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Edited version of your written advice
Authorisation Number: 1013095202088
Date of advice: 29 September 2016
Ruling
Subject: Assessability of foreign income
Question and answer
Is your overseas fellowship stipend assessable income in Australia?
Yes.
This ruling applies for the following periods:
Year ended 30 June 2016
Year ending 30 June 2017
The scheme commenced on:
1 July 2015
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 resident of Australia for taxation purposes.
You have gone overseas for study.
You will receive a stipend for the period you are studying overseas which will be paid monthly.
You are not required to pay tax on the stipend overseas.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5
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 all the ordinary income derived directly or indirectly from all sources, whether in or out of Australia, during the income year.
Under subsection 6-5(1) of the ITAA 1997, ordinary income means income 'according to ordinary concepts'. This phrase is not defined under the legislation but the courts have identified a number of factors which indicate whether an amount has the character of income according to ordinary concepts.
The main characteristics that have evolved from case law include receipts that are:
• received periodically and regularly
• relied upon or expected
• earned, and
• for the replacement of income
Research grants are generally assessable. For example, amounts paid under a postgraduate research scholarship granted to a PhD student by a university out of funds provided by the Asthma Foundation were not exempt as the Foundation financed the scholarship on the condition that the student would analyse, collate and prepare for publication the findings of a respiratory survey conducted on behalf of the Foundation (Federal Commissioner of Taxation v. Hall 75 ATC 4156).
You will be receiving monthly 'stipends' from the overseas facility. The meaning of stipend in the Macquarie Online Dictionary is fixed or regular pay; periodic payment; salary.
This regular payment that you will be receiving falls within the meaning of ordinary income and must be included in your Australian tax return.