Letitia is a 42-year-old South African resident. During the 2023 year of assessment, her employer awarded a bona fide bursary to the value of R20 000 for her 12-year-old son to continue his studies at Bishops Primary, a recognised educational institution. Letitias remuneration proxy is R601 000 for the 2023 year of assessment. Letitia believes that the bursary of R20 000 is exempt from normal tax and that she does not have to pay any tax on the bursary. REQUIRED: Advise Letitia, with reference to the Income Tax Act, whether she is correct in stating that she will not be liable to pay tax on the R20 000 bona fide bursary. (12 marks) Competency Framework Reference: E1.3 Application of tax legislation to calculate tax obligation a) Analyse the taxpayers tax profile. c) Apply the relevant law to the facts, determine the tax position and compute the tax payable (VAT or normal tax) for individuals and companies. I1 Personal ethics a) Act honestly and demonstrate integrity, accountability and trustworthiness whilst interacting with others. b) Carry out work in a manner that protects public interest, the client, employer and other relevant stakeholders, and put these before ones own interest. I2 Business ethics c) Display ethical behaviour whilst interacting with the organisations stakeholders. I3 Professional ethics g) By way of general conduct, demonstrate a commitment to the ethical values upheld by the profession

2023 tax year (1 March 2022 28 February 2023) Taxable Income (R) Rates of tax (R) 1 226 000 18% of taxable income 226 001 353 100 40 680 + 26% of taxable income above 226 000 353 101 488 700 73 726 + 31% of taxable income above 353 100 488 701 641 400 115 762 + 36% of taxable income above 488 700 641 401 817 600 170 734 + 39% of taxable income above 641 400 817 601 1 731 600 239 452 + 41% of taxable income above 817 600 1 731 601 and above 614 192 + 45% of taxable income above 1 731 600 Tax Rebates 2023 Primary 16 425 Secondary (65 and older) 9 000 Tertiary (75 and older) 2 997 Medical Aid Tax Credits 2023 Main member R347 Taxpayer and first dependent R694 Each additional dependent R234 Fixed cost table: 1 March 2022 - 28 February 2023 Value of the vehicle (including VAT) (R) Fixed cost (R p.a.) Fuel cost (c/km) Maintenance cost (c/km) 1 - 95 000 29 836 131.7 40.9 95 001 - 190 000 52 889 147.0 51.1 190 001 - 285 000 76 033 159.7 56.3 285 001 - 380 000 96 197 171.8 61.5 380 001 - 475 000 116 438 183.8 72.3 475 001 - 570 000 137 735 210.8 84.9 570 001 - 665 000 159 031 218.0 105.5 exceeding 665 000 159 031 218.0 105.5 Reimbursive travel allowance 418 cents Severance benefits and retirement fund lump sum benefits Taxable Income (R) Rates of tax (R) 1 - 500 000 0% of taxable income 500 001 - 700 000 0 + 18% of taxable income above 500 000 700 001 - 1 150 000 36 000 + 27% of taxable income above 700 000 1 050 000 and above 130 500 + 36% of taxable income above 1 050 000