Audit observed the following in respect of Income tax payable by the staff of the Commission for the year ended 31st December 2017;
(a) There were seventeen (17) allowances enjoyed by the staff of the Commission apart from the basic salary.
(b) Only the Management staff and the directors are entitled to diesel and security allowances; while directorate cadre joins in benefiting from domestic, driver and fuelling. Forty-one (41) drivers are entitled to laundry allowance.
(c) The remaining eleven (11) allowances: Transport, Housing/Rent, Utility, Dressing, Supervision, GSM, Tea, Education, Health, Meal and Furniture allowances are enjoyed by all the staff of the Commission.
(d) From (a) above, Meal, Utility and Transport allowances are consolidated with the basic salary to calculate income tax (PAYE) of the staff.
(e) The other fourteen (14) allowances are off payroll.
(f) The sum of N724,122.79 (Seven hundred and twenty-four thousand, one hundred and twenty-two-naira, seventy-nine kobo) were averagely paid monthly as income tax for the year under review. Annually, the staff of the Commission is paying N8,689,473.48.
(g) Based on our computation, the income tax payable by the staff of the Commission should be N19,543,949.49 monthly. Due to some off-payroll allowances enjoyed but not disclosed by the Management computation, the annual income tax is equivalent to N234,527,393.93.
(h) The total income tax evaded by the staff of the Commission is the sum of N18,824,826.70 monthly and N225,837,920.45 annually.
It should be noted that the Commission categorizes three (3) allowances as consolidated with basic salary to arrive at the remitted income tax. All income including salary, wage, allowance, bonus, and others are subjected to tax as indicated in the Section 1 (3) (a) (b) and (c) of the Personal Income Tax Act 1993 (as amended).
This infraction was due to the failure of the Commissioner of insurance to strictly comply with the provision of extant laws especially as it relates to the improper computation of taxes in respect of employees of the Commission. This practice is tax evasion and must be discouraged.