Sihlangule Mhlaba (26) runs an educational training facility. She trades as a sole proprietor. She is registered for value-added tax (VAT) on the invoice basis. She is a resident of the Republic.

An analysis of Sihlangule Mhlabas income and expenditure for 2022 financial year (all amounts exclude VAT unless otherwise stated):

Income

Training fees

400 000

Sale of second-hand overhead projectors (note 1)

12 640

Donation received from a former student who received a promotion due to attending Sihlangules training

70 000

Interest on current account

20 000

Foreign interest

45 000

Local dividends

15 000

Insurance payout received (note 2)

11 500

Trainer of the year award (note 3)

50 000

Expenditure

Bad debts (note 4)

32 260

Other deductible expenditure

69 912

Overhead projector (note 5)

24 000

Motor car (note 5)

275 000

Petrol for the motor car

12 793

Repairs to training room desks

12 520

Salary paid to staff

66 400

Salary paid to Sihlangule

100 000

Traffic fines paid

2 000

Compensation award (note 6)

12 500

Legal expenses paid in connection with this compensation award

1 800

Rent payable (note 7)

24 000

Prepaid expenses (note 8)

180 000

Notes

1. The overhead projectors had a tax value of R0 on 1 March 2021. It had been written off over 4 years and had an original cost of R15 000

2. The insurance payout was for a laptop that was purchased on 1 November 2021 for R12 000. It was stolen out of Sihlangules car on 31 December 2022. SARS allows wear and tear under s11(e) over three years for laptops and computers. A replacement computer was purchased per note 5.

3. Sihlangule Mhlaba won the department of trainings trainer of the year award,

4. Bad debts written off of R32 260 comprise the following:

R 260 owing by a long-standing customer of Sihlangule Mhlaba (a parent of three children who had all been coached by Sihlangule Mhlaba) for outstanding fees. This customer has since emigrated and Sihlangule Mhlaba has been unable to trace him.

R22 000 relating to a loan granted to Sihlangules friend who turned out to be a frenemy. The frenemy blocked Sihlangule on all social media platforms and moved to a different town, never to be heard from. The R22 000 includes interest she had charged the frenemy of R2 500.

5. The following assets were purchased Sihlangule Mhlaba:

A replacement laptop that was purchased on 1 January 2022 for R12 500

New overhead projector that was purchased R24 000 on 1 June 2021

Motor car that was purchased on 1 July 2021 for R313 500 (R275 000 plus VAT of R38 500). Sihlangule Mhlaba has the sole use of it (Sihlangule Mhlaba maintains accurate records of her travelling and is able to prove that her business travelling is 40% of her total travelling). SARS grants wear and tear over 5 years.

6. The compensation was awarded to a training attendee who tripped and fell on the steps of the training hall. There was no negligence but chose to pay so that her training attendees note that she cares about all her attendees.

7. Sihlangule had entered into a lease agreement on 1 March 2020 (previous year of assessment) for a sporting ground she can use to train school children on weekends and during holidays. The terms of the agreement were as follows:

. Lease term is 10 years, and a lease premium is payable on 1 May 2020 to the value of R55 000.

. A sports hall to be built and the contract stipulated an amount of R295 000.

. Rental of R2 000 per month payable.

. Sihlangule had taken 4 months from 1 May 2020 until 31 August 2020 to build the hall and it was brought into use of 1 September 2020.

8. The following amounts were paid for the period from:

. Rates for 1 March 2022 to 31 August 2023 for R120 000

. Water and electricity for 1 March 2022 to 31 July 2023 for R60 000.

REQUIRED:

Calculate the taxable income of Sihlangule for the 28 February 2022 year of assessment.

Sihlangule Mhlaba (26) runs an educational training facility. She trades as a sole proprietor. She is registered for value-added tax (VAT) on the invoice basis. She is a resident of the Republic.

An analysis of Sihlangule Mhlabas income and expenditure for 2022 financial year (all amounts exclude VAT unless otherwise stated):

Income

Training fees R400 000

Sale of second-hand overhead projectors R12 640 (note 1)

Donation received from a former student who received a promotion due to attending Sihlangules training R70 000

Interest on current account R20 000

Foreign interest R45 000

Local dividends R15 000

Insurance payout received (note 2) R11 500

Trainer of the year award (note 3) R50 000

Expenditure

Bad debts (note 4) R32 260

Other deductible expenditure R69 912

Overhead projector (note 5) R24 000

Motor car (note 5) R275 000

Petrol for the motor car R12 793

Repairs to training room desks R12 520

Salary paid to staff R66 400

Salary paid to Sihlangule R100 000

Traffic fines paid R2 000

Compensation award (note 6) R12 50)

Legal expenses paid in connection with this compensation award R1 800

Rent payable (note 7) R24 000

Prepaid expenses (note 8) R180 000

Notes

1. The overhead projectors had a tax value of R0 on 1 March 2021. It had been written off over 4 years and had an original cost of R15 000

2. The insurance payout was for a laptop that was purchased on 1 November 2021 for R12 000. It was stolen out of Sihlangules car on 31 December 2022. SARS allows wear and tear under s11(e) over three years for laptops and computers. A replacement computer was purchased per note 5.

3. Sihlangule Mhlaba won the department of trainings trainer of the year award,

4. Bad debts written off of R32 260 comprise the following:

R 260 owing by a long-standing customer of Sihlangule Mhlaba (a parent of three children who had all been coached by Sihlangule Mhlaba) for outstanding fees. This customer has since emigrated and Sihlangule Mhlaba has been unable to trace him.

R22 000 relating to a loan granted to Sihlangules friend who turned out to be a frenemy. The frenemy blocked Sihlangule on all social media platforms and moved to a different town, never to be heard from. The R22 000 includes interest she had charged the frenemy of R2 500.

5. The following assets were purchased Sihlangule Mhlaba:

A replacement laptop that was purchased on 1 January 2022 for R12 500

New overhead projector that was purchased R24 000 on 1 June 2021

Motor car that was purchased on 1 July 2021 for R313 500 (R275 000 plus VAT of R38 500). Sihlangule Mhlaba has the sole use of it (Sihlangule Mhlaba maintains accurate records of her travelling and is able to prove that her business travelling is 40% of her total travelling). SARS grants wear and tear over 5 years.

6. The compensation was awarded to a training attendee who tripped and fell on the steps of the training hall. There was no negligence but chose to pay so that her training attendees note that she cares about all her attendees.

7. Sihlangule had entered into a lease agreement on 1 March 2020 (previous year of assessment) for a sporting ground she can use to train school children on weekends and during holidays. The terms of the agreement were as follows:

. Lease term is 10 years, and a lease premium is payable on 1 May 2020 to the value of R55 000.

. A sports hall to be built and the contract stipulated an amount of R295 000.

. Rental of R2 000 per month payable.

. Sihlangule had taken 4 months from 1 May 2020 until 31 August 2020 to build the hall and it was brought into use of 1 September 2020.

8. The following amounts were paid for the period from:

. Rates for 1 March 2022 to 31 August 2023 for R120 000

. Water and electricity for 1 March 2022 to 31 July 2023 for R60 000.

REQUIRED:

Calculate the taxable income of Sihlangule for the 28 February 2022 year of assessment.