Private ruling: Government grant
Date of advice: 24 April 2026
Published: 13 July 2026
Ruling period: Income year ending 30 June 20YY
Date scheme commenced: 1 July 20YY

Ruling: Questions and answers | 1. Is the Government grant (the grant) payment you received assessable income under section 6-1 of the Income Tax Assessment Act 1997 (ITAA 1997)? | Answer: Yes. | 2. Is the grant payment you received exempt income under section 6-20 of the ITAA 1997? | Answer: No. An amount of ordinary income or statutory income is exempt income if it is made exempt from income tax by a provision of the ITAA 1997 or another Commonwealth Law. | 3. Are you entitled to claim deductions for expenses associated with the grant under section 8-1 of the ITAA 1997? | Answer: Yes, provided all the requirements of the relevant deduction provisions are satisfied.

Relevant facts and circumstances: You were nominated by the State Government to participate in a program conducted by an organisation, under a full scholarship. The organisation is a bipartisan, private, diplomatic organisation. You received notification of the nomination and invitation to join the program on DD MM 20YY. You were selected for the program due to your expertise in the business sector and the work you undertake for your employer. The program is an X-year program. It involves multiple overseas trips, and multiple interstate travel and accompanying costs. The State Government has stated they will cover all costs associated with the program up to $X (including GST). The State Government credited your account with a $X grant (the grant) on DD MM 20YY. The nature of this grant is purely to fund travel, accommodation and other costs associated with the program. You are required to report all expenditure to the State Government. This includes the supply of documentation and substantiation for all payments associated with the program. You must repay any unallocated amount at the end of the program. You are not being paid for your services in the program by the State Government. Rather, all costs associated with the program are covered under the grant. You are not a full-time student. You are a regular salary and wage employee at your employer.

Relevant legislative provisions: Income Tax Assessment Act 1997 subsection 6-1 | Income Tax Assessment Act 1997 subsection 6-5 | Income Tax Assessment Act 1997 subsection 6-10(2) | Income Tax Assessment Act 1997 section 6-20 | Income Tax Assessment Act 1997 section 8-1 | Income Tax Assessment Act 1997 section 11-15 | Income Tax Assessment Act 1997 section 51-10

Reasons for decision: Summary: The grant payment is assessable income as it is either ordinary income in accordance with section 6-5 or statutory income in accordance with section 6-10 of the ITAA 1997. The amount is not non-assessable non-exempt income by any provision of the ITAA 1997. You are entitled to claim deductions for expenses in relation to the expenditure which meet the requirements of section 8-1 of the ITAA 1997. | Detailed Reasoning - Assessable income: Subsection 6-1(1) states that assessable income consists of both ordinary income and statutory income. Section 6-1 also states that some ordinary income and some statutory income is exempt income (subsection 6-1(2)); exempt income is not assessable income (subsection 6-1(3)); and some ordinary income and some statutory income is neither assessable income nor exempt income (subsection 6-1(4)). | Detailed Reasoning - Ordinary income: Subsection 6-5(2) of the ITAA 1997 provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year. Ordinary income is generally considered to include: • amounts received in return for personal services, whether received in the capacity of an employee or otherwise, and • amounts received periodically or regularly and which the recipient relies on for the maintenance of themselves and/or their dependants ( Federal Commissioner of Taxation v Dixon (1952) 86 CLR 540). Relevant factors in determining whether an amount is ordinary income include: • whether the payment is the product of any employment, services rendered, or any business; • the quality or character of the payment in the hands of the recipient; • the form of the receipt, that is, whether it is received as a lump sum or periodically; and • the motive of the person making the payment. Motive, however, is rarely decisive as in many cases a mixture of motives may exist. An amount that is not ordinary income that is included in assessable income under a specific provision of the Assessment Act is statutory income under subsection 6-10(2). Statutory income serves to expand the scope of income for tax purposes beyond the ordinary meaning of the term. Although some items of statutory income (e.g. dividends and gains from many financial transactions) are also regarded as income according to ordinary concepts, other items (in particular capital gains) are the antithesis of income. | Detailed Reasoning - Statutory income: Statutory income is income that is not ordinary income, but income included as assessable income by way of a specific legislative provision, and this can include some government payments and allowances. Payments of financial assistance by government are commonly referred to as 'bounties', 'subsidies' or 'grants'. | Detailed Reasoning - Exempt Income: Section 11-15 of the ITAA 1997 lists certain types of exempt income, included in Item 2.1A of the table in section 51-10 of the ITAA 1997, which makes exempt from income tax amounts paid as a scholarship, bursary, educational allowance, or educational assistance to a full-time student at a school, college, or university. Section 51-10 provides that, subject to some exemptions and special conditions, 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. In general terms, for a scholarship to be exempt from income tax: • you must be a full-time student at a school, college or university; • you must receive a scholarship, and the scholarship must be provided principally for educational purposes; and • there must be no condition that you be an employee of the scholarship provider or enter into any contract with the scholarship provider that is wholly or principally for labour. | Detailed Reasoning - Application to you circumstances: The grant payment you received from the State Government to fund your participation in the program is ordinary income in accordance with section 6-5. The grant you received is not exempt income in accordance with section 51-10 of the ITAA 1997 as you are not a full-time student at a school, college or university. The grant you received is included in your assessable income as a resident Australian taxpayer in accordance with subsection 6-5(2) of the ITAA 1997. | Detailed Reasoning - Expenses/deductions: Section 8-1 provides that a deduction is allowable for expenses incurred in gaining or producing assessable income, provided those expenses are not capital, private or domestic in nature. Subsection 8-1(1) allows as a deduction for a loss or outgoing "incurred" by a taxpayer in gaining or producing assessable income or 'necessarily incurred' in carrying on a business for the purpose of gaining or producing assessable income. Where a deduction is available under section 8-1, the loss or outgoing is generally allowable in full in the income year it is incurred. Whether a loss or outgoing is incurred is primarily a timing issue. This is because section 8-1 does not require a loss or outgoing to be specifically matched to, and deducted in the same year as, any income produced by that loss or outgoing. Further, it is not necessary for expenditure to actually be made or paid, or for a loss to actually be borne, so long as the taxpayer is "definitively committed" or "completely subjected" to it. | Detailed Reasoning - Application to you circumstances: In your case, the expenses you incur in relation to the grant you received (which are not capital, private or domestic in nature) are deductible under section 8-1 in the income year in which you incur the expense.