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Edited version of your private ruling
Authorisation Number: 1011928395581
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Ruling
Subject: Assessable income - scholarship
Question
Is the Commonwealth Accommodation Scholarship you receive exempt income?
Answer
Yes.
This ruling applies for the following periods:
Year ended 30 June 2009
Year ended 30 June 2010
Year ended 30 June 2011
The scheme commences on:
1 January 2009
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
You are a full time student at university.
You are in receipt of a scholarship.
You have received this scholarship since commencing university and will continue to receive it up until you graduate.
The scholarship is provided principally for educational purposes.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5 and
Income Tax Assessment Act 1997 Section 51-10.
Detailed reasoning
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, then it is not included in the assessable income of a taxpayer (section 6-15 of the ITAA 1997).
Item 2.1A of the table in section 51-10 of the ITAA 1997 provides that, 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. This is subject to the exceptions and special conditions contained within section 51-35 of the ITAA 1997.
For the scholarship to be exempt from income tax:
· you must be a full-time student at a school, college or university
· you must be in receipt of a scholarship and the scholarship must be provided principally for educational purposes, and
· there must be no condition that you 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 a full time student at a university and receive a scholarship that is provided principally for educational purposes. Accordingly, the scholarship that you receive is exempt from income tax under section 51-10 of the ITAA 1997.