Private ruling: Scholarship Income
Date of advice: 21 July 2016
Published: August 2016
Ruling period: Year ended 30 June 2019
Date scheme commenced: 1 July 2015

Ruling: Q1: Is your scholarship exempt from income tax? | A1: Yes

Relevant facts and circumstances: You study full-time at a university. You won a scholarship for excellence. The scholarship states it can be used at your discretion to contribute towards education related expenses. You are not employed by the scholarship provider. You have not signed any employment contracts or will be required to work for the scholarship provider when your study is completed.

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

Reasons for decision: Summary: Subsection 6-15(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that if an amount is exempt income, it is not assessable income. Section 51-10 of the ITAA 1997 provides, subject to some exceptions listed in section 51-35 of that Act, that a scholarship, bursary, educational allowance or educational assistance payment is exempt from income tax if it is paid to a full-time student at a school, college or university. In general terms, for a scholarship to be exempt from income tax: • The taxpayer must be in receipt of a scholarship and the scholarship must be provided principally for educational purposes. • The taxpayer must be a full-time student at a school, college or university, and • There must be no condition that the taxpayer be an employee of the scholarship provider or enter into any contract with the scholarship provider that is wholly or principally for labour. 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.