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Ruling
Subject: Exemption of income
Question 1
Will the scholarship payments that you receive be exempt from tax?
Answer
Yes
This ruling applies for the following periods
Year ending 30 June 2013
Year ending 30 June 2014
Year ending 30 June 2015
Year ending 30 June 2016
The scheme commences on
1 July 2012
Relevant facts and circumstances
You are a full-time student enrolled at a university.
You have been granted a scholarship to complete a PhD over four years under an Australian Postgraduate Award
There are no conditions attached to the scholarship that require you to work for the university now or in the future.
The scholarship is paid principally for educational purposes.
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(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of an Australian resident includes ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year. However, if an amount is exempt, it is not included in the assessable income of a taxpayer.
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
· The taxpayer must be in receipt of a scholarship and the scholarship must be provided principally for education 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 and have been awarded an Australian Postgraduate Award scholarship and there are no conditions attached that require you to work now or in the near future for the provider.
As you have satisfied all the requirements, your scholarship income is exempt from tax.