Private ruling: Exempt income - education and training
Date of advice: 28 July 2025
Published: 29 September 2025
Ruling period: Year ended 30 June 20XX
Date scheme commenced: DDMM20YY

Ruling: Q1: Is the scholarship income you receive as a part-time student exempt under the Income Tax Assessment Act 1997 (ITAA 1997) section 51-10? | A1: No. You do not meet the conditions set out in section 51-10 of the ITAA 1997 which must be met for scholarship income to be exempt from income tax.

Relevant facts and circumstances: On DDMM20YY, you enrolled as a student at ABC University (the university) on a full-time basis. You receive a scholarship. Your scholarship assists students with their living costs while undertaking a graduate research course. Payments are made to you fortnightly into an Australian bank account. On DDMM20YY, you became enrolled on a part-time basis due to a medical condition. The university confirmed that your scholarship would continue in accordance with their guidelines. Your scholarship has since been treated as taxable income by the university. The scholarship does not require employment, labour or guarantee future employment. The scholarship was awarded to you based solely on equity grounds.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 6-5 | Income Tax Assessment Act 1997 section 6-15 | Income Tax Assessment Act 1997 section 51-10 | Income Tax Assessment Act 1997 section 51-35

Reasons for decision: Summary: Section 6-5 of the ITAA 1997 provides that assessable income includes income according to ordinary concepts, that is, ordinary income. 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). Payments received under a scholarship, bursary, educational allowance or educational assistance are considered to be ordinary income. Subsection 6-15(2) of the 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 the 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. 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. In your case, your scholarship is not exempt from income tax because you are a part-time student. You do not meet one of the essential requirements set down by section 51-10 of the ITAA 1997, that is, that you must be a full-time student at a school, college or university. Whilst we accept that you are studying part-time due to a medical condition, the income tax law specifically limits the tax exemption of certain scholarships to full-time students. No such concession is available to part-time students under the income tax law. As your scholarship payments are income according to ordinary concepts and are not exempt under the provisions of the income tax law, your part-time scholarship is assessable income under section 6-5 of the ITAA 1997. The scholarship payments are therefore included in your taxable income.