Consolidated Relief Allowance (CRA)

What is CRA?

The Consolidated Relief Allowance (CRA) is a mechanism introduced by the Personal Income Tax (Amendment) Act 2011 to reduce the tax burden on employees and individuals. It replaces the defunct tax allowances (transport, housing, etc.) with a single, unified relief.

How is it Calculated?

CRA is calculated as:

₦200,000 or 1% of Gross Income (whichever is higher)
PLUS
20% of Gross Income

This total amount is deducted from your Gross Income before tax is calculated.

Example Calculation

If you earn ₦5,000,000 per year:

1. Fixed Base: 1% of ₦5m = ₦50,000. Since ₦200,000 is higher, we take ₦200,000.
2. Variable Base: 20% of ₦5m = ₦1,000,000.
3. Total CRA: ₦200,000 + ₦1,000,000 = ₦1,200,000.

Taxable Income = ₦5,000,000 - ₦1,200,000 = ₦3,800,000.

Why it Matters

By claiming CRA, you significantly lower the amount of income that is subject to tax. This is automatically applied in most PAYE calculations, but self-employed individuals must claim it when filing Direct Assessment.

Key Takeaways

• Available to all taxable residents.
• Automatically reduces your taxable base.
• Combines a fixed relief (₦200k) with a percentage relief (20%).