ATO Interpretative Decision

ATO ID 2004/896 (Withdrawn)

Income Tax

Exempt income: scholarship paid to a student enrolled part-time due to personal circumstances
FOI status: may be released

This ATO ID is withdrawn from the database as it is a straight application of the law in section 51-35 of the Income Tax Assessment Act 1997 and does not contain an interpretative decision.

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Is a scholarship paid to a student exempt from income tax under section 51-10 of the Income Tax Assessment Act 1997 (ITAA 1997) where the student is enrolled as a part-time student due to personal circumstances and is undertaking the maximum study load that their personal circumstances permit?

Decision

No. A scholarship paid to a student is not exempt from income tax under section 51-10 of the ITAA 1997 where the student is enrolled as a part-time student due to their personal circumstances and is undertaking the maximum study load that their personal circumstances permit.

Facts

The taxpayer initially enrolled as a full-time student at a university.

The taxpayer was awarded a scholarship in relation to these studies.

For the current income year the taxpayer changed their enrolment from full-time to part-time due to a change in their personal circumstances.

The taxpayer is completing the maximum study load that their personal circumstances permit. Their study load is less than that of a full-time student.

The scholarship would be exempt from income tax if paid to a full-time student.

Reasons for Decision

Item 2.1A of the table in section 51-10 of the ITAA 1997 provides that, subject to the exceptions and special conditions in section 51-35 of the ITAA 1997, amounts received by way of scholarship, bursary, educational allowance or educational assistance by a 'full time student' at a school, college or university are exempt from income tax.

The term 'full-time student' is not defined for the purposes of section 51-10 of the ITAA 1997. Accordingly, it is necessary to consider the ordinary meaning of the term. The Macquarie Dictionary, 2001, rev. 3rd edn The Macquarie Library Pty Ltd, NSW (Macquarie Dictionary) defines 'full-time' as:

....taking all the normal working hours (opposed to part-time).

Further, the Macquarie Dictionary defines 'part-time' as:

participating in an activity for less than the full timetable or program: a part-time student.

The taxpayer is undertaking a study load which is less than the full-time requirement for the university, therefore, the taxpayer is not considered to be a full-time student. The fact that the taxpayer is completing the maximum study load that their personal circumstances permit does not alter their status as a part-time student.

As the taxpayer is a part-time student they do not satisfy one of the requirements set down by section 51-10 of the ITAA 1997, that is, the taxpayer must be a full-time student at a school, college or university.

Accordingly, a scholarship paid to the taxpayer, a part-time student, is not exempt from income tax under section 51-10 of the ITAA 1997.

Date of decision: 15 October 2004

Year of income: Year ended 30 June 2002

Legislative References:
Income Tax Assessment Act 1997
section 51-10

Related ATO Interpretative Decisions
ATO ID 2002/222
ATO ID 2001/227

Other References:
The Macquarie Dictionary, 2001, rev. 3rd edn The Macquarie Library Pty Ltd, NSW

Keywords
Exempt income
Scholarships, fellowships & bursaries

Business Line: Administration, Business and Personal Taxes Centre of Expertise

Date of publication: 19 November 2004

ISSN: 1445-2782

history

	Date:	Version:
	15 October 2004	Original statement
You are here	25 July 2008	Archived

Copyright notice

You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).