Private ruling: Taxation of Scholarship
Published: November 2013
Ruling period: Year ended 30 June 2013
Date scheme commenced: 1 July 2012

Ruling: Q1: Is the scholarship that you have received assessable income? | A1: Yes


Relevant legislative provisions: Income Tax Assessment Act 1997 Section 6-5 | 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. Scholarship income is generally considered ordinary income. However, 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 not full-time student and you have been paid a scholarship to enhance your professional skills. As you have not satisfied all the requirements set out in section 51-10 of the ITAA 1997, your scholarship income is included in your assessable income.

Relevant facts: You are an employed worker. | You attend a full-time course and you received a scholarship to support your attendance and you were given funds which you spent on travel, meals, course fees and accommodation. | The scholarship provider awards scholarships to supports professionals to undertake continuing professional development. | The scholarship was not paid by or associated with your employer and there were no conditions attached to the scholarship.