Economic analyst, Kalu Aja, has said that money entering a bank account is not automatically taxed, contrary to widespread belief.
Aja made the comment on Nairametrics’ X space on Thursday, with the topic “How the new tax law affects your pay, business and daily spending.
The clarification follows growing public concerns around Nigeria’s new tax framework that took effect on January 1, 2026.
What Kalu Aja is saying
Speaking on the new tax reforms, Aja explained that only income is taxable, not every inflow, and that proper tax filing is the key legal safeguard for individuals and small businesses.
Addressing fears that bank deposits would be taxed directly, Aja said the new tax law does not target inflows, but rather income earned by taxpayers.
“Forget about trying to say if money has come into your account. No, if it has come in as income, it’s taxable,” he said.
According to him, the tax law broadly defines income to include salaries, business earnings, interest, digital earnings, and other gains, particularly for individuals and small and medium-sized enterprises (SMEs).
“Literally, any income that you make… any income literally that comes into your account as a taxpayer individual is taxable,” Aja explained.
What is not taxable income
Aja was emphatic that several types of inflows are explicitly not considered income and therefore not taxable, including:
- Gifts
- Inheritance
- Loans
- Life insurance payouts
“If I borrow money from a bank, the money coming into my account… is a loan. So it’s not income,” he said.
He added that gifts, even when substantial, do not attract tax liability.
“If someone sends me money as a gift, that is not income to me, and I will not include it as taxable income,” Aja noted.
Why filing taxes is now critical
Aja warned that the biggest risk under the new tax law is failure to file, not the act of receiving money.
Under the revised framework, automatic reliefs previously granted to taxpayers have been removed, placing responsibility squarely on individuals to declare their income and exemptions.
“They’ve changed the structure. It puts the onus on you, the taxpayer, to go out and buy exemptions. Otherwise, you expose that income to taxation,” he said.
He explained that in the past, taxpayers automatically received 20% relief plus N200,000, whether or not they filed returns. That provision no longer applies.
How tax authorities use bank data
According to Aja, tax authorities may see money flowing into bank accounts, but cannot tax it automatically or withdraw funds arbitrarily.
“They don’t tax inflow. They want to tax income,” he said.
He explained that filing creates the legal basis for taxpayers to explain the source of funds.
“When you file, that’s when they can decide if they agree with your filing or challenge it,” he said.
Without filing, however, tax authorities may assume inflows are income.
“If you don’t file, the tax man will say, ‘We saw this money come in, we assume it’s income, and we want you to pay tax,” Aja warned.
No automatic account deductions without due process
Aja also dismissed fears of direct deductions from bank accounts without notice or due process.
“They cannot go into your account and take funds before you have filed,” he said.
He added that even after filing, enforcement actions would require legal backing.
“They cannot do that unless they have a court order,” Aja stated.
Key takeaway for taxpayers
Summarising the reforms, Aja said the new tax law does not introduce new personal taxes but tightens compliance by eliminating automatic reliefs and increasing reliance on accurate self-reporting.
“Anything that comes into your account, apart from gifts, inheritance, insurance, and loans, is income. Filing is what protects you,” he concluded.
What you should know
- Earlier in the week, tax expert and Partner at PwC Nigeria, Kenneth Erikume, called on finance teams and businesses to urgently automate key compliance processes to avoid costly penalties under Nigeria’s new tax regime.
- Erikume gave the advice while speaking at FirstBank’s Nigeria Economic Outlook 2026, warning that the new tax laws impose significant penalties for errors that should no longer be left to manual processes.
