Section 42 Nigeria Tax Act 2025

Section 42 of the Nigeria Tax Act 2025 is about Consideration due after time of disposal. It provides as follows:

(1) Where the consideration or part of a consideration, taken into account in the computation of chargeable gains under section 39 of this Act, is payable by instalments over a period exceeding twelve months, beginning from the time when the disposal is made, the chargeable gain accruing on the disposal shall be regarded as accruing in proportionate parts in the period of assessment in which the disposal is made and in subsequent periods of assessments, until the last instalment is payable.

(2) The proportionate parts to be recorded as accruing in the respective periods of assessment shall correspond to the proportions of the amounts of the instalments of consideration payable in those respective periods of assessment.

(3) The time in the year or accounting period when any part of a chargeable gain is deemed to accrue under this section shall be the last day in that year of assessment, except in the case of cessation of a trade, business, profession or vocation, or death of the alienator, where such part shall be deemed to accrue on the date of cessation or death.

(4) The provisions of subsection (1) shall not apply to any part of the consideration which has effectively passed to the person making the disposal
by way of a loan made to that person by the other party to the transaction.

(5) In the computation of chargeable gains under this section –
(a) consideration for the disposal shall, in the first instance, be brought into account without –
(i) any adjustment for postponement of the right to receive any part of it, and
(ii) regard to a risk of any part of the consideration being irrecoverable, or to the right to receive any part of the consideration being contingent; and

(b) where any part of the consideration so brought into account is subsequently shown to the satisfaction of the relevant tax authority to be irrecoverable, such adjustment, whether by way of discharge, or repayment of tax or otherwise, shall be made as required.

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