Class Ruling CR 2021/36

What this ruling is about: 1. This Ruling sets out the tax consequences of receiving stipend payments from the Commonwealth Scientific and Industrial Research Organisation (CSIRO) under the following awards: 2. Full details of this scheme are set out in paragraphs 8 to 87 of this Ruling. 3. All legislative references in this Ruling are to the Income Tax Assessment Act 1997 (ITAA 1997) unless otherwise indicated. Who this Ruling applies to 4. This Ruling applies to full-time university students in receipt of a studentship or internship stipend as described in this Ruling. When this Ruling applies 5. This Ruling applies from 1 July 2020 to 30 June 2025. 6. The payments received by students from the CSIRO under the studentship and internship programs as described within this Ruling are considered ordinary income under subsection 6-5(1). 7. However, the payments received from the CSIRO under these programs will be exempt income under table item 2.1A of section 51-10 where received by full-time university students. 8. The following description of the scheme is based on information provided by the applicant. If the scheme is not carried out as described, this Ruling cannot be relied upon. 9. Section 9 of the Science and Industry Research Act 1949 (SIR Act) lists the statutory functions of the CSIRO. 10. Under paragraphs 9(1)(d) and (e) of the SIR Act, these statutory functions include: 11. Relevantly, the CSIRO provides the following under its statutory functions: 12. More specifically, the CSIRO offers postgraduate studentships and internships to Doctor of Philosophy (PhD), Masters, Graduate Certificate and Graduate Diploma students to undertake research in fields capable of being supported by the CSIRO. 13. The CSIRO currently funds four types of award: 14. The CSIRO studentships and internships are intended to provide a meaningful learning and development opportunity for students but are not to be used to conduct the ordinary operations of the CSIRO or fill vacancies. 15. Students and interns must have a university supervisor and a CSIRO sponsor. The CSIRO will, in conjunction with the university supervisor, have a responsibility for: 16. Industry PhD studentships also have an industry partner supervisor. 17. Students must apply to receive the studentships and internships funded by the CSIRO. 18. The CSIRO Sponsored Postgraduate Studentships, CSIRO-University Co-funded Postgraduate Studentships, and iPhDs are publicly advertised. Top-up scholarships and CSIRO Postgraduate Internships do not require advertisement, but students must have undergone some form of merit selection through their university. 19. Recipients must be enrolled as students of their university and undertake research at or in association with the CSIRO. 20. Students participating in a studentship or internship program may be covered under the CSIRO workers compensation scheme for services performed during their program with the CSIRO. 21. To receive payments under a studentship or internship program, a student must enter a student agreement with the CSIRO and the university (Student Agreement). The Student Agreement specifies the terms of engagement and states it does not create the relationship of employee and employer between any of the parties. It addresses intellectual property, publications and confidentiality, dispute resolution, and extension and termination of the studentship and internship. The CSIRO has three standard Student Agreements. The terms of the Student Agreement are not negotiable. 22. In addition to the Student Agreement, a research project may also have a Collaboration Agreement which sets out terms of the project, including the option for joint ownership of jointly developed intellectual property (Project IP). Ownership can vary for each project depending on the nature of the project and nominated owners. For instance, the Collaboration Agreement for an iPhD project will generally give ownership of all Project IP to the industry partner. 23. Where there is no Collaboration Agreement for a project, either the CSIRO or the university will own Project IP as set out in the relevant Student Agreement. 24. Common paragraphs within a Student Agreement include: 25. Ancillary outcomes for the CSIRO or other partners fostering a student project may include Project IP and/or other information documented in a thesis or student paper of confidential importance. CSIRO Sponsored Postgraduate Studentship 26. A CSIRO Sponsored Postgraduate Studentship is offered as a primary scholarship and/or as a top-up scholarship and ensures project operating expenses can be reimbursed. It is offered to students working on a project relevant to the strategic direction and focus of the CSIRO, where the CSIRO has a role in defining the scope of the project. 27. At the date of publication of this Ruling, the CSIRO has funded several postgraduate studentships under the CSIRO Sponsored Postgraduate Studentships program, including the Data61 Scholarships and ResearchPlus Postgraduate top-up scholarships. 28. The primary scholarship stipend is set at the base rate of the Research Training Program (RTP) scheme ($28,092 for 2020). 29. The top-up scholarship stipend is $10,000 per annum. 30. The CSIRO will also provide funds for learning and development and reasonable operating expenses incurred by students in the course of their research project, and may reimburse travel costs and relocation expenses. Use of these funds is at the discretion of the CSIRO and the university supervisor. 31. To be eligible for a CSIRO Sponsored Postgraduate Studentship a student must be: 32. In addition: 33. Where there is a national skill shortage as specified by the Australian Government (Government), CSIRO Sponsored Postgraduate Studentships may be awarded to overseas students enrolled in a full-time course at an Australian university. 34. CSIRO Sponsored Postgraduate Studentships are awarded based on merit. 35. The student's research must be co-supervised by a university supervisor and CSIRO supervisor. The CSIRO supervisor will have responsibility for the oversight of the research program and support the student's studies. 36. The student must submit progress reports to the CSIRO supervisor as agreed with the university to monitor academic/project progress but not assure ancillary outputs which may benefit the CSIRO. 37. Students who are in receipt of any other primary scholarship which supports living costs are not eligible for a primary scholarship under the CSIRO Sponsored Postgraduate Studentship. Top-up scholarships are made available to students who are in receipt of a CSIRO primary scholarship, government-funded scholarship, university funded scholarship or other third party funded scholarship. Under the CSIRO Sponsored Postgraduate Studentship, top-up scholarships are not available to students who already hold another top-up scholarship. 38. Primary scholarships under the CSIRO Sponsored Postgraduate Studentship are offered for a period up to four years for PhD students and up to two years for Masters students. A top-up scholarship will be for the period of the student's primary scholarship. 39. A CSIRO Sponsored Postgraduate Studentship can be paid to a full-time student (full-time study load) or part-time student (part-time study load). Some studentships require the student to have a full-time study-load. 40. The CSIRO Sponsored Postgraduate Studentship scholarship stipend is paid fortnightly in arrears from commencement of the scholarship until cessation of studies or the scholarship end date. The scholarships will be paid through CSIRO payroll unless an agreement is in place for it to be paid by the university, in which case it will be paid through the university's payment processes. CSIRO-University Co-funded Studentship 41. The CSIRO-University Co-funded Studentship is offered as a primary scholarship and/or a top up scholarship. It is offered to students working on a co-funded collaborative CSIRO-University project where a formal arrangement is in place between the CSIRO and the University. A project may be undertaken at CSIRO or university facilities depending on the project, but most will be undertaken in CSIRO facilities. 42. The primary scholarship stipend is set at the base rate of the RTP scheme ($28,092 for 2020). 43. The top-up scholarship stipend is $10,000 per annum. 44. The CSIRO and the university will also provide funds for learning and development and reasonable operating expenses. Use of these funds is at the discretion of the CSIRO. 45. To be eligible for a CSIRO-University Co-funded Studentship a student must be: 46. In addition: 47. Where there is a national skill shortage as specified by the Government, CSIRO-University Co-funded Studentships may be awarded to overseas students enrolled in a full-time course at an Australian university. 48. CSIRO-University Co-funded Studentships are awarded based on merit. 49. The student's research must be co-supervised by a university supervisor and CSIRO supervisor. The CSIRO supervisor will have responsibility for the oversight of the research program, and advice and support for the student's studies. 50. The student must submit progress reports to the CSIRO supervisor as agreed with the university to monitor academic/project progress but not assure ancillary outputs which may benefit the CSIRO. 51. Top-up scholarships are made available to students who are in receipt of a CSIRO primary scholarship, government-funded scholarship, university-funded scholarship or other third-party funded scholarship. 52. Primary scholarships are offered for a period up to four years for PhD students and up to two years for Masters students. A top-up scholarship will be for the period of the student's primary scholarship. 53. A CSIRO-University Co-funded Studentship can be paid to a full-time student (full-time study load) or part-time student (part-time study load). 54. The scholarship stipend is paid fortnightly in arrears from commencement of the scholarship until cessation of studies or the scholarship end date. The scholarships will be paid either through CSIRO payroll or through the university's payment processes under an agreement between the CSIRO and the university. Where the CSIRO accepts any monies paid to it on trust, the CSIRO will use the funds in accordance with the agreed terms and pay the student's stipend and allowances. Industry PhD Studentship 55. The iPhD involves collaborative research between the CSIRO, a university and an industry partner to deliver an industry-focused applied research training program. The program requires that all three partners (industry, university and the CSIRO) are involved in all aspects of the project from definition of the problem through to candidate selection, supervision and completion. 56. The iPhD scholarship totals $41,092 per annum (for 2020), which is indexed annually. The scholarship is a structured program that must be commenced in the year of the offer. 57. The iPhD scholarship is comprised of the following amounts: 58. The iPhD scholarship will generally be paid to the student through the university, unless an agreement is in place for the scholarship to be paid through the CSIRO. Where it is paid through the university, the CSIRO will pay the top-up scholarship to the university for distribution to the student. 59. The iPhD industry partner will also provide funds for reasonable operating expenses and may provide funds for learning and development. The CSIRO and the university may also provide funds for operating expenses and learning and development. The CSIRO or the university will manage the funds on behalf of the student. The use of funds for operating expenses is at the discretion of the CSIRO and the university supervisor. 60. The iPhD is a four-year program. 61. To be eligible for the iPhD Studentship, the student must be: 62. Students who are in receipt of any other top-up scholarship or award, or have already commenced PhD studies, may not be eligible. 63. The iPhD studentships are only offered through Australian universities. 64. Students are assessed by the: 65. The Supervisory Team is comprised of a university supervisor, CSIRO supervisor and industry supervisor (Supervisory Team). All supervisors will be actively involved and provide expertise, equipment and resources to the project and student. 66. The Supervisory Team must be involved in identifying and defining the research project. The research project must have demonstratable benefits to the industry partner's business, and have demonstrated alignment between industry, university and the CSIRO strategy. The research project must address an industry problem. The CSIRO and the university will select the research project. 67. The Supervisory Team is responsible for nominating students for the project and the program. Students nominated by the Supervisory Team will be invited to submit an application to the university which may be approved or declined. 68. Students will be assessed on academic excellence, experience relevant to the field of research, including any research experience, suitability for the project and industry experience. 69. The iPhD Studentship includes a mandatory development program which includes a three to six months industry internship component with the industry partner. Students will continue to receive the iPhD Studentship stipend for the period of the internship component. 70. The internship is a mandatory component of the scholarship program and is part of the professional development of the program. It is designed to provide practical learning activities for the candidate separate from the research project and should provide exposure to the broader work environment of the industry partner including participating in workplace meetings and meetings with clients. 71. The industry partner is expected to provide options for the internship but the final arrangement for the internship must be agreed between the Supervisory Team and the student. This will be set out in the Internship Plan. 72. The internship can be completed as a block or spread throughout the program (it must occur within the four-year candidature) and should be conducted predominantly at the industry partner's location. An Internship Plan must be provided to the university and the CSIRO within 12 months of the placement. If the arrangement changes, an updated plan must be provided. 73. At the completion of the internship the candidate must complete a statement about the internship experience and what they learnt. This may include a presentation or report. The industry partner is also requested to complete a short statement outlining the impact and outcomes of the internship. 74. The internship cannot be used as additional time to work on the candidate's thesis. Research from the internship can be included in the candidate's thesis. CSIRO Postgraduate Internship 75. CSIRO Postgraduate Internships are offered to PhD or Masters students to gain work experience as part of a course requirement for their university degree. The student works on a CSIRO-designed project under the supervision of the CSIRO. 76. A student undertaking the CSIRO Postgraduate Internship must have a university and a CSIRO supervisor. 77. The scope of the CSIRO's control is to define the area of research. The student is not subject to the orders or direction of the CSIRO, and the CSIRO cannot exercise control over the student to direct that services or labour be provided. Furthermore, the stipend is not paid on the condition that the student render services to the CSIRO. 78. Students completing research for a thesis component of their studies are not engaged as a CSIRO Postgraduate Intern. 79. A purpose of the internship is to build research capability for Australia by providing students with opportunities to participate in collaborative research and undertake impactful research without a requirement to deliver productive outputs for the CSIRO. 80. To be eligible for the CSIRO Postgraduate Internship the student must be: 81. CSIRO postgraduate internships are offered for a period of up to one year. 82. Students may undertake the internship without receiving a stipend. To receive the CSIRO Postgraduate Internship stipend, a student must not be in receipt of a primary scholarship stipend. 83. A stipend will be paid where the university requires the student's primary scholarship to be suspended. Where this happens, the stipend will be equivalent to the pro rata base RTP rate ($28,092 for 2020), plus operating expenses, but may be higher. 84. Students not receiving a stipend may be paid a living allowance if the student is required to transfer from their place of living to another locality to undertake the internship and funding is not provided by the university. Where this happens, the stipend will be equivalent to the pro rata base RTP rate. If the student receives a partial living allowance form another source, any CSIRO contribution will be adjusted so the full allowance is equivalent to the pro rata base RTP rate. 85. The stipend will be paid through the CSIRO payroll fortnightly in arrears from commencement of the internship at the CSIRO until cessation of the internship or the internship end date. 86. The CSIRO may also provide funds for reasonable costs incurred by students in the course of their work experience at the CSIRO and may also reimburse travel costs and relocation expenses. Use of these funds is at the discretion of the CSIRO and the university supervisor. 87. This scheme has been determined from information contained in the following documents and materials: Commissioner of Taxation 19 May 2021 Ordinary income 88. Subsection 6-5(1) provides that the assessable income of a taxpayer includes income according to ordinary concepts (ordinary income). 89. The legislation does not provide specific guidance on the meaning of income according to ordinary concepts, however there is a substantial body of case law that identifies likely characteristics. 90. In GP International Pipecoaters Pty Ltd v Commissioner of Taxation (Cth) [1] , the High Court stated: 91. Amounts that are periodical, regular or recurrent, relied upon by the recipient for their regular expenditure and paid to them for that purpose are likely to be ordinary income, as are amounts that are the product in a real sense of any employment of, or services rendered by, the recipient. [2] Amounts paid in substitution for salary or wages foregone or lost may also be ordinary income. [3] 92. Ultimately, whether or not a particular receipt is ordinary income depends on its character in the hands of the recipient. [4] The whole of the circumstances must be considered [5] and the motive of the payer may be relevant to this consideration. [6] 93. The stipend payments contemplated by this Ruling are ordinary income, being periodical receipts that are expected and relied upon by the student. Exempt income 94. Subsection 6-20(1) provides that an amount of ordinary income is exempt income if it is made exempt from income tax by a provision of the ITAA 1997 or another Commonwealth law. 95. Amounts of ordinary income and statutory income are exempt from income tax under section 51-1 if the amount is of a type listed in the tables in Division 51, subject to any exception or special condition. 96. Table item 2.1A of section 51-10 provides that payments are exempt from income tax if they are: 97. As the payments are ordinary income, it must be established whether or not they are exempt income under Division 51. This requires a consideration of these three conditions. Full-time students at a school, college or university 98. The studentships and internships are awarded to PhD, Masters, Graduate Certificate and Graduate Diploma students. 99. They are available to part-time and full-time students. 100. In all cases, recipients must remain enrolled as students of their university while undertaking the studentship or internship and comply with university rules at all times. 101. Students in receipt of a studentship or internship may undertake work experience, research, training or study at the university or an external site, including the CSIRO or another industry partner. 102. The university provides direction and supervision for students and will continue to impart and oversee educational outcomes when third-party institution companion oversight is involved. 103. Research projects undertaken at CSIRO or industry partner premises are completed with university co-supervision and oversight and accepted as being at a school, college or university in the statutory context of table item 2.1A of section 51-10. 104. Where a stipend is received by a full-time student, it is accepted that these students satisfy the condition of being a full-time student at a school, college or university. Where a stipend is received by a part-time student, the amount will not be exempt income under Division 51. Scholarship, bursary, educational allowance or educational assistance 105. The words 'scholarship', 'bursary', 'educational allowance' or 'educational assistance' are not defined in the ITAA 1997. The Macquarie Dictionary online [7] , defines: 106. Paragraphs 34 to 48 of Taxation Ruling TR 93/39 Income tax: friendly society education funds discuss the meaning of the words 'scholarship, bursary, educational allowance or educational assistance' for the purposes of the former paragraph 23(z) of the Income Tax Assessment Act 1936. Paragraph 35 of TR 93/39 states that the words are no more '... than a description of rewards for merit attained as a result of competition or selection on the basis of general criteria ...'. 107. In interpreting the meaning of the words 'scholarship, bursary, educational allowance or educational assistance', courts have determined that the relevant characteristics of a scholarship include the: 108. To receive a CSIRO studentship or internship, students must undertake a merit based selection process which involves an assessment of their skills against criteria including academic achievements and interpersonal skills. As such, it is accepted that selection for the studentships and internships are merit based. 109. In Chesterman v Federal Commissioner of Taxation [10] , Isaacs J said that for purposes to be educational they must provide for the giving or imparting of instruction. 110. To receive a CSIRO stipend a student must meet the eligibility criteria, including university enrolment and compliance with university rules. The studentships are awarded to postgraduate university students who undertake research as part of their course of study for research training and development purposes. It is accepted that the studentships and internships have the requisite educational purposes. 111. Accordingly, it is accepted the payments are by way of 'a scholarship, bursary, educational allowance or educational assistance'. Section 51-35 exceptions 112. Section 51-35 excludes the following payments from exemption: Commonwealth payment for education or training 113. The payments made are not of a kind covered by paragraphs 51-35(a), (b) or (f). Payment on condition that the student enters into employment with, or a contract for labour with, the payer 114. Paragraphs 51-35(c) and (d) excludes payments from exemption if they represent: 115. In Commissioner of Taxation of the Commonwealth of Australia v Ranson, E.L. [11] , the Federal Court took the view that the words 'upon condition that' do not require a contract between the parties to exist or any other form of legal relationship. It was held that the exemption did not apply where, as a matter of ordinary language, it could be said that the receipt of the scholarship amount was conditional on the recipient working with the payer if the payer so required. 116. To receive a studentship or internship the student is required to enter a Student Agreement with the CSIRO and university. The Student Agreement clearly sets out that the student will work with the CSIRO and university on a research project relevant to their course of study at the university but is not otherwise required to perform work for the CSIRO. In all cases, the students are not employees of the CSIRO. 117. While the student can be directed by the CSIRO with regards to the research project and may be covered by the CSIRO workers compensation scheme for work performed on the research project, this is not considered sufficient to make the student an employee of that organisation. 118. Neither are the Student Agreements considered to amount to a contract wholly or principally for the labour of the student. 119. As such, the payments are not excluded under paragraphs 51-35(c) or (d). Payment not provided principally for educational purposes 120. The word 'principally' is not defined and takes on its commonly understood meaning of 'chiefly' or 'mainly'. [12] 121. The granting of studentships and internships are done in accordance with particular statutory functions of the CSIRO under section 9 of the SIR Act. Relevantly, the CSIRO delivers in the following ways, consistent with its statutory functions: 122. In all cases, the studentships and internships provide a meaningful learning and development opportunity for the students and are not to be used as a means to conduct the ordinary operations of the CSIRO or to fill vacancies caused by absences of staff members. 123. The studentships and internships are for an educational purpose. This includes periods of work experience, and the CSIRO Postgraduate Internship. The purpose for offering the scholarships is the development of research skills, which is an educational purpose. 124. As such, the payments are not excluded under paragraph 51-35(e). © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). Not previously issued as a draft

Class of entities or scheme: 8. The following description of the scheme is based on information provided by the applicant. If the scheme is not carried out as described, this Ruling cannot be relied upon. 9. Section 9 of the Science and Industry Research Act 1949 (SIR Act) lists the statutory functions of the CSIRO. 10. Under paragraphs 9(1)(d) and (e) of the SIR Act, these statutory functions include: 11. Relevantly, the CSIRO provides the following under its statutory functions: 12. More specifically, the CSIRO offers postgraduate studentships and internships to Doctor of Philosophy (PhD), Masters, Graduate Certificate and Graduate Diploma students to undertake research in fields capable of being supported by the CSIRO. 13. The CSIRO currently funds four types of award: 14. The CSIRO studentships and internships are intended to provide a meaningful learning and development opportunity for students but are not to be used to conduct the ordinary operations of the CSIRO or fill vacancies. 15. Students and interns must have a university supervisor and a CSIRO sponsor. The CSIRO will, in conjunction with the university supervisor, have a responsibility for: 16. Industry PhD studentships also have an industry partner supervisor. 17. Students must apply to receive the studentships and internships funded by the CSIRO. 18. The CSIRO Sponsored Postgraduate Studentships, CSIRO-University Co-funded Postgraduate Studentships, and iPhDs are publicly advertised. Top-up scholarships and CSIRO Postgraduate Internships do not require advertisement, but students must have undergone some form of merit selection through their university. 19. Recipients must be enrolled as students of their university and undertake research at or in association with the CSIRO. 20. Students participating in a studentship or internship program may be covered under the CSIRO workers compensation scheme for services performed during their program with the CSIRO. 21. To receive payments under a studentship or internship program, a student must enter a student agreement with the CSIRO and the university (Student Agreement). The Student Agreement specifies the terms of engagement and states it does not create the relationship of employee and employer between any of the parties. It addresses intellectual property, publications and confidentiality, dispute resolution, and extension and termination of the studentship and internship. The CSIRO has three standard Student Agreements. The terms of the Student Agreement are not negotiable. 22. In addition to the Student Agreement, a research project may also have a Collaboration Agreement which sets out terms of the project, including the option for joint ownership of jointly developed intellectual property (Project IP). Ownership can vary for each project depending on the nature of the project and nominated owners. For instance, the Collaboration Agreement for an iPhD project will generally give ownership of all Project IP to the industry partner. 23. Where there is no Collaboration Agreement for a project, either the CSIRO or the university will own Project IP as set out in the relevant Student Agreement. 24. Common paragraphs within a Student Agreement include: 25. Ancillary outcomes for the CSIRO or other partners fostering a student project may include Project IP and/or other information documented in a thesis or student paper of confidential importance. | CSIRO Sponsored Postgraduate Studentship: 26. A CSIRO Sponsored Postgraduate Studentship is offered as a primary scholarship and/or as a top-up scholarship and ensures project operating expenses can be reimbursed. It is offered to students working on a project relevant to the strategic direction and focus of the CSIRO, where the CSIRO has a role in defining the scope of the project. 27. At the date of publication of this Ruling, the CSIRO has funded several postgraduate studentships under the CSIRO Sponsored Postgraduate Studentships program, including the Data61 Scholarships and ResearchPlus Postgraduate top-up scholarships. 28. The primary scholarship stipend is set at the base rate of the Research Training Program (RTP) scheme ($28,092 for 2020). 29. The top-up scholarship stipend is $10,000 per annum. 30. The CSIRO will also provide funds for learning and development and reasonable operating expenses incurred by students in the course of their research project, and may reimburse travel costs and relocation expenses. Use of these funds is at the discretion of the CSIRO and the university supervisor. 31. To be eligible for a CSIRO Sponsored Postgraduate Studentship a student must be: 32. In addition: 33. Where there is a national skill shortage as specified by the Australian Government (Government), CSIRO Sponsored Postgraduate Studentships may be awarded to overseas students enrolled in a full-time course at an Australian university. 34. CSIRO Sponsored Postgraduate Studentships are awarded based on merit. 35. The student's research must be co-supervised by a university supervisor and CSIRO supervisor. The CSIRO supervisor will have responsibility for the oversight of the research program and support the student's studies. 36. The student must submit progress reports to the CSIRO supervisor as agreed with the university to monitor academic/project progress but not assure ancillary outputs which may benefit the CSIRO. 37. Students who are in receipt of any other primary scholarship which supports living costs are not eligible for a primary scholarship under the CSIRO Sponsored Postgraduate Studentship. Top-up scholarships are made available to students who are in receipt of a CSIRO primary scholarship, government-funded scholarship, university funded scholarship or other third party funded scholarship. Under the CSIRO Sponsored Postgraduate Studentship, top-up scholarships are not available to students who already hold another top-up scholarship. 38. Primary scholarships under the CSIRO Sponsored Postgraduate Studentship are offered for a period up to four years for PhD students and up to two years for Masters students. A top-up scholarship will be for the period of the student's primary scholarship. 39. A CSIRO Sponsored Postgraduate Studentship can be paid to a full-time student (full-time study load) or part-time student (part-time study load). Some studentships require the student to have a full-time study-load. 40. The CSIRO Sponsored Postgraduate Studentship scholarship stipend is paid fortnightly in arrears from commencement of the scholarship until cessation of studies or the scholarship end date. The scholarships will be paid through CSIRO payroll unless an agreement is in place for it to be paid by the university, in which case it will be paid through the university's payment processes. | CSIRO-University Co-funded Studentship: 41. The CSIRO-University Co-funded Studentship is offered as a primary scholarship and/or a top up scholarship. It is offered to students working on a co-funded collaborative CSIRO-University project where a formal arrangement is in place between the CSIRO and the University. A project may be undertaken at CSIRO or university facilities depending on the project, but most will be undertaken in CSIRO facilities. 42. The primary scholarship stipend is set at the base rate of the RTP scheme ($28,092 for 2020). 43. The top-up scholarship stipend is $10,000 per annum. 44. The CSIRO and the university will also provide funds for learning and development and reasonable operating expenses. Use of these funds is at the discretion of the CSIRO. 45. To be eligible for a CSIRO-University Co-funded Studentship a student must be: 46. In addition: 47. Where there is a national skill shortage as specified by the Government, CSIRO-University Co-funded Studentships may be awarded to overseas students enrolled in a full-time course at an Australian university. 48. CSIRO-University Co-funded Studentships are awarded based on merit. 49. The student's research must be co-supervised by a university supervisor and CSIRO supervisor. The CSIRO supervisor will have responsibility for the oversight of the research program, and advice and support for the student's studies. 50. The student must submit progress reports to the CSIRO supervisor as agreed with the university to monitor academic/project progress but not assure ancillary outputs which may benefit the CSIRO. 51. Top-up scholarships are made available to students who are in receipt of a CSIRO primary scholarship, government-funded scholarship, university-funded scholarship or other third-party funded scholarship. 52. Primary scholarships are offered for a period up to four years for PhD students and up to two years for Masters students. A top-up scholarship will be for the period of the student's primary scholarship. 53. A CSIRO-University Co-funded Studentship can be paid to a full-time student (full-time study load) or part-time student (part-time study load). 54. The scholarship stipend is paid fortnightly in arrears from commencement of the scholarship until cessation of studies or the scholarship end date. The scholarships will be paid either through CSIRO payroll or through the university's payment processes under an agreement between the CSIRO and the university. Where the CSIRO accepts any monies paid to it on trust, the CSIRO will use the funds in accordance with the agreed terms and pay the student's stipend and allowances. | Industry PhD Studentship: 55. The iPhD involves collaborative research between the CSIRO, a university and an industry partner to deliver an industry-focused applied research training program. The program requires that all three partners (industry, university and the CSIRO) are involved in all aspects of the project from definition of the problem through to candidate selection, supervision and completion. 56. The iPhD scholarship totals $41,092 per annum (for 2020), which is indexed annually. The scholarship is a structured program that must be commenced in the year of the offer. 57. The iPhD scholarship is comprised of the following amounts: 58. The iPhD scholarship will generally be paid to the student through the university, unless an agreement is in place for the scholarship to be paid through the CSIRO. Where it is paid through the university, the CSIRO will pay the top-up scholarship to the university for distribution to the student. 59. The iPhD industry partner will also provide funds for reasonable operating expenses and may provide funds for learning and development. The CSIRO and the university may also provide funds for operating expenses and learning and development. The CSIRO or the university will manage the funds on behalf of the student. The use of funds for operating expenses is at the discretion of the CSIRO and the university supervisor. 60. The iPhD is a four-year program. 61. To be eligible for the iPhD Studentship, the student must be: 62. Students who are in receipt of any other top-up scholarship or award, or have already commenced PhD studies, may not be eligible. 63. The iPhD studentships are only offered through Australian universities. 64. Students are assessed by the: 65. The Supervisory Team is comprised of a university supervisor, CSIRO supervisor and industry supervisor (Supervisory Team). All supervisors will be actively involved and provide expertise, equipment and resources to the project and student. 66. The Supervisory Team must be involved in identifying and defining the research project. The research project must have demonstratable benefits to the industry partner's business, and have demonstrated alignment between industry, university and the CSIRO strategy. The research project must address an industry problem. The CSIRO and the university will select the research project. 67. The Supervisory Team is responsible for nominating students for the project and the program. Students nominated by the Supervisory Team will be invited to submit an application to the university which may be approved or declined. 68. Students will be assessed on academic excellence, experience relevant to the field of research, including any research experience, suitability for the project and industry experience. 69. The iPhD Studentship includes a mandatory development program which includes a three to six months industry internship component with the industry partner. Students will continue to receive the iPhD Studentship stipend for the period of the internship component. 70. The internship is a mandatory component of the scholarship program and is part of the professional development of the program. It is designed to provide practical learning activities for the candidate separate from the research project and should provide exposure to the broader work environment of the industry partner including participating in workplace meetings and meetings with clients. 71. The industry partner is expected to provide options for the internship but the final arrangement for the internship must be agreed between the Supervisory Team and the student. This will be set out in the Internship Plan. 72. The internship can be completed as a block or spread throughout the program (it must occur within the four-year candidature) and should be conducted predominantly at the industry partner's location. An Internship Plan must be provided to the university and the CSIRO within 12 months of the placement. If the arrangement changes, an updated plan must be provided. 73. At the completion of the internship the candidate must complete a statement about the internship experience and what they learnt. This may include a presentation or report. The industry partner is also requested to complete a short statement outlining the impact and outcomes of the internship. 74. The internship cannot be used as additional time to work on the candidate's thesis. Research from the internship can be included in the candidate's thesis. | CSIRO Postgraduate Internship: 75. CSIRO Postgraduate Internships are offered to PhD or Masters students to gain work experience as part of a course requirement for their university degree. The student works on a CSIRO-designed project under the supervision of the CSIRO. 76. A student undertaking the CSIRO Postgraduate Internship must have a university and a CSIRO supervisor. 77. The scope of the CSIRO's control is to define the area of research. The student is not subject to the orders or direction of the CSIRO, and the CSIRO cannot exercise control over the student to direct that services or labour be provided. Furthermore, the stipend is not paid on the condition that the student render services to the CSIRO. 78. Students completing research for a thesis component of their studies are not engaged as a CSIRO Postgraduate Intern. 79. A purpose of the internship is to build research capability for Australia by providing students with opportunities to participate in collaborative research and undertake impactful research without a requirement to deliver productive outputs for the CSIRO. 80. To be eligible for the CSIRO Postgraduate Internship the student must be: 81. CSIRO postgraduate internships are offered for a period of up to one year. 82. Students may undertake the internship without receiving a stipend. To receive the CSIRO Postgraduate Internship stipend, a student must not be in receipt of a primary scholarship stipend. 83. A stipend will be paid where the university requires the student's primary scholarship to be suspended. Where this happens, the stipend will be equivalent to the pro rata base RTP rate ($28,092 for 2020), plus operating expenses, but may be higher. 84. Students not receiving a stipend may be paid a living allowance if the student is required to transfer from their place of living to another locality to undertake the internship and funding is not provided by the university. Where this happens, the stipend will be equivalent to the pro rata base RTP rate. If the student receives a partial living allowance form another source, any CSIRO contribution will be adjusted so the full allowance is equivalent to the pro rata base RTP rate. 85. The stipend will be paid through the CSIRO payroll fortnightly in arrears from commencement of the internship at the CSIRO until cessation of the internship or the internship end date. 86. The CSIRO may also provide funds for reasonable costs incurred by students in the course of their work experience at the CSIRO and may also reimburse travel costs and relocation expenses. Use of these funds is at the discretion of the CSIRO and the university supervisor. 87. This scheme has been determined from information contained in the following documents and materials: Commissioner of Taxation 19 May 2021

Ruling: 1. This Ruling sets out the tax consequences of receiving stipend payments from the Commonwealth Scientific and Industrial Research Organisation (CSIRO) under the following awards: 2. Full details of this scheme are set out in paragraphs 8 to 87 of this Ruling. 3. All legislative references in this Ruling are to the Income Tax Assessment Act 1997 (ITAA 1997) unless otherwise indicated. | Who this Ruling applies to: 4. This Ruling applies to full-time university students in receipt of a studentship or internship stipend as described in this Ruling. | When this Ruling applies: 5. This Ruling applies from 1 July 2020 to 30 June 2025. 6. The payments received by students from the CSIRO under the studentship and internship programs as described within this Ruling are considered ordinary income under subsection 6-5(1). 7. However, the payments received from the CSIRO under these programs will be exempt income under table item 2.1A of section 51-10 where received by full-time university students. 8. The following description of the scheme is based on information provided by the applicant. If the scheme is not carried out as described, this Ruling cannot be relied upon. 9. Section 9 of the Science and Industry Research Act 1949 (SIR Act) lists the statutory functions of the CSIRO. 10. Under paragraphs 9(1)(d) and (e) of the SIR Act, these statutory functions include: 11. Relevantly, the CSIRO provides the following under its statutory functions: 12. More specifically, the CSIRO offers postgraduate studentships and internships to Doctor of Philosophy (PhD), Masters, Graduate Certificate and Graduate Diploma students to undertake research in fields capable of being supported by the CSIRO. 13. The CSIRO currently funds four types of award: 14. The CSIRO studentships and internships are intended to provide a meaningful learning and development opportunity for students but are not to be used to conduct the ordinary operations of the CSIRO or fill vacancies. 15. Students and interns must have a university supervisor and a CSIRO sponsor. The CSIRO will, in conjunction with the university supervisor, have a responsibility for: 16. Industry PhD studentships also have an industry partner supervisor. 17. Students must apply to receive the studentships and internships funded by the CSIRO. 18. The CSIRO Sponsored Postgraduate Studentships, CSIRO-University Co-funded Postgraduate Studentships, and iPhDs are publicly advertised. Top-up scholarships and CSIRO Postgraduate Internships do not require advertisement, but students must have undergone some form of merit selection through their university. 19. Recipients must be enrolled as students of their university and undertake research at or in association with the CSIRO. 20. Students participating in a studentship or internship program may be covered under the CSIRO workers compensation scheme for services performed during their program with the CSIRO. 21. To receive payments under a studentship or internship program, a student must enter a student agreement with the CSIRO and the university (Student Agreement). The Student Agreement specifies the terms of engagement and states it does not create the relationship of employee and employer between any of the parties. It addresses intellectual property, publications and confidentiality, dispute resolution, and extension and termination of the studentship and internship. The CSIRO has three standard Student Agreements. The terms of the Student Agreement are not negotiable. 22. In addition to the Student Agreement, a research project may also have a Collaboration Agreement which sets out terms of the project, including the option for joint ownership of jointly developed intellectual property (Project IP). Ownership can vary for each project depending on the nature of the project and nominated owners. For instance, the Collaboration Agreement for an iPhD project will generally give ownership of all Project IP to the industry partner. 23. Where there is no Collaboration Agreement for a project, either the CSIRO or the university will own Project IP as set out in the relevant Student Agreement. 24. Common paragraphs within a Student Agreement include: 25. Ancillary outcomes for the CSIRO or other partners fostering a student project may include Project IP and/or other information documented in a thesis or student paper of confidential importance. | CSIRO Sponsored Postgraduate Studentship: 26. A CSIRO Sponsored Postgraduate Studentship is offered as a primary scholarship and/or as a top-up scholarship and ensures project operating expenses can be reimbursed. It is offered to students working on a project relevant to the strategic direction and focus of the CSIRO, where the CSIRO has a role in defining the scope of the project. 27. At the date of publication of this Ruling, the CSIRO has funded several postgraduate studentships under the CSIRO Sponsored Postgraduate Studentships program, including the Data61 Scholarships and ResearchPlus Postgraduate top-up scholarships. 28. The primary scholarship stipend is set at the base rate of the Research Training Program (RTP) scheme ($28,092 for 2020). 29. The top-up scholarship stipend is $10,000 per annum. 30. The CSIRO will also provide funds for learning and development and reasonable operating expenses incurred by students in the course of their research project, and may reimburse travel costs and relocation expenses. Use of these funds is at the discretion of the CSIRO and the university supervisor. 31. To be eligible for a CSIRO Sponsored Postgraduate Studentship a student must be: 32. In addition: 33. Where there is a national skill shortage as specified by the Australian Government (Government), CSIRO Sponsored Postgraduate Studentships may be awarded to overseas students enrolled in a full-time course at an Australian university. 34. CSIRO Sponsored Postgraduate Studentships are awarded based on merit. 35. The student's research must be co-supervised by a university supervisor and CSIRO supervisor. The CSIRO supervisor will have responsibility for the oversight of the research program and support the student's studies. 36. The student must submit progress reports to the CSIRO supervisor as agreed with the university to monitor academic/project progress but not assure ancillary outputs which may benefit the CSIRO. 37. Students who are in receipt of any other primary scholarship which supports living costs are not eligible for a primary scholarship under the CSIRO Sponsored Postgraduate Studentship. Top-up scholarships are made available to students who are in receipt of a CSIRO primary scholarship, government-funded scholarship, university funded scholarship or other third party funded scholarship. Under the CSIRO Sponsored Postgraduate Studentship, top-up scholarships are not available to students who already hold another top-up scholarship. 38. Primary scholarships under the CSIRO Sponsored Postgraduate Studentship are offered for a period up to four years for PhD students and up to two years for Masters students. A top-up scholarship will be for the period of the student's primary scholarship. 39. A CSIRO Sponsored Postgraduate Studentship can be paid to a full-time student (full-time study load) or part-time student (part-time study load). Some studentships require the student to have a full-time study-load. 40. The CSIRO Sponsored Postgraduate Studentship scholarship stipend is paid fortnightly in arrears from commencement of the scholarship until cessation of studies or the scholarship end date. The scholarships will be paid through CSIRO payroll unless an agreement is in place for it to be paid by the university, in which case it will be paid through the university's payment processes. | CSIRO-University Co-funded Studentship: 41. The CSIRO-University Co-funded Studentship is offered as a primary scholarship and/or a top up scholarship. It is offered to students working on a co-funded collaborative CSIRO-University project where a formal arrangement is in place between the CSIRO and the University. A project may be undertaken at CSIRO or university facilities depending on the project, but most will be undertaken in CSIRO facilities. 42. The primary scholarship stipend is set at the base rate of the RTP scheme ($28,092 for 2020). 43. The top-up scholarship stipend is $10,000 per annum. 44. The CSIRO and the university will also provide funds for learning and development and reasonable operating expenses. Use of these funds is at the discretion of the CSIRO. 45. To be eligible for a CSIRO-University Co-funded Studentship a student must be: 46. In addition: 47. Where there is a national skill shortage as specified by the Government, CSIRO-University Co-funded Studentships may be awarded to overseas students enrolled in a full-time course at an Australian university. 48. CSIRO-University Co-funded Studentships are awarded based on merit. 49. The student's research must be co-supervised by a university supervisor and CSIRO supervisor. The CSIRO supervisor will have responsibility for the oversight of the research program, and advice and support for the student's studies. 50. The student must submit progress reports to the CSIRO supervisor as agreed with the university to monitor academic/project progress but not assure ancillary outputs which may benefit the CSIRO. 51. Top-up scholarships are made available to students who are in receipt of a CSIRO primary scholarship, government-funded scholarship, university-funded scholarship or other third-party funded scholarship. 52. Primary scholarships are offered for a period up to four years for PhD students and up to two years for Masters students. A top-up scholarship will be for the period of the student's primary scholarship. 53. A CSIRO-University Co-funded Studentship can be paid to a full-time student (full-time study load) or part-time student (part-time study load). 54. The scholarship stipend is paid fortnightly in arrears from commencement of the scholarship until cessation of studies or the scholarship end date. The scholarships will be paid either through CSIRO payroll or through the university's payment processes under an agreement between the CSIRO and the university. Where the CSIRO accepts any monies paid to it on trust, the CSIRO will use the funds in accordance with the agreed terms and pay the student's stipend and allowances. | Industry PhD Studentship: 55. The iPhD involves collaborative research between the CSIRO, a university and an industry partner to deliver an industry-focused applied research training program. The program requires that all three partners (industry, university and the CSIRO) are involved in all aspects of the project from definition of the problem through to candidate selection, supervision and completion. 56. The iPhD scholarship totals $41,092 per annum (for 2020), which is indexed annually. The scholarship is a structured program that must be commenced in the year of the offer. 57. The iPhD scholarship is comprised of the following amounts: 58. The iPhD scholarship will generally be paid to the student through the university, unless an agreement is in place for the scholarship to be paid through the CSIRO. Where it is paid through the university, the CSIRO will pay the top-up scholarship to the university for distribution to the student. 59. The iPhD industry partner will also provide funds for reasonable operating expenses and may provide funds for learning and development. The CSIRO and the university may also provide funds for operating expenses and learning and development. The CSIRO or the university will manage the funds on behalf of the student. The use of funds for operating expenses is at the discretion of the CSIRO and the university supervisor. 60. The iPhD is a four-year program. 61. To be eligible for the iPhD Studentship, the student must be: 62. Students who are in receipt of any other top-up scholarship or award, or have already commenced PhD studies, may not be eligible. 63. The iPhD studentships are only offered through Australian universities. 64. Students are assessed by the: 65. The Supervisory Team is comprised of a university supervisor, CSIRO supervisor and industry supervisor (Supervisory Team). All supervisors will be actively involved and provide expertise, equipment and resources to the project and student. 66. The Supervisory Team must be involved in identifying and defining the research project. The research project must have demonstratable benefits to the industry partner's business, and have demonstrated alignment between industry, university and the CSIRO strategy. The research project must address an industry problem. The CSIRO and the university will select the research project. 67. The Supervisory Team is responsible for nominating students for the project and the program. Students nominated by the Supervisory Team will be invited to submit an application to the university which may be approved or declined. 68. Students will be assessed on academic excellence, experience relevant to the field of research, including any research experience, suitability for the project and industry experience. 69. The iPhD Studentship includes a mandatory development program which includes a three to six months industry internship component with the industry partner. Students will continue to receive the iPhD Studentship stipend for the period of the internship component. 70. The internship is a mandatory component of the scholarship program and is part of the professional development of the program. It is designed to provide practical learning activities for the candidate separate from the research project and should provide exposure to the broader work environment of the industry partner including participating in workplace meetings and meetings with clients. 71. The industry partner is expected to provide options for the internship but the final arrangement for the internship must be agreed between the Supervisory Team and the student. This will be set out in the Internship Plan. 72. The internship can be completed as a block or spread throughout the program (it must occur within the four-year candidature) and should be conducted predominantly at the industry partner's location. An Internship Plan must be provided to the university and the CSIRO within 12 months of the placement. If the arrangement changes, an updated plan must be provided. 73. At the completion of the internship the candidate must complete a statement about the internship experience and what they learnt. This may include a presentation or report. The industry partner is also requested to complete a short statement outlining the impact and outcomes of the internship. 74. The internship cannot be used as additional time to work on the candidate's thesis. Research from the internship can be included in the candidate's thesis. | CSIRO Postgraduate Internship: 75. CSIRO Postgraduate Internships are offered to PhD or Masters students to gain work experience as part of a course requirement for their university degree. The student works on a CSIRO-designed project under the supervision of the CSIRO. 76. A student undertaking the CSIRO Postgraduate Internship must have a university and a CSIRO supervisor. 77. The scope of the CSIRO's control is to define the area of research. The student is not subject to the orders or direction of the CSIRO, and the CSIRO cannot exercise control over the student to direct that services or labour be provided. Furthermore, the stipend is not paid on the condition that the student render services to the CSIRO. 78. Students completing research for a thesis component of their studies are not engaged as a CSIRO Postgraduate Intern. 79. A purpose of the internship is to build research capability for Australia by providing students with opportunities to participate in collaborative research and undertake impactful research without a requirement to deliver productive outputs for the CSIRO. 80. To be eligible for the CSIRO Postgraduate Internship the student must be: 81. CSIRO postgraduate internships are offered for a period of up to one year. 82. Students may undertake the internship without receiving a stipend. To receive the CSIRO Postgraduate Internship stipend, a student must not be in receipt of a primary scholarship stipend. 83. A stipend will be paid where the university requires the student's primary scholarship to be suspended. Where this happens, the stipend will be equivalent to the pro rata base RTP rate ($28,092 for 2020), plus operating expenses, but may be higher. 84. Students not receiving a stipend may be paid a living allowance if the student is required to transfer from their place of living to another locality to undertake the internship and funding is not provided by the university. Where this happens, the stipend will be equivalent to the pro rata base RTP rate. If the student receives a partial living allowance form another source, any CSIRO contribution will be adjusted so the full allowance is equivalent to the pro rata base RTP rate. 85. The stipend will be paid through the CSIRO payroll fortnightly in arrears from commencement of the internship at the CSIRO until cessation of the internship or the internship end date. 86. The CSIRO may also provide funds for reasonable costs incurred by students in the course of their work experience at the CSIRO and may also reimburse travel costs and relocation expenses. Use of these funds is at the discretion of the CSIRO and the university supervisor. 87. This scheme has been determined from information contained in the following documents and materials: Commissioner of Taxation 19 May 2021 | Ordinary income: 88. Subsection 6-5(1) provides that the assessable income of a taxpayer includes income according to ordinary concepts (ordinary income). 89. The legislation does not provide specific guidance on the meaning of income according to ordinary concepts, however there is a substantial body of case law that identifies likely characteristics. 90. In GP International Pipecoaters Pty Ltd v Commissioner of Taxation (Cth) [1] , the High Court stated: 91. Amounts that are periodical, regular or recurrent, relied upon by the recipient for their regular expenditure and paid to them for that purpose are likely to be ordinary income, as are amounts that are the product in a real sense of any employment of, or services rendered by, the recipient. [2] Amounts paid in substitution for salary or wages foregone or lost may also be ordinary income. [3] 92. Ultimately, whether or not a particular receipt is ordinary income depends on its character in the hands of the recipient. [4] The whole of the circumstances must be considered [5] and the motive of the payer may be relevant to this consideration. [6] 93. The stipend payments contemplated by this Ruling are ordinary income, being periodical receipts that are expected and relied upon by the student. | Exempt income: 94. Subsection 6-20(1) provides that an amount of ordinary income is exempt income if it is made exempt from income tax by a provision of the ITAA 1997 or another Commonwealth law. 95. Amounts of ordinary income and statutory income are exempt from income tax under section 51-1 if the amount is of a type listed in the tables in Division 51, subject to any exception or special condition. 96. Table item 2.1A of section 51-10 provides that payments are exempt from income tax if they are: 97. As the payments are ordinary income, it must be established whether or not they are exempt income under Division 51. This requires a consideration of these three conditions. | Full-time students at a school, college or university: 98. The studentships and internships are awarded to PhD, Masters, Graduate Certificate and Graduate Diploma students. 99. They are available to part-time and full-time students. 100. In all cases, recipients must remain enrolled as students of their university while undertaking the studentship or internship and comply with university rules at all times. 101. Students in receipt of a studentship or internship may undertake work experience, research, training or study at the university or an external site, including the CSIRO or another industry partner. 102. The university provides direction and supervision for students and will continue to impart and oversee educational outcomes when third-party institution companion oversight is involved. 103. Research projects undertaken at CSIRO or industry partner premises are completed with university co-supervision and oversight and accepted as being at a school, college or university in the statutory context of table item 2.1A of section 51-10. 104. Where a stipend is received by a full-time student, it is accepted that these students satisfy the condition of being a full-time student at a school, college or university. Where a stipend is received by a part-time student, the amount will not be exempt income under Division 51. | Scholarship, bursary, educational allowance or educational assistance: 105. The words 'scholarship', 'bursary', 'educational allowance' or 'educational assistance' are not defined in the ITAA 1997. The Macquarie Dictionary online [7] , defines: 106. Paragraphs 34 to 48 of Taxation Ruling TR 93/39 Income tax: friendly society education funds discuss the meaning of the words 'scholarship, bursary, educational allowance or educational assistance' for the purposes of the former paragraph 23(z) of the Income Tax Assessment Act 1936. Paragraph 35 of TR 93/39 states that the words are no more '... than a description of rewards for merit attained as a result of competition or selection on the basis of general criteria ...'. 107. In interpreting the meaning of the words 'scholarship, bursary, educational allowance or educational assistance', courts have determined that the relevant characteristics of a scholarship include the: 108. To receive a CSIRO studentship or internship, students must undertake a merit based selection process which involves an assessment of their skills against criteria including academic achievements and interpersonal skills. As such, it is accepted that selection for the studentships and internships are merit based. 109. In Chesterman v Federal Commissioner of Taxation [10] , Isaacs J said that for purposes to be educational they must provide for the giving or imparting of instruction. 110. To receive a CSIRO stipend a student must meet the eligibility criteria, including university enrolment and compliance with university rules. The studentships are awarded to postgraduate university students who undertake research as part of their course of study for research training and development purposes. It is accepted that the studentships and internships have the requisite educational purposes. 111. Accordingly, it is accepted the payments are by way of 'a scholarship, bursary, educational allowance or educational assistance'. | Section 51-35 exceptions: 112. Section 51-35 excludes the following payments from exemption: Commonwealth payment for education or training 113. The payments made are not of a kind covered by paragraphs 51-35(a), (b) or (f). Payment on condition that the student enters into employment with, or a contract for labour with, the payer 114. Paragraphs 51-35(c) and (d) excludes payments from exemption if they represent: 115. In Commissioner of Taxation of the Commonwealth of Australia v Ranson, E.L. [11] , the Federal Court took the view that the words 'upon condition that' do not require a contract between the parties to exist or any other form of legal relationship. It was held that the exemption did not apply where, as a matter of ordinary language, it could be said that the receipt of the scholarship amount was conditional on the recipient working with the payer if the payer so required. 116. To receive a studentship or internship the student is required to enter a Student Agreement with the CSIRO and university. The Student Agreement clearly sets out that the student will work with the CSIRO and university on a research project relevant to their course of study at the university but is not otherwise required to perform work for the CSIRO. In all cases, the students are not employees of the CSIRO. 117. While the student can be directed by the CSIRO with regards to the research project and may be covered by the CSIRO workers compensation scheme for work performed on the research project, this is not considered sufficient to make the student an employee of that organisation. 118. Neither are the Student Agreements considered to amount to a contract wholly or principally for the labour of the student. 119. As such, the payments are not excluded under paragraphs 51-35(c) or (d). Payment not provided principally for educational purposes 120. The word 'principally' is not defined and takes on its commonly understood meaning of 'chiefly' or 'mainly'. [12] 121. The granting of studentships and internships are done in accordance with particular statutory functions of the CSIRO under section 9 of the SIR Act. Relevantly, the CSIRO delivers in the following ways, consistent with its statutory functions: 122. In all cases, the studentships and internships provide a meaningful learning and development opportunity for the students and are not to be used as a means to conduct the ordinary operations of the CSIRO or to fill vacancies caused by absences of staff members. 123. The studentships and internships are for an educational purpose. This includes periods of work experience, and the CSIRO Postgraduate Internship. The purpose for offering the scholarships is the development of research skills, which is an educational purpose. 124. As such, the payments are not excluded under paragraph 51-35(e). © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). Not previously issued as a draft


Appendix: Ordinary income: 88. Subsection 6-5(1) provides that the assessable income of a taxpayer includes income according to ordinary concepts (ordinary income). 89. The legislation does not provide specific guidance on the meaning of income according to ordinary concepts, however there is a substantial body of case law that identifies likely characteristics. 90. In GP International Pipecoaters Pty Ltd v Commissioner of Taxation (Cth) [1] , the High Court stated: 91. Amounts that are periodical, regular or recurrent, relied upon by the recipient for their regular expenditure and paid to them for that purpose are likely to be ordinary income, as are amounts that are the product in a real sense of any employment of, or services rendered by, the recipient. [2] Amounts paid in substitution for salary or wages foregone or lost may also be ordinary income. [3] 92. Ultimately, whether or not a particular receipt is ordinary income depends on its character in the hands of the recipient. [4] The whole of the circumstances must be considered [5] and the motive of the payer may be relevant to this consideration. [6] 93. The stipend payments contemplated by this Ruling are ordinary income, being periodical receipts that are expected and relied upon by the student. | Exempt income: 94. Subsection 6-20(1) provides that an amount of ordinary income is exempt income if it is made exempt from income tax by a provision of the ITAA 1997 or another Commonwealth law. 95. Amounts of ordinary income and statutory income are exempt from income tax under section 51-1 if the amount is of a type listed in the tables in Division 51, subject to any exception or special condition. 96. Table item 2.1A of section 51-10 provides that payments are exempt from income tax if they are: 97. As the payments are ordinary income, it must be established whether or not they are exempt income under Division 51. This requires a consideration of these three conditions. | Full-time students at a school, college or university: 98. The studentships and internships are awarded to PhD, Masters, Graduate Certificate and Graduate Diploma students. 99. They are available to part-time and full-time students. 100. In all cases, recipients must remain enrolled as students of their university while undertaking the studentship or internship and comply with university rules at all times. 101. Students in receipt of a studentship or internship may undertake work experience, research, training or study at the university or an external site, including the CSIRO or another industry partner. 102. The university provides direction and supervision for students and will continue to impart and oversee educational outcomes when third-party institution companion oversight is involved. 103. Research projects undertaken at CSIRO or industry partner premises are completed with university co-supervision and oversight and accepted as being at a school, college or university in the statutory context of table item 2.1A of section 51-10. 104. Where a stipend is received by a full-time student, it is accepted that these students satisfy the condition of being a full-time student at a school, college or university. Where a stipend is received by a part-time student, the amount will not be exempt income under Division 51. | Scholarship, bursary, educational allowance or educational assistance: 105. The words 'scholarship', 'bursary', 'educational allowance' or 'educational assistance' are not defined in the ITAA 1997. The Macquarie Dictionary online [7] , defines: 106. Paragraphs 34 to 48 of Taxation Ruling TR 93/39 Income tax: friendly society education funds discuss the meaning of the words 'scholarship, bursary, educational allowance or educational assistance' for the purposes of the former paragraph 23(z) of the Income Tax Assessment Act 1936. Paragraph 35 of TR 93/39 states that the words are no more '... than a description of rewards for merit attained as a result of competition or selection on the basis of general criteria ...'. 107. In interpreting the meaning of the words 'scholarship, bursary, educational allowance or educational assistance', courts have determined that the relevant characteristics of a scholarship include the: 108. To receive a CSIRO studentship or internship, students must undertake a merit based selection process which involves an assessment of their skills against criteria including academic achievements and interpersonal skills. As such, it is accepted that selection for the studentships and internships are merit based. 109. In Chesterman v Federal Commissioner of Taxation [10] , Isaacs J said that for purposes to be educational they must provide for the giving or imparting of instruction. 110. To receive a CSIRO stipend a student must meet the eligibility criteria, including university enrolment and compliance with university rules. The studentships are awarded to postgraduate university students who undertake research as part of their course of study for research training and development purposes. It is accepted that the studentships and internships have the requisite educational purposes. 111. Accordingly, it is accepted the payments are by way of 'a scholarship, bursary, educational allowance or educational assistance'. | Section 51-35 exceptions: 112. Section 51-35 excludes the following payments from exemption: Commonwealth payment for education or training 113. The payments made are not of a kind covered by paragraphs 51-35(a), (b) or (f). Payment on condition that the student enters into employment with, or a contract for labour with, the payer 114. Paragraphs 51-35(c) and (d) excludes payments from exemption if they represent: 115. In Commissioner of Taxation of the Commonwealth of Australia v Ranson, E.L. [11] , the Federal Court took the view that the words 'upon condition that' do not require a contract between the parties to exist or any other form of legal relationship. It was held that the exemption did not apply where, as a matter of ordinary language, it could be said that the receipt of the scholarship amount was conditional on the recipient working with the payer if the payer so required. 116. To receive a studentship or internship the student is required to enter a Student Agreement with the CSIRO and university. The Student Agreement clearly sets out that the student will work with the CSIRO and university on a research project relevant to their course of study at the university but is not otherwise required to perform work for the CSIRO. In all cases, the students are not employees of the CSIRO. 117. While the student can be directed by the CSIRO with regards to the research project and may be covered by the CSIRO workers compensation scheme for work performed on the research project, this is not considered sufficient to make the student an employee of that organisation. 118. Neither are the Student Agreements considered to amount to a contract wholly or principally for the labour of the student. 119. As such, the payments are not excluded under paragraphs 51-35(c) or (d). Payment not provided principally for educational purposes 120. The word 'principally' is not defined and takes on its commonly understood meaning of 'chiefly' or 'mainly'. [12] 121. The granting of studentships and internships are done in accordance with particular statutory functions of the CSIRO under section 9 of the SIR Act. Relevantly, the CSIRO delivers in the following ways, consistent with its statutory functions: 122. In all cases, the studentships and internships provide a meaningful learning and development opportunity for the students and are not to be used as a means to conduct the ordinary operations of the CSIRO or to fill vacancies caused by absences of staff members. 123. The studentships and internships are for an educational purpose. This includes periods of work experience, and the CSIRO Postgraduate Internship. The purpose for offering the scholarships is the development of research skills, which is an educational purpose. 124. As such, the payments are not excluded under paragraph 51-35(e). © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). Not previously issued as a draft


What this Ruling is about | If this Ruling applies to you, and you correctly rely on it, we will apply the law to you in the way set out in this Ruling. That is, you will not pay any more tax or penalties or interest in respect of the matters covered by this Ruling. | To determine whether a receipt is of an income or of a capital nature, various factors may be relevant. Sometimes the character of receipts will be revealed most clearly by their periodicity, regularity or recurrence; sometimes, by the character of a right or thing disposed of in exchange for the receipt; sometimes, by the scope of the transaction, venture or business in or by reason of which money is received and by the recipient's purpose in engaging in the transaction, venture or business.


Related rulings: TR 93/39
Legislative references: ITAA 1997 6-5(1) ITAA 1997 6-20(1) ITAA 1997 Div 51 ITAA 1997 51-1 ITAA 1997 51-10 ITAA 1997 51-35 ITAA 1997 51-35(a) ITAA 1997 51-35(b) ITAA 1997 51-35(c) ITAA 1997 51-35(d) ITAA 1997 51-35(e) ITAA 1997 51-35(f) ITAA 1936 23(z) TAA 1953 Science and Industry Research Act 1949 9 Science and Industry Research Act 1949 9(1)(d) Science and Industry Research Act 1949 9(1)(e)
Case references: Chesterman v Federal Commissioner of Taxation [1923] HCA 24 32 CLR 362 (1923) 29 ALR 224
Other references: Macmillan Publishers Australia, The Macquarie Dictionary online, www.macquariedictionary.com.au , accessed 14 May 2021