Private ruling: Scholarship income
Date of advice: 25 July 2025
Published: 29 September 2025
Ruling period: Year ended 30 June 20YY | Year ended 30 June 20YY
Date scheme commenced: XX MM 20YY

Ruling: Q1: Does the grant constitute assessable income under section 6-5 (ordinary income) or section 6-10 (statutory income of the Income Tax Assessment Act 1997 (ITAA 1997)? | A1: Yes. | Q2: Do any exemptions or concessions apply to the grant under section 51-10 of ITAA 1997, particularly in relation to education and training payments? | A2: No.

Relevant facts and circumstances: You are an Australian resident, undertaking structured professional training, working with X. Your 20YY Income Tax Return has been lodged, confirming your employment with X in the capacity of a X. On DD MM 20YY, you were notified via email from a recognised organisation involved in structured professional development that you had been awarded a grant. This grant is part of a X Government initiative aimed at supporting individuals undertaking structured professional training, with the goal of increasing enrolments in targeted development pathways during the 20YY and 20YY. The purpose of the Grant include. • A potential reduction in income during the transition from one structured training environment to another community-based setting is a significant concern for individuals considering this pathway. • Current and projected workforce challenges in one sector have led to initiatives aimed at improving the appeal of this training stream. • This initiative represents an initial step toward addressing disparities in entitlements between participants in different professional training pathways. The grant up to $X is paid in X instalments; $X at the start of training, $X after X months (if still enrolled), and $X after X months (if still enrolled), with the final payment supporting exam-related expenses. On DD MM 20YY, you received the first instalment of the grant. On DD MM 20YY, you received the second instalment payment of $X, which was reflected on your bank statement on DD MM 20YY.

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

Reasons for decision: Summary: Scholarship income Does the grant constitute assessable income under section 6-5 (ordinary income) or section 6-10 (statutory income of the Income Tax Assessment Act 1997 (ITAA 1997)? | Detailed Reasoning - Detailed reasoning: Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a resident taxpayer includes income according to ordinary concepts (ordinary income) derived from all sources during the income year. Ordinary income has generally been held to include three categories, namely income from 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, or • Have an element of periodicity, recurrence or regularity. The Grant is paid to individuals undertaking professional training and is intended to support their transition. It includes. • A top-up payment of $X for first-year trainees ($X at the start of training and $X after X months if still enrolled). • $X to support the exam costs. • Delivered in three instalments over X months These payments supplement income and are received in connection with professional development, making them ordinary income under section 6-5 of ITAA 1997. | Detailed Reasoning - Detailed reasoning: Section 51-10 of the ITAA 1997 provides exemption for education and training payments under certain government programs. To qualify • The payment must be made under a program declared by the Minister to be an education or training program. • The payment must be principally for the purpose of education and training. The Grant: • Is not part of a declared education or training program under Commonwealth legislation. • Is not classified as non-assessable non-exempt (NANE) income by the ATO. • Does not relate to COVID-19 disaster payments or similar exempt schemes. The Grant appears to be a financial incentive to encourage training, including support for exam costs, but not explicitly as an education or training payment under a declared program.