behavioural change. The double dividend in the sense that as government generate revenue at the same time bring about behavioural change among the polluters.
Carbon is present in every hydrocarbon fuel (coal, petroleum and natural gas) and is released as carbon dioxide (CO2) when they are burnt. Hydrocarbons are released into the air when volatile fuels evaporate from storage tanks. They are also found in the exhaust of motor vehicles when fuel is burnt incompletely. If not control they can cause cancer and lead to the formation of photochemical smog (otherwise called Soot “black soot” as we currently experienced around Port Harcourt, Nigeria and its environs). In contrast, non-combustion energy sources—wind, sunlight, hydropower, and nuclear—do not convert hydrocarbons to CO2. CO2 is a heat-trapping “greenhouse” gas.
The reason carbon tax is overdue in Nigeria is that it will internalize the externality. What this means is that the final price of the good should include the social cost and not just the private cost. It is similar to the ‘polluter pays principle.
The ‘polluter pays principle is the commonly accepted practise that those who produce pollution should bear the costs of managing it to prevent damage to human health or the environment. The polluter-pays principle was incorporated into international law at the 1992 Rio Summit.
A number of countries have implemented carbon taxes or energy taxes that are related to carbon content but Nigeria is still lacking behind. South Africa for example has developed a robust carbon tax system since 2016. The aim is to reduce greenhouse gas (GHG) emissions from key sectors such as mining, transportation and agriculture and to achieve sustainable development. Sadly, other African countries have failed in this regard. If a carbon tax is to be successful in your country, then one must embrace the efficiency that follows.
Some countries that have implemented carbon tax or energy tax are:
South Africa;
Columbia;
Denmark;
Japan;
Mexico;
Finland;
Germany;
Chile;
France;
Canada;
Iceland;
Costa Rica;
Ireland;
Italy;
The Netherland;
Norway;
Slovenia;
Sweden;
Switzerland, and the
United Kingdom etc
DIFFERENCE BETWEEN CARBON TAX AND CARBON CREDIT (CAP & TRADE SYSTEM)
Carbon tax does not guarantee decreased carbon emissions but focuses on revenue generation, while carbon credit (cap and trade) system helps to sets emission limits.
