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Appointment
of payers of Capital Sum inclusive of employers as collecting agents of payers
for the purpose of deducting and remitting Capital Gains Tax (CGT) due on the
respective capital sums paid including but not limited to compensation for loss
of employment
Overview
The
Lagos State Internal Revenue Service (LIRS) is issuing this public notice to
all employers, company owners, or their representatives, employees and other
members of the public. Our public notice on “Exemption of compensation for loss
of employment” has clearly articulated the requirements for all employers to
always segregate compensation to loss of employment into specific pay
component. This is with the view of ensuring correct tax treatment for components
that are:
a. Tax Exempt
b. Subject to PAYE and
c. Subject to CGT
Legal Basis
Whilst
section 6 sub section 2(a) and section 11 of CGTA define capital sum as any
money or money’s worth received as consideration which is not excluded under
the Act, section 6 sub section 1 (a-c) of Capital Gains Tax Act (CGTA) lists
all types of capital sum and qualifying transactions on which CGT is
applicable. “Capital sum derived by way of compensation for any loss of office
or employment” is one of them.
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