Treasury Single Account (TSA): This is defined as a unified structure of government bank accounts for MDA’s. TSA is a single account in the custody of the Central Bank of Nigeria (CBN). TSA is a bank account or a set of linked accounts through which the government transacts all its receipts and payments. Treasury Single Account is a concluding phase of the E-collection scheme. The Federal Government of Nigeria commenced the implementation of e-collection component of TSA in January 2015. The first Treasury Circular on e-Collection was issued on the 19th of March 2015.
E-collection automates and streamline revenues and other monies payable to MDAs as well as other Institutions and Parastatal directly into the Consolidated Revenue Fund (CRF) or designated accounts of each MDA at CBN using the CBN Payment Gateway.
This is one of the good initiatives of federal government of Nigeria that has help to bring about transparency and accountability. This initiative has given Nigeria government control over the management of fund in the hand of Ministries, Department and Agencies (MDAs).
OBJECTIVES OF FGN E-COLLECTION
Ensure total compliance with the relevant provisions of the 1999 Constitution of the Federal Republic of Nigeria (FRN) (Section 162 & 80).
Collect and remit all revenues due to the Federation Account and Federal Government Consolidated Revenue Fund.
Block all leakages in government revenue generation, collection and remittance
Enthrone a new regime of transparency and accountability in the management of government receipts.
Improve on availability of funds for development programs and projects.
Align with the CBN Cashless policy.
Ease the burden of revenue payers.
BENEFITS OF TSA
Government have oversight of all revenue and other monies collected by MDAs
2. Increase Government receipt by blocking any form of leakages
3. Makes it easier for Nigerians to pay government through introduction of electronic channels like Cards, Internet Banking and POS.
4. Payment is received promptly, and service can be rendered to the payer
5. Ensure availability of funds for the execution of government policies, programmes and projects. Control aggregate cash flows within fiscal and monetary limits
6. Improve management of domestic borrowing programme
7. Investment of idle funds
8. Improves transparency and accountability of all FGN receipts
9. Consolidated view of government cash position and status
TREASURY SINGLE ACCOUNT STAKEHOLDERS
Ministries, Departments & Agencies (MDAs);
2. Deposit Money Banks (DMBs);
3. Central Bank of Nigeria (CBN);
4. Service Providers.
THE ROLE OF CBN IN TSA
Provide payment gateway platform
2. Development of overall e-collection and e-payment policies for the nation
3. Interfacing with Deposit Money Banks (DMBs) and monitoring them
4. Creation and maintenance of bank accounts including CRF/TSA, FAAC and TSA Sub Accounts
THE ROLE OF DEPOSIT MONEY BANKS (DMB)
Ensures that:
Their duties under the subsisting Payment Gateway MOU are effectively discharged
2. Customers making payment to government are given prompt service
3. All collections in favour of government are promptly remitted
4. Operational and other relevant issues are logged with appropriate authorities (OAGF, CBN and REMITA) without delay
The ROLE OF MDAs
Ensure that their revenue targets are met
2. Provide their payers with details of payment including amount and nature of payment
3. Guide payers on e-collection processes including how to pay at the bank or through other channels of the CBN Payment Gateway (Remita).
4. Where applicable, ensure that appropriate services are rendered upon confirmation of payment
THE ROLE OF OFFICE OF THE ACCOUNTANT-GENERAL OF THE FEDERATION (OAGF)
Ensure effective implementation of e-collection
2. Development of operational guidelines
3. Proper monitoring of the collection gateway
4. Prompt reconciliation of all collections
5. Support MDAs, banks and payers for smooth operation of e-collection
6. Regular monitoring of all collections to ensure that they are promptly remitted and accounted for
7. Issuance as well as continuous review and update of the e-Collection guidelines and processes
8. Abide by the provisions of the Memorandum of Understanding (MOU) with CBN, Service Provider and Banks
THE ROLE OF SERVICE PROVIDER ie Remitta, Interswtich etc
Work with CBN, OAGF and other stakeholders to articulate system requirements
2. Provide a robust, stable and effective integrated processing platform
3. Ensure the optimal availability of all relevant systems and platforms
4. Provide effective and efficient support to users of the platform
5. Provide users with relevant reports
6. Training of users on the use of the payment gateway.
E-PAYMENT
This is an electronic system of payment for all of government funds through the banks either commercial banks or CBN. The Federal Government of Nigeria commenced the implementation of Treasury Single Account (TSA) in April 2012, with the e-Payment component. E-payment covers the following transactions:
All payments to
contracts and consultants.
2. service providers e.g. PHCN.
3. payment to staff.
4. payment to other government agencies e.g. National Health Insurance Scheme (NHIS), Federal Inland Revenue Service (FIRS), National Housing Fund (NHF).
Issuance as well as continuous review and update of the e-Collection guidelines and processes
BENEFITS OF E-PAYMENT
These are some of the E-Payment benefits:
It eliminates the:
1. Unacceptable delay in payments
2. The uses of cheques in payment of all transactions within the Federation Government
3. Interaction between the contractor and government official in the payment of FG contracts
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.
