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Edited version of your written advice
Authorisation Number: 1012691782673
Ruling
Subject: Scholarship income
Question 1
Will the scholarship received be assessable income?
Answer
No
This ruling applies for the following period(s)
Income year ended 30 June 2014
The scheme commences on
1 July 2013
Relevant facts and circumstances
You received a scholarship.
The scholarships stated aim is to offset the costs associated with training and assist students to overcome the financial barriers to studying at university.
To be eligible for the scholarship the recipient needed:
• to be studying towards an accredited qualification
• have demonstrated a commitment to working in rural and regional Australia in the Future
• be completing their final years of studies in 2013
• obtained an intern position in a rural area for 2014
At the time of being awarded the scholarship you were a full time student, but by the time you received the funds you had graduated but not yet commenced employment.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 6-5
Income Tax Assessment Act 1997 section 51-10
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 (section 6-15 of the ITAA 1997).
As a general rule, money received from scholarships is ordinary income.
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 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 circumstance the scholarship meets all of the above criteria even though the scholarship was received after you had graduated it was awarded to you by virtue of you being a full time student. Consequently the scholarship you received will be exempt from income tax under section 51-10 of the ITAA 1997.