Reference no: EM132724345

Sifiso Mkhize (aged 40) is a resident of South Africa. He is employed as a plant supervisor at PulpCo (Pty) Ltd (a South African resident company that manufactures paper). Sifiso is married out of community of property and has 2 children.

He has the following receipts and accruals for the 2020 year of assessment:

Description                                                  Note                                               Amount (R)
Salary received from PulpCo (Pty) Ltd                                               480 000
Uniform allowance from PulpCo (Pty) Ltd         1                                      3 500
Bursary from PulpCo (Pty) Ltd                         2                                 65 000
Local interest                                         3                                        25 250
Gross local dividends                                 4                                           23 750
Rental income                                           5                                        108 000
Proceeds from sale of shares                      6                                           164 500
Proceeds from sale of personal motor vehicle 7                                            125 000
Proceeds from sale of primary residence        8                                            2 500 000

Notes:

1. While on duty at the manufacturing plant of PulpCo (Pty) Ltd, Sifiso is required to use a uniform that has been specially made according to safety standards. The uniform consists of a heavy-duty, chemical-safe blue overall that has the company name, employee name and employee designation clearly printed on the front and back.

2. Sifiso's son is currently studying towards a degree in engineering (NQF level 7) at the University of Cape Town. PulpCo (Pty) Ltd provided Sifiso with a bursary for his son to pay for his tuition fee for the year. Sifiso's remuneration for the prior year of assessment was R400 000.

3. The local interest is received from Sifiso's current and fixed deposit accounts held with South African banks.

4. The local dividends are received in respect of Sifiso's shareholdings in South African resident companies listed on the Johannesburg Stock Exchange.

5. On 1 January 2020, Sifiso sold a portion of his share portfolio for R164 500 (his share portfolio was held for investment purposes). Sifiso purchased these shares on 1 May 2014 for R100 000.

6. On 29 January 2020, Sifiso sold his personal motor car, a Kia Sportage, for R125 000. He originally purchased the car for R195 000 on 15 June 2016. The car has been used mainly for private use.

7. On 20 February 2020, Sifiso sold his primary residence (which originally cost R1 800 000 on 1 June 2009) for an amount of R2 500 000. Sifiso has never effected any improvements on the property.

Required:

Problem 1: Calculate Sifiso Mkhize's taxable income for the 2020 year of assessment.