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Edited version of your private ruling
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Ruling
Subject: Income - tertiary education bursary
Question
Is the income you received, by way of a tertiary education bursary, exempt from income tax?
Answer: Yes.
This ruling applies for the following period
Year ended 30 June 2011
The scheme commenced on
1 July 2010
Relevant facts
You are a resident of Australia for tax purposes.
You are a full-time university student.
You are a recipient of a full Centrelink Youth Allowance.
You are a recipient of a tertiary education bursary.
The provider of the bursary will pay expenses it considers incidental and necessary for your education and it will be paid each year until you complete your course, provided you achieve a satisfactory result each year.
The provider of the bursary does not attach any conditions for services or employment to the bursary.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 6-5(2)
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
Reasons for decision
Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year. However, if an amount is exempt income, it is not included in the assessable income of a taxpayer (subsection 6-15(2) of the ITAA 1997).
Item 2.1A of the table in section 51-10 of the ITAA 1997 provides that, subject to the exceptions and special conditions contained within section 51-35 of the ITAA 1997, income received by way of a scholarship, bursary, educational allowance or education assistance by a full time student at a school, college or university is exempt from income tax.
For the bursary to be exempt from income tax:
§ the taxpayer must be a full time student at a school, college or university
§ the taxpayer must be in receipt of a scholarship and the scholarship must be provided principally for educational purposes, and
§ there must be no condition that the taxpayer be an employee of the scholarship provider or enter into any contract with the scholarship provider that is wholly or principally for labour.
In your case, you are a full time student at a university. The payments made under the bursary are provided principally for education purposes and, there are no conditions attached to the bursary that require you (or will require you) to be an employee, or enter into a contract that is wholly or principally for labour, with the foundation. Therefore, you satisfy all the above requirements and your bursary income is exempt from income tax under section 51-10 of the ITAA 1997.