NBR ITP flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Residence test 183 days

An individual is resident if physically present in the country for 183 days or more in the income year, making worldwide income taxable.

Taxable income formula

Taxable income equals assessable income plus balancing charges minus allowable deductions and capital allowances; tax is then computed on that figure.

Allowable deduction test

An expense is deductible only if wholly and exclusively incurred in producing income, actually incurred, and not capital or expressly disallowed.

Capital allowance purpose

Capital allowances replace accounting depreciation by writing off qualifying asset cost at statutory rates, with balancing charges on disposal above tax written-down value.

Withholding tax on non-residents

Local-source interest, royalties, and management fees paid to non-residents are subject to withholding tax at the prescribed rate, remitted by the payer.

Loss carry-forward rule

Trading losses may be carried forward to offset future profits of the same business, subject to continuity of ownership and statutory conditions.

Employment income cash basis

Salary, wages, allowances, and benefits in kind are taxed in the year received, with benefits valued at employer cost or prescribed deemed values.

VAT definition

VAT is a multi-stage indirect tax on supplies of goods and services and on imports, charged as output tax and offset by recoverable input tax.

Input tax claim conditions

Input tax is recoverable only on purchases used for taxable supplies and only where a valid tax invoice from a registered supplier is held.

Zero-rated versus exempt

Zero-rated supplies are taxed at 0% and permit full input tax recovery; exempt supplies bear no output tax and block related input tax.

VAT tax point

The tax point is the earlier of invoice date, payment date, or delivery or performance date, and it fixes the return period for output tax.

Partial exemption ratio

Input tax on mixed use is apportioned by taxable turnover divided by total turnover, with the resulting percentage applied to residual input tax.

Import VAT base

Import VAT is charged on the aggregate of customs value, customs duty, excise, and surcharge, paid at clearance and recoverable if used for taxable supplies.

VAT registration threshold

Registration becomes compulsory once taxable supplies exceed the prescribed threshold; voluntary registration below it is available on application.

Customs duty basis

Customs duty is levied at tariff rates on imported or exported goods, classified by Harmonized System code and valued for ad valorem assessment.

Transaction value

Transaction value is the price actually paid or payable for the goods, adjusted for freight, insurance, commissions, assists, and royalties.

Valuation method sequence

Valuation applies in order: transaction value, identical goods, similar goods, deductive value, computed value, then fallback method.

General Interpretative Rules

The six rules guide tariff classification, starting with heading text and chapter notes, then specificity, essential character, and numerical order.

Duty drawback

Drawback repays customs duty on imported goods later exported, subject to documentary proof of import, processing, and export within time limits.

Bonded warehouse regime

Goods stored in a bonded warehouse are duty-suspended until entered for home use or re-exported, with stock records and security required.

Customs under-declaration penalty

Under-declaration or misclassification attracts a penalty calculated as a multiple of duty evaded, plus possible seizure and forfeiture of goods.

Excise duty definition

Excise is a single-stage tax on specified goods such as alcohol, tobacco, and petroleum, collected at manufacture or import.

Specific versus ad valorem excise

Specific excise is a fixed amount per unit or litre; ad valorem excise is a percentage of value; hybrid excise combines both methods.

Excise base for imports

For imports, excise is computed on the customs value plus customs duty, so duty increases the excise amount payable.

Excise stamps

Excise stamps or tax marks affixed to specified goods evidence duty payment, and possession of unstamped goods is an offence.

Excise licence requirement

Manufacturers of excisable goods must hold a licence and provide security or bond before starting production and before removing goods.

Excise refund on export

Excise paid on locally manufactured goods that are subsequently exported may be refunded on proof of export within the statutory period.

Surcharge definition

A surcharge is an additional levy calculated as a percentage of a primary tax, such as income tax or customs duty payable.

Surcharge versus interest

A surcharge is a fixed statutory add-on to the primary tax, while interest accrues over time on unpaid amounts at a prescribed rate.

Import computation order

Import taxes are computed as customs value, plus duty, plus excise, plus surcharge, with VAT applied to the resulting aggregate.

Surcharge on income tax

Surcharge is added after basic tax is computed on taxable income, giving total tax payable, and is generally not deductible.

Surcharge recalculation on appeal

If the primary tax is reduced on objection or appeal, the related surcharge is recalculated on the revised tax amount.