Can You Claim “Black Tax” as a Tax Deduction in Nigeria?

You may send money to your parents every month, pay a younger sibling’s school fees, cover a relative’s medical bills or regularly help with household expenses. These responsibilities are often described as “Black tax” — the financial support people provide to family members and, sometimes, their wider community.

But when you are calculating your tax, can those payments reduce your taxable income?

For most ordinary family support payments, the answer is no.

The reason comes down to how Nigerian tax law treats business expenses and personal expenses.

What counts as a tax-deductible business expense?

Under the Nigeria Tax Act 2025, expenses incurred in carrying on a trade, business, profession or vocation can generally be deducted when they are wholly and exclusively incurred in producing the income. The Act also specifically allows certain expenses such as salaries and wages paid to employees.

The Act then draws a clear line around private spending.

Section 21 says a deduction is not allowed for a domestic or private expense, or expenditure on assets that are not used for the purpose of the trade, business, profession or vocation.

That distinction matters for freelancers and self-employed people.

Imagine you are a Nigerian freelance designer earning ₦6 million from clients during the year. You send ₦100,000 every month to your mother to support her household.

That payment may be important to you and your family, but it does not become a business expense simply because it comes from your freelance income.

You generally cannot record the ₦1.2 million annual family support as an expense of your design business and deduct it from your business income.

The same principle would apply if you pay your sibling’s university fees, send money to relatives each month or cover a family member’s personal medical expenses.

What if the money goes to a family member who works in your business?

This is where the situation can change.

Suppose you run a small photography business and your sister genuinely works for the business as an editor. You pay her ₦150,000 per month for that work.

That payment is different from simply sending your sister ₦150,000 as family support.

The Nigeria Tax Act expressly includes salary, wages and other remuneration paid to employees among expenses that may be deductible when determining business income, provided the expense meets the requirements of the Act.

In practice, the important question is whether the payment is genuinely connected to the business.

There should be a real role, actual work performed and records supporting the arrangement. You should also keep the relevant payroll, payment and employment records.

Simply describing a family transfer as “salary” does not turn a private payment into a business expense.

What about gifts and donations?

Gifts also need to be separated from business expenses.

The Nigeria Tax Act contains provisions dealing with gifts and with certain donations. However, the specific deductible-donation provision in section 164 is framed for companies and covers donations to specified funds, bodies and institutions, subject to the conditions in that section.

That should not be confused with sending money to a parent, sibling or other relative.

For an individual freelancer, a personal gift or family-support payment should not simply be treated as a deductible business expense because it was financially necessary or because the recipient depended on you.

So what should freelancers keep?

This does not mean you should ignore records of family payments.

Keep your personal and business records separate.

For business expenses, retain invoices, receipts, payment confirmations and other evidence showing what you paid for and how the expense relates to your freelance work.

For family support, keep your own records if you need to track your personal finances — but don’t include those payments as business expenses merely because they came from your business account.

This separation becomes especially useful when your freelance income passes through several accounts or payment platforms.

For example, if a client in the UK pays you through a payment platform, you may receive the money, pay a platform fee, move funds to your Nigerian bank account and then send part of the money to your parents.

Those are different transactions with different purposes.

Your records should make that distinction clear.

The practical takeaway

Supporting your family can be a significant part of your financial life, but family responsibility and business expenditure are not automatically the same thing for tax purposes.

For a Nigerian freelancer, the safer approach is to ask of every expense:

Was this expense incurred in producing my business income, and can I support that connection with proper records?

If the answer is no, don’t force it into your business expenses.

And if a family member genuinely works in your business, keep the employment, payment and business records that show what the arrangement actually is.

Good record keeping makes these distinctions much easier to manage, especially when it is time to prepare your tax return.

LessaTax helps freelancers organise their income, expenses and supporting financial records throughout the year, so their records are easier to understand when tax time comes.