Once a business is liable for the ITF levy, the next question is straightforward: how much, and on what figure. Both answers come from ITF itself, not from guesswork.
The rate itself
A liable employer contributes 1% of total annual payroll for each calendar year. The Act phrases it as a duty on the employer directly, not a deduction taken from anyone's wages.
That distinction matters at payslip level. Staff should never see a line calling this an ITF deduction, because the cost sits with the company, not the worker.
What counts as payroll
This is where employers most often get the sum wrong. ITF's own Form 5 guide defines payroll as all basic pay, allowances and other entitlements paid in or outside Nigeria.
In practice, that reaches further than a basic salary line. The form specifically lists items such as overtime, housing and transport allowances, directors' fees, bonuses, commissions, leave allowance, casual wages, and other cash or in-kind benefits.
Employers who total up only basic salaries usually end up with a lower number than they should. Since the rate is a percentage of that total, an incomplete payroll figure understates the contribution itself, not just a line on a form.
Building the figure correctly
A clean payroll total for ITF purposes should add together, for the full calendar year:
- Basic salary for every employee who counts under ITF's definition.
- Allowances: housing, transport, leave and any other regular allowance paid.
- Directors' fees, where the company pays them.
- Bonuses, commissions and overtime actually paid in the year.
- Wages paid to casual or temporary staff during the year.
Pull these from payroll records rather than estimating. A figure built from memory tends to miss the smaller, irregular items.
Why this matters beyond the certificate
An understated payroll figure does not just risk a query from ITF later. It can also leave you short if your business ever needs to show its full contribution history, for instance to support an ITF compliance certificate request before a tender deadline.
Getting the base figure right once, at the start of the year, is simpler than reconstructing it under pressure later. Payroll software often already separates these items out; the task is usually pulling the totals together, not calculating anything new.
Common mistakes
- Treating payroll as basic salary only, and leaving out allowances.
- Forgetting directors' fees because directors are not on a standard payslip.
- Missing casual or contract wages paid outside the normal payroll run.
- Recalculating the figure from memory instead of from payroll records.
See who must pay the ITF levy if you are still working out whether your business is liable at all, and the ITF compliance certificate guide for what happens once your contribution is paid and recorded.