Tax Education Series: Credit Alerts, Income and What the Law Really Taxes

Musa’s phone vibrated just as he was relaxing after dinner. The message read: “N250,000 CREDIT ALERT.” He smiled—it was money his elder sister in Ibadan had sent to help cover their mother’s hospital bills.

Moments later, doubt crept in. “With all this new tax law wahala, will they tax this money?” Musa’s confusion mirrors the concerns of many Nigerians who now worry that every credit alert automatically attracts tax.

But that is not how taxation works—and the new tax laws make this clearer than ever. Here is what Musa came to understand.

Not Every Credit Alert Is Income

The first lesson was simple: tax is not charged simply because money enters your bank account. Tax applies to income—and not all money received qualifies as income.

Many people get into trouble not because they break the law, but because they misunderstand or mislabel the nature of money they receive.

Why Descriptions Matter

When Musa later reviewed his bank statement, he noticed that every transaction had a description. That detail made all the difference.

If money appears to be income, systems may treat it as income—even when it isn’t. But when transactions are honestly and accurately described, tax is only applied where it is legally due.

Here are common examples Musa learned, which apply to many Nigerians:

Family Support Is Not Taxable

The N250,000 Musa received from his sister was family assistance. Genuine gifts or support from relatives do not become taxable income just because they appear as a credit alert.
Correct description: “Gift” or “Family support”
Tax: None

Refunds and Reimbursements Are Not Income

When Musa’s employer refunded transport expenses from a work trip, it was simply his own money returned—not profit or salary.
Correct description: “Refund” or “Reimbursement”
Tax: None

Transferring Your Own Money Creates No Income

Moving money between personal accounts or sending money to yourself through different banks does not generate income.
Correct description: “Personal transfer” or “Savings”
Tax: None

Loans Are Not Income

Money Musa borrowed from a cooperative to repair his car also arrived as a credit alert. But loans must be repaid and do not increase wealth.
Correct description: “Loan received”
Tax: None

Business Capital Is Not Profit

When Musa’s cousin injected her own funds into her printing business to buy equipment, the money entered the business account—but it was capital, not income.
Correct description: “Capital contribution”
Tax: None

What the New Tax Laws Emphasise

The new tax framework does not say every credit alert should be taxed. Instead, it stresses honesty, clarity and proper classification of transactions.

If money is wrongly labeled in a way that makes it appear like income, a taxpayer may end up paying more tax than required.

One Important Warning

These transactions are tax-free only when the descriptions are truthful. Labeling payment for work as a “gift” is illegal and may attract penalties. The law protects honest taxpayers—not false declarations.

The Lesson Musa Learned

By the end of the day, Musa was at ease. He realised he had done nothing wrong. His money was legal, clean and correctly described.

The new tax laws were not designed to punish him, but to clarify one key principle:

Always describe money accurately and lawfully. Do that, and you pay only the tax you truly owe—nothing more.

That, Musa concluded, is something most Nigerians can agree with.

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