People who dispose of their assets are expected to pay ______________

Step 1: Analyze the question The question asks which tax is charged on people who dispose of their assets (for example, selling land, shares, or a building).

Step 2: Explain the concept Capital gains tax is a tax on the profit (gain) made when a capital asset is sold or otherwise disposed of for more than its purchase price. In Nigeria, it is charged under the Capital Gains Tax Act.

Formula: Capital gain = Disposal price − Cost of acquisition (and related costs)

Step 3: Check each option

• A. Value added tax (VAT): This is charged on the consumption of goods and services at each stage of supply. It is not specific to asset disposal.
• B. Capital gains tax: This is charged on gains from the sale or disposal of assets such as land, buildings, and shares. ✔
• C. Expenditure tax: This is a tax on what people spend, not on selling assets.
• D. Sales tax: This is a tax on the sale of goods to consumers, charged on the retail price of goods.

Step 4: Answer Someone who sells a plot of land for ₦5,000,000 after buying it for ₦3,000,000 has made a gain of ₦2,000,000, and capital gains tax applies to that gain. The correct answer is **B.

Exam tip: Link the key word to the tax. "Dispose of assets" or "sale of capital items" points to capital gains. "Consumption of goods and services" points to VAT. "Income or profit from work or business" points to income tax or company income tax.