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Ruling
Subject: Assessable income - scholarship
Question
Are the scholarship payments you receive assessable income?
Answer
Yes.
This ruling applies for the following period:
Year ended 30 June 2012
The scheme commences on:
1 July 2011
Relevant facts and circumstances
You obtained a scholarship.
The scholarship is provided for educational purposes.
You are not employed by the scholarship provider and there is no guarantee or requirement for employment by the provider following your study.
You are a part time student.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5
Income Tax Assessment Act 1997 Section 51-10
Income Tax Assessment Act 1997 Section 51-35
Reasons for decision
Subsection 6-5(1) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that an amount is included as assessable income if it is income according to ordinary concepts.
Scholarship payments are treated as ordinary income.
However, 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 scholarship to be exempt from income tax the taxpayer must be a full time student at a school, college or university, they must be in receipt of a scholarship that is 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 will receive a scholarship for educational purposes and there are no conditions attached to the scholarship that require you to work for the scholarship provider. However, you are only studying part time. Therefore, you do not meet the requirements of section 51-35 of the ITAA 1997. Accordingly, the scholarship payments that you receive are assessable income.