Private ruling: Scholarship
Date of advice: 9 August 2019
Published: October 2019
Ruling period: Income year ended 30 June 2019
Date scheme commenced: 1 July 2018

Ruling: Q1: Is the Scholarship you received exempt from income tax? | A1: Yes. As you are a full time student in receipt of a scholarship provided principally for educational purposes and are not required to enter into a labour contract with the scholarship provider, your scholarship income is exempt from income tax.

Relevant facts and circumstances: The University awarded you the research scholarship. Information given to you by the scholarship provider says: The Scholarships support second, third or fourth year student enrolled in the Sciences to undertake a project under the supervision of a staff member in the School. The scholarships are designed to give students the opportunity to gain hands-on experience working in a research environment. At the time you received the scholarship you were a full time student enrolled at the University. You had finished your bachelor degree. However you did not officially graduate until later. You received the offer to study honours prior to your bachelor's graduation ceremony. When you received the scholarship payment it was effectively a break between the two degrees: your bachelor degree and your honours. During this break you were undertaking the research project that you would receive the scholarship for. You are not currently an employee of the scholarship provider. You are not required (or can you be required) to become an employee of the scholarship provider (either during or after the completion of your studies) under the conditions of the scholarship. The terms of the scholarship do not amount to a contract that is wholly or principally for your labour (for example, a cadetship or research grant). There was no contract associated with the scholarship. However you were required to perform research on a project for several weeks and documentation of any contact hours was not required. The condition was that you must give a presentation on the findings from the research at the completion of the project. You cannot be required, under the terms of the scholarship, to provide personal services (now or in the future) for the scholarship provider (or a nominee). The scholarship payment is provided principally for educational purposes.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 6-15(2) | Income Tax Assessment Act 1997 section 51-10 | Income Tax Assessment Act 1997 section 51-35