Taxable income is the amount on which tax will be calculated on.
Formula for Taxable Income:
Taxable income = Gross Income - Exempt Income - Allowable Deductions + Taxable Capital Gains.
Taxable capital gains are the taxable portion of the profit earned from selling an asset, e.g., the sale of your house.
Example:
If a taxpayer earns R500,000 annually, R25,000 local interest, and contributes R50,000 to a retirement fund:
Taxable Income = R500,000 + R1,200 (R25,000 - R23,800 interest exemption) - R50,000 = R451,200
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