Private ruling: Deduction for payments for scholarships
Date of advice: 24 December 2015
Published: March 2016
Ruling period: Year ending 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Are you entitled to claim a deduction for a donation made for a scholarship for students of a local high school? | A1: No.

Relevant facts and circumstances: You offer two scholarships to high school students graduating year 12. The scholarships are awarded annually to students of a local high school. One scholarship is offered to eligible students who are going on to further studies in the field of agriculture and one scholarship is offered to eligible students who are going on to further study in the field of science. The scholarships will be paid to the awardees to assist them with their first university degree at the commencement of their first year of study. Further amounts will be payable after the end of each semester and subject to the student providing the Trustees with evidence of their successful completion of study for the semester. The students are not listed as deductible gift recipients.

Relevant legislative provisions: Income Tax Assessment Act 1997 Division 30

Reasons for decision: Summary: Division 30 of the Income Tax Assessment Act 1997 (ITAA 1997) allows a deduction for certain gifts or contributions made to eligible organisations. Types of organisations that can receive tax deductible gifts are determined by income tax law. These organisations are called deductible gift recipients (DGR). To be an allowable deduction, the value of the gift must be $2 or more and the recipient of the gift must meet the definition of a DGR under section 30-227 of the ITAA 1997. A deduction is not available unless the recipient is endorsed by the Commissioner as a DGR or specifically listed by name in the ITAA 1997 or its regulations. Donations to the students are not allowable deductions as the students have not been endorsed as deductible gift recipients by the Australian Taxation Office nor are they listed by name as a DGR in the tax law. As your donation was not made to an eligible DGR, it does not meet the required conditions of Division 30 of the ITAA 1997. Therefore no deduction is allowed for your donation.