Private ruling: Scholarship income
Published: August 2012
Ruling period: Year ended 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Is the scholarship money you receive included in your assessable income? | A1: Yes.

Relevant facts and circumstances: You are in receipt of a scholarship. You are a part-time student undertaking postgraduate studies.

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 a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year. However, if an amount is exempt income, it is not included in the assessable income of a taxpayer (section 6-15 of the ITAA 1997). As a general rule, money received from scholarships is ordinary income. 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 educational 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 are in the receipt of a scholarship whilst studying part time. Although the scholarship is provided for educational purposes, as you are not a full time student the income is not exempt from tax. This is irrespective of whether the scholarship is provided under a private or government scheme. Therefore, the scholarship income you receive must be included in your assessable income.

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