Private ruling: Assessable income
Date of advice: 19 July 2016
Published: August 2016
Ruling period: Year ended 30 June 2017. | Year ended 30 June 2016.
Date scheme commenced: 1 July 2015

Ruling: Q1: Is the scholarship money you receive included in your assessable income? | A1: No.

Relevant facts and circumstances: You are a full-time student at the university. You received a scholarship. The scholarship is awarded for educational purposes. The scholarship is not bound to any condition other than satisfactory academic progress. The terms of the scholarship do not require you to provide personal services to the scholarship provider or that you will be or become an employee of the authority making the payment. Assumption(s) You may become a part-time student at the end on 2016. Therefore you will cease receiving this scholarship payment at the end of 2016.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 6-5(2). | 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: 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 (section 6-15 of the ITAA 1997). 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 the scholarship provider that is wholly or principally for labour. In your case, you have been awarded a scholarship to assist your study in your chosen field and there are no conditions attached that require you to work now or in the future for the provider. Although you only study the course part-time, you are also enrolled in another course which makes you a full-time student. As you have satisfied all the requirements, your scholarship income is exempt from tax.