TAX EXPERT EXPLAINS WHAT IMISI OWES ON 150M NAIRA PRIZE WIN.

When Imisi emerged victorious in a recent season of Big Brother Naija the spotlight was on her ₦150 million prize While fans celebrated her success one important question came up does she owe tax on the winnings According to tax experts the answer is yes Nigerias tax laws do not automatically exempt prize money from taxation Below is a breakdown of what Imisi is likely to owe why the tax applies and how it may be collected .

1. Prize Money as Taxable Income
2. Who Collects the Tax
3. Withholding Tax at Source
4. The Organizers Deduction and Its Limits
5. What the ₦150M Prize Includes
6. Practical Example of Tax Calculation
7. What Imisi Has Said
8. Summary of Tax Obligations
9. Implications and Best Practices
   1. Share this:
   2. Like this:
   3. Related

Prize Money as Taxable Income

Under the Personal Income Tax Act any reward whether in the form of cash property or vehicles is considered part of an individuals income This means prize winnings are not tax free The law treats prize money in the same way as salaries business profits or allowances Once it is income it is taxable .

Advertisement

Who Collects the Tax

The authority that collects the tax depends on where the winner resides For residents the State Internal Revenue Service usually takes responsibility for collecting personal income tax For non residents the Federal Inland Revenue Service may step in to collect the tax This means Imisis state of residence plays an important role in determining which tax body she will deal with .

Withholding Tax at Source

In some cases contest organizers deduct a withholding tax before handing over the prize This deduction serves as an advance payment on the winners final income tax liability For example if the show deducts 10 to 15 percent at source Imisi would still need to reconcile any extra tax when filing her annual return if her effective tax rate is higher .

The Organizers Deduction and Its Limits

From the companys perspective offering such a prize can qualify as a deductible marketing or promotional expense under company income tax rules While this helps the organization reduce its taxable profit it does not exempt Imisi from paying her own tax obligations The responsibility to settle her personal income tax remains hers .

What the ₦150M Prize Includes

The prize package reportedly goes beyond cash and may include additional benefits such as services or gifts Under Nigerian tax law all these components are treated as part of the total value of the prize and are subject to taxation Whether it is money goods or property they are all recognized as taxable income .

Practical Example of Tax Calculation

To understand how this works consider a simple scenario If the organizers deducted 10 percent withholding tax upfront that would mean ₦15 million was taken from the ₦150 million prize before payment If Imisis effective personal income tax rate is calculated at 20 percent her total liability would be ₦30 million Since ₦15 million was already withheld she would still need to pay another ₦15 million when filing her tax return This is just an example because the actual tax rates and deductions depend on her full financial profile and state rules .

What Imisi Has Said

So far Imisi has shared that she does not yet have a concrete plan for spending her winnings She intends to seek financial advice before making big moves or investments This suggests she is being cautious and may first settle the tax implications before committing her funds elsewhere .

Summary of Tax Obligations

The entire ₦150 million prize is treated as taxable income under Nigerian law The authority responsible for collecting the tax will depend on her residency status Contest organizers may have deducted withholding tax but the final responsibility rests with Imisi to reconcile any outstanding amounts While the organizing company may treat the prize as an expense for its own tax purposes that does not cancel Imisis personal liability .

Implications and Best Practices

The main lesson for prize winners is that large cash awards are rarely tax exempt Timely filing and payment are essential to avoid penalties Seeking guidance from a qualified tax advisor will help in navigating deductions and ensuring compliance Keeping proper records of prize components tax receipts and communications with authorities is also important For the public this serves as a reminder that winning big in entertainment shows or lotteries comes with serious tax responsibilities .