SLK (Pty) Ltd has a net income from operations (before the sale of the capital assets) of

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Question:

SLK (Pty) Ltd has a net income from operations (before the sale of the capital assets) of R400 000. The company brought forward an assessed capital loss of R540 000 from the previous year of assessment. The company's financial year-end is 31 December 2022.

The following information pertains to the disposal of SLK (Pty) Ltd.'s capital assets: 

Office building:

SLK (Pty) Ltd sold an office building on 30 December 2022 for R4 500 000. This office building was acquired on 30 December 2005 for R3 200 000. In addition to the acquisition cost, a transfer cost of R72 000 was paid to the lawyer. The following costs were incurred while the company owned the asset:

Improvements R740 000

Interest paid on mortgage bond (deducted for normal tax purposes) 890 000

Property tax (deducted for normal tax purposes) 350 000

Total 1 980 000

The building did not qualify for section 13quin allowance as it was erected before 1 April 2007. 

Manufacturing asset SLK (Pty) Ltd bought a used manufacturing asset on 1 October 2000 for R500 000. The asset qualified for the section 12C allowance at 20%. On 1 November 2020, the company made improvements to the asset at a total cost of R800 000. These improvements qualify for their own allowance at 20% in terms of section 12C. The asset was sold on 30 September 2022 for R2 500_000. The total base cost of this asset at the time of disposal was R345 641. 

Delivery vehicle During the 2022 financial year, SLK (Pty) Ltd realized a capital loss of R360 000 from the disposal of a delivery vehicle.

Required: Calculate the taxable income of SLK (Pty) Ltd for the 2022 year of assessment. NB: VAT implications for this question must be ignored. Round off your calculations to the nearest whole number.