Private ruling: Fellowship
Published: July 2012
Ruling period: Year ended 30 June 2012 | Year ended 30 June 2013
Date scheme commenced: 1 July 2011

Ruling: Q1: Are your fellowship payments included as assessable income? | A1: Yes.


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5. | Income Tax Assessment Act 1997 Division 51.

Reasons for decision: Summary: Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of an Australian resident includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year. Ordinary income has generally been held to include three categories, namely, income form rendering personal services, income from property and income from carrying on a business. Other characteristics of income that have evolved from case law include receipts that: · are earned, · are expected, · are relied upon, and · have an element of periodicity, recurrence or regularity. It is not necessary for all of the above indicators to be present for a receipt to be considered ordinary income. The fellowship payments you receive relate to the research services you are providing. The funds are used for your tuition and living expenses. Your fellowship income is ordinary income for the purposes of subsection 6-5(2) of the ITAA 1997. The fellowship payments will therefore form part of your assessable income unless it is exempted by a provision of either the Income Tax Assessment Act 1936 or the ITAA 1997. Certain amounts of income are exempt from income tax under section 51-1 of the ITAA 1997 if the amount is of a type listed in the tables in Division 51 of the ITAA 1997. Item 2.1A of the table in section 51-10 of 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 educational assistance by a full-time student at a school, college or university is exempt from income tax. You are not a full time student. Therefore your fellowship income is not exempt under section 51-10 of the ITAA 1997. In determining liability to Australian tax on income it is necessary to consider not only the income tax laws, but also any applicable tax agreement. The relevant agreement operates to avoid the double taxation of income received by Australian and foreign residents. Under paragraph one of the relevant article, items of income of a resident of Australia, wherever arising, not dealt with in the foregoing Articles shall be taxable only in Australia. However, paragraph 3 of the article provides that items of income of an Australian resident from the overseas country may also be taxed in that country. Therefore, your fellowship payments may be taxed in Australia and the overseas country. There are no other exemptions relevant to your fellowship. Therefore your fellowship income is assessable under subsection 6-5(2) of the ITAA 1997.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet. | Relevant facts: You are an Australian resident for tax purposes. | You received a Fellowship. | The funds support you during your overseas stay. | The fellowship is intended to support tuition, roundtrip travel between Australia and the overseas country and living expenses in connection with one year of research at the overseas educational institution. | You received the fellowship payments in two instalments. The first instalment was received in Australia. The second instalment was sent by cheque to you from the overseas country. | You have a short term scholar visa for your stay overseas and are permitted to work there for six months. | The fellowship program requires you to devote full time to and complete your research plan. The fellowship funds are not intended to fund other expenses such as travel to professional meetings, conferences, seminars or conventions, performances or exhibitions, publication costs, equipment purchases such as personal computers and mobile phones, research assistants, institutional overhead costs, forgone salary, support for dependents, repayment of loans, beginning studies in any subject or retroactive program support. | You are not an employee of the organisation that pays the fellowship. | Prior to receiving a fellowship payment, you agreed to submit an update on your research.