Private ruling: Scholarship income
Published: July 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Are the amounts you receive from a scholarship for full-time study exempt from tax? | A1: Yes.

Relevant facts and circumstances: You are currently studying full time at university. You applied for a number of scholarships and you were awarded one. The conditions of the scholarship require you to remain enrolled full time, achieve a minimum GPA, not hold another similar scholarship and conduct yourself in a professional manner. You have been working part time for the scholarship provider. It is a condition of your degree that you complete a minimum number of days work experience with a company undertaking the duties relating to your field of study. If you wanted to you could change to a different company and it would not affect your scholarship. There is no obligation to work for the company and the scholarship has not been issued in lieu of any work completed or to be completed with the company.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 51-10. | Income Tax Assessment Act 1997 Section 51-35.

Reasons for decision: Summary: (ITAA 1997) provides that, subject to the exceptions and special conditions contained within section 51-35 of the ITAA 1997, income received by way of a scholarship, bursary, educational allowance or education assistance by a full time student at a school, college or university is exempt from income tax. For the scholarship to be exempt from income tax: · the taxpayer must be a full time student at a school, college or university; · the taxpayer must be in receipt of a scholarship and the scholarship must be provided principally for educational purposes; 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. In your case, you are a full time student in receipt of a scholarship. Although you are an employee of the scholarship provider this was not a condition of the scholarship. The purpose of the payments is to provide you with the opportunity to obtain practical experience. Thus, the payments are provided principally for educational purposes. As the payments meet the requirements of section 51-10 of the ITAA 1997 they are exempt income and do not form part of your assessable income.

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