Prof. Mohamed Omar, a registered architect, is the proprietor of Omar Architects. Since he is a full time employee of TRD Ltd., Omar Architects is managed by his wife, Mrs. Zahra Omar who draws a monthly salary of Sh.87,500 (PAYE deducted per month Sh.20,000).

TRD Ltd. provided the following emoluments to Prof. Omar for the year ended 31 December 2020:

1.	Basic salary of sh.450,000 per month (PAYE deducted was Sh.85,000 per month).
2.	Free housing was provided with water, electricity and telephone with effect from September 2000. Prior to this, he was living in his own house. He paid a nominal rent of Sh.10,000 per month towards rent. Water consumed was for Sh.14,400, telephone was Sh.15,000 and electricity was sh.18,000 during the year. The market rental value for the house is estimated at Sh.150,000 per month.
3.	In December 2020, the Board of TRD Ltd. issued him 2,000 ordinary shares for his good performance during the year. The last valuation of the shares was at Sh.50 each. TRD Ltd.s issued share capital is now 25,000 shares. The company paid a dividend of Sh.10 per shares on 30 December 2020.
4.	Company car of 2000cc which cost Sh.950,000 in 2019
5.	Leave pay equal to one months basic salary.
6.	Life insurance premium per each household member of Sh.10,000 per annum. This covers himself, wife and son.
7.	Pension contribution at 5% of basic salary per month to the companys registered pension scheme. He contributes a similar amount.
8.	During the year, the company paid school fees for his son amounting to Sh.95,000. The amount was disallowed for tax purposes on TRD Ltd.
9.	TRD Ltd. operates a medical cover for all staff with AAR. In the year 2000, the amount paid for Prof. Omars cover amounted to Sh.45,000.

Prof. Omars other incomes were as follows:

Omar Architects made a loss of Sh.700,000 for the year 2020.

During the year, he received pension amounting to Sh.280,000 from his previous employer. He has been receiving this annually since 2017.

Amounts received for rented personal property was Sh.100,000 per month from September 2016. Repairs and painting cost sh.25,600 before letting. The house was later furnished at a cost of Sh.600,000 in October 2016. The house had a mortgage of Sh.2,000,000 and Sh.600,000 was paid during the year, out of which Sh.330,000 was capital.

Mrs. Zahra Omar had previously been working for World Vision, an International NGO, on contract since January 2018. However, on 31 December 2019, her five year contract was terminated and a compensation of Sh.1,200,000 was paid. Before termination her remuneration was Sh.360,000 per annum. She used the proceeds to purchase a plot in Nairobi, which she sold in November 2020 and made a profit of sh.600,000. The balance of the amount was used to set up a small business whose accounts reflected the following:

	Sh.	Sh.
Gross profit Less: expenses Staff salaries Salary to self Partitions Computers Insurance, rent and rates General expenses Interest on loan Net loss for the year	. . 480,000 600,000 200,000 1,200,000 180,000 220,000 365,000	3,000,000 . . . . . . . 3,245,000 (245,000)

Required:

(a) Taxable income of Prof. Omar for the year of income 2020.

(b) Tax payable by Prof. Omar for year of income 2020.

(c) Show how the compensation paid to Mrs. Zalma Omar will be assessed.

(d) Comment on any information not used above.