Private ruling: Income from Scholarships
Published: November 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Are the scholarships that you have received exempt from tax? | A1: Yes.

Relevant facts and circumstances: You are a full time student enrolled at a University in your first year of study. You have received two scholarships. There are no conditions attached to the scholarships that require you to work for the university now or in the future. The scholarships are paid principally for educational purposes.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5, | Income Tax Assessment Act 1997 Section 51-10 and | 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 an Australian resident includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year. However, if an amount is exempt, 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 education purposes and, · there must be no condition that the taxpayer be an employee of the scholarship provider or enter into any contract with scholarship provider that is wholly or principally for labour. In your case, you are a full-time student and have been awarded scholarships. There are no conditions attached that require you to work now or in the near future for the provider. As you have satisfied all the requirements, your scholarship income is exempt from tax.

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.