Edited version of your written advice

Authorisation Number: 1051313993477

Date of advice: 28 November 2017

Ruling

Subject: Scholarship and Study Grant

Question 1

Is your scholarship assessable income?

Answer

Yes

Question 2

Is your grant from the relevant Education and Research Foundation assessable income?

Answer

Yes

Question 3

Can you claim your expenses of airfares, conference registration and accommodation for attending the overseas conference as a deduction?

Answer

Yes

Question 4

Can you claim a deduction for the travel insurance expense?

Answer

No

This ruling applies for the following period:

Year ended 30 June 2017

The scheme commences on:

1 July 2016

Relevant facts and circumstances

● You received a XXXX post graduate scholarship payment of $X,XXX for the period ended 30 June 2017

● You study part time.

● You are employed full time by XXXX as a XXXX.

● You received a $X,000 overseas short study grant from the relevant Education and Research Foundation, a body related to your employer to attend the XXXX Conference being held overseas in XXXX.

● The grant is only available to employees of XXXX.

● You attended the conference as a presenter and attendee.

● The conditions of receiving the grant was that on your return to be prepared to present your experiences and to share the knowledge gained, and to act as a peer reviewer for the following year’s recipients (which you were not asked to do).

● You took annual leave to travel to XXXX on DDMMYY and returned home on DDMMYZ and your spouse accompanied you.

● The conference went for four days.

● You visited the XXXX Management team on DDMMYY to collaborate and network.

● You incurred expenses for accommodation, conference registration, Travel insurance and return flights. The expenses for your spouse have been excluded.

Relevant legal provisions

Income Tax Assessment Act 1997 section 6-5

Income Tax Assessment Act 1997 subsection 6-15(2)

Income Tax Assessment Act 1997 section 51-10

Income Tax Assessment Act 1997 section 51-35

Income Tax Assessment Act 1997 section 8-1

Reasons for decision

Summary

The scholarship you received is considered assessable income as you do not meet the conditions set out in section 51-10 of the ITAA 1997 as you were not a full time student when you received your scholarship payments; therefore the scholarship payments are not exempt from income tax.

The study grant you received as an employee of the XXXX is considered assessable income. Your conference expenses of airfares, accommodation and conference are a deductable expense, but your travel insurance is not deductable.

Detailed Reasoning

Ordinary Income

Section 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that assessable income includes income according to ordinary concepts, that is, ordinary income.

Ordinary income is generally considered to include:

● amounts received in return for personal services, whether received in the capacity of an employee or otherwise, and

● amounts received periodically or regularly and which the recipient relies on for the maintenance of themselves and/or their dependants (Federal Commissioner of Taxation v. Dixon (1952) 86 CLR 540).

The scholarship payment of $X,XXX and the short study grant payment of $X,000 relate to your employment position and are considered to be ordinary income.

Subsection 6-15(2) of the ITAA 1997 provides that if an amount is exempt income, it is not assessable income.

Section 51-10 of the ITAA 1997 provides, subject to some exceptions listed in section 51-35 of that Act, that a scholarship, bursary, educational allowance or educational assistance payment is exempt from income tax if it is paid to a full-time student at a school, college or university.

In general terms, for a scholarship to be exempt from income tax:

● the taxpayer must be in receipt of a scholarship and the scholarship must be provided principally for educational purposes

● the taxpayer must be a full-time student at a school, college or university, 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 study part-time therefore your scholarship payment $X,XXX is income according to ordinary concepts and is not exempt under the provisions of the income tax law. Your scholarship is assessable income under section 6-5 of the ITAA 1997.

The study grant of $X,000 you received from the relevant Education and Research Foundation is only available to employees of XXXX. The study grant payment is considered income according to ordinary concepts and is not exempt under the provisions of the income tax law. Your grant is assessable income under section 6-5 of the ITAA 1997.

Deductions

Section 8-1 of the ITAA 1997 allows a deduction for all losses and outgoings to the extent to which they are incurred in gaining or producing assessable income, except where the outgoings are of a capital, private or domestic nature, or relate to the earning of exempt income.

To determine whether your expenses are deductible, the essential character of the expenditure must be considered. It is necessary to determine whether there is a sufficient nexus between the expenditure and your current income-earning activities. The intention or purpose in incurring an expense can be an element in determining whether the whole or part of the expense is an allowable deduction.

In your case you were awarded the “XXXX Study Grant” that is only available to employees of XXXX to travel to XXXX to attend the XXXX Congress. In your grant submission you outlined your intentions if awarded the grant to attend the conference. These included:

● The presentation of your research paper at conference on “XXXX”.

● Networking with attendees from around the world at conference.

● Arranged with director of XXXX to meet and tour their communications centre, equipment and their coordination centre.

One of the conditions of the study grant is that you are also required to share your learnings from the study and from the congress with your colleagues and as broadly as possible.

Therefore, it is accepted that your expenses of accommodation, air fares and the conference registration have the necessary and relevant connection with the earning of your assessable income, and are therefore deductible to the extent that the expenses are not private. However, as your spouse travelled with you, you will need to ensure you claim only the costs you incurred as an individual.

You are not entitled to a deduction for travel insurance under section 8-1 of the ITAA 1997 as the expenditure is private in nature. Expenses such as insurance policies invariably cover items that are generally private in nature, for example illness, loss of baggage, and theft or damage to belongings.

ATO view documents

Interpretative Decision 2001/615

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