Nicky and Marsha own and operate a small supermarket in partnership. They share profits and losses equally. The profit and loss account for the year ended 31st December 2013 is as follows:

Gross Profit $3,620,000

Less $

Salaries and wages 397,000

General expenses 265,000

Bad Debt 205,000

Motor vehicle expenses 95,000

Insurance 290,500

Depreciation 145,000 1,397,500

Net profit 2,222,500

Appropriation Account

Partner's salary allowances

Nicky 925,000

Marsha 925,000

Interest on capital

Nicky 358,000

Marsha 323,000

Share of profits

Nicky 154,250

Marsha 154,250

2,222,500

Other information:

a. The partners' salary and interest are as given in the appropriation account.

b. Included in general expenses is the amount of $82,000 for subscriptions and donations. A breakdown of the subscriptions and donations is as follows: $40,000, donations to church and school events not on the CIT's approved list. $42,000, magazine and service club (Lioness) subscriptions.

c. Bad debts totaling $65,000 are in relation to a debtor who is bankrupt and the remaining balance is a general provision.

d. Nicky is 50 and Marsha is 68 years old.

e. Nicky received net interest income on a fixed deposit at the bank amounting to $60,000 for the year.

f. Capital allowances for assets bought during the year amount to $200 000.

Required:

Compute the income tax liability of Nicky and Marsha for the year of assessment 2013, stating all necessary assumptions.

Non-taxable threshold for 2013 $507 312.00