NBR ITP common mistakes
NBR ITP · Understand the traps and how to avoid them.
Treating the tax year as the calendar year and applying calendar-year thresholds to a July–June income year.
Candidates carry over habits from other jurisdictions or from personal experience, and the income year definition is buried in the general provisions rather than the charging section, so it is skimmed.
What to do instead
State the income year on the first line of every worked answer, then map each threshold or rate change to the correct income year before computing; check the transitional rules for the year the definition changed.
Classifying a receipt as capital or revenue by labelling it (for example 'one-off' or 'windfall') instead of analysing its character.
The labels feel decisive and are quick to apply, and candidates under time pressure skip the indicia analysis that the exam expects to see.
What to do instead
Work through the indicia explicitly - nature of the asset, regularity, intention of the taxpayer, whether the receipt replaces income or a capital asset - and reach a conclusion only after listing them.
Computing VAT output tax on the VAT-inclusive price, or input tax on a figure that already includes VAT, producing a 15% overstatement.
Invoices and case facts often quote the gross amount, and candidates apply the rate directly to whatever number appears in the question.
What to do instead
Always identify whether a figure is inclusive or exclusive before applying the rate; for inclusive amounts use the fraction rate/(100+rate), and show the conversion step in the answer.
Ignoring the time of supply and the tax point, and accounting for VAT in the period the invoice was paid or the return was filed.
Cash accounting feels intuitive, and the rules on when a supply takes place are treated as background rather than as a computational step.
What to do instead
For each transaction, determine the tax point from the invoice date, payment date, and delivery date in that order of priority, then place the transaction in the correct tax period before computing the return.
Treating zero-rated supplies and exempt supplies as interchangeable, then either claiming input tax on exempt supplies or omitting zero-rated sales from the return.
Both categories bear 0% on the face of the invoice, and the difference only matters for input tax recovery and registration thresholds.
What to do instead
Build a two-column schedule distinguishing zero-rated from exempt, and state the input tax consequence for each: zero-rated supplies permit recovery, exempt supplies do not.
Using the transaction (invoice) value as the customs value when the law requires the price actually paid or payable adjusted to the specified basis.
The commercial invoice is the most visible number in the fact pattern, so candidates stop there and ignore the statutory additions and deductions.
What to do instead
Start from the price actually paid or payable and then apply each statutory adjustment in sequence - commissions, packing, royalties, assists, transport and insurance to the place of importation - noting which items are added and which are excluded.
Applying the domestic ex-factory price or the retail price as the customs value instead of the CIF value at the border.
Candidates conflate the customs base with the excise or VAT base, which are defined differently, and reuse one figure for all three taxes.
What to do instead
Write the three bases side by side before computing: customs value (CIF), excise base, and VAT base; show how each is derived from the previous one so the cascade is visible.
Computing excise duty on the duty-inclusive value when the law requires the excise base to include customs duty but not excise itself, or vice versa.
The cascading structure of customs duty, excise, and VAT is easy to state but easy to get wrong in the arithmetic, especially under time pressure.
What to do instead
Memorise and write out the cascade before calculating: customs duty on CIF, excise on CIF plus customs duty, VAT on CIF plus customs duty plus excise; check the order against the statute for the specific goods.
Overlooking the surcharge because it is computed on a different base or at a different stage from the main tax, and reporting only the primary liability.
Surcharge is often a small percentage and is treated as an afterthought, and its interaction with the underlying tax is not always spelled out in the question.
What to do instead
Include a dedicated surcharge line in every computation template, identify its base and trigger conditions explicitly, and reconcile the total to the sum of all four tax heads before finalising.
Failing to apply the correct rate for the period, using a superseded rate or threshold from an earlier year without checking the effective date.
Rates and bands change frequently and candidates rely on memorised figures rather than the rates supplied in the question or the current schedule.
What to do instead
Before computing, list every rate and threshold used with its effective date and source, and cross-check each against the period of the transaction; where the question supplies rates, use only those.