Private ruling: Scholarship income
Published: May 2012
Ruling period: 1 July 2011 to 30 June 2013
Date scheme commenced: 1 July 2011

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

Relevant facts and circumstances: You are enrolled as a full-time student. You have been awarded a research scholarship for the 2011-12 and 2012-13 financial years. There are no conditions attached to the scholarship that require you to work for the paying organisation now or into the future.

Relevant legislative provisions: Income Tax Assessment Act 1997 Item 2.1A of the table in section 51-10. | Income Tax Assessment Act 1997 Section 51-35.

Reasons for decision: Summary: Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year. However, if an amount is exempt income, it is not included in the assessable income of a taxpayer. Item 2.1A of the table in section 51-10 of the 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. As you satisfy all the above requirements, your scholarship income is exempt from tax.

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