19 Jan



Introduced in 1967. It is a tax on the Exclusive Legislative List administered by the FIRS and SBIR for corporations and individuals respectively. Section 1 of the Act defines CGT as a capital gains accruing to any person on the disposal of an asset after the first of April. The 8th Edition, Dictionary of Law defines CGT as a tax on chargeable gains arising from chargeable disposal of chargeable assets. there must be an asset… a chargeable asset-Section 3 British Telecoms Plc V Majesty’s HMRC.

Disposal of an asset includes sale, assignment and so on. It could include destruction of asset as was held in Marren V Inglis. There has been no clear explanation for the introduction in Nigeria. Although we can apply it to the introduction in England in 1965 and the Rationale given by James Calagan of the Exchequer. To seal the pores in taxation and make sure that a person enjoying from capital gains pays just like a normal wage or salary earner does. Therefore ensuring equity and justice. Rather than revenue generation. In my opinion, it is apparent that it is for revenue generation. It was suggested that Nigeria’s reason was because of the need to generate revenue for the Civil war.

Section 2 imposes 10 percent on chargeable gain (net gain). Chargeable gain is described as capital sum derived from sale… disposal of asset. The chargeable gain/capital gain would be the difference between the cost price (e.g. 50 million) and selling price (e.g. 60 million) (which would be 10million) being the profit made from the disposal of the asset-Section 11… although there are allowable deductions that shall be discussed later. Note that where the disposal has been taken into account under the income taxes (CIT, PIT, PPT and so on) it can be excluded/deducted -Section 12.

Under Section 14, allowable deductions include any money or money’s worth. In Oram V Johnson, the court held that where the man has expended his own energy in improving the energy it was not deductible as what was required her is money’s worth not sweat’s worth.

The following are deductible:

  • Expenditure wholly, exclusively and necessarily incurred to acquire the asset.
  • Incidental cost of acquisition (like cost of advertising, payment to agent).
  • Cost of improvement to the property and protection of the property or right over the asset.

Section 22 deals with transactions between connected person. Section 30 exempts shares and stocks from CGT.


  • It is a dis-incentive to save.
  • It it illusory and argued to amount to double taxation.
  • Lack of awareness and publicity.
  • Poor administration and lack of innovation.
  • Poor accounting culture and lack of documentation record keeping.




Quite eccentric really

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