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Is the PhD Research Training Program government scholarship you receive as a part time student exempt from income tax under section 51-10 of the Income Tax Assessment Act 1997 (ITAA 1997 ) ?

No This ruling applies for the following periods : Year ended 30 June 20XX Year ended 30 June 20XX Year ended 30 June 20XX The scheme commenced on: XX X 20XX

You have been studying your PhD since X 20XX under a Research Training Program government scholarship. You were studying full time but changed to part time due to health reasons on the XX X 20XX. You tutor for the University for a few hours a week. You do not have full time or stable employment.

Income Tax Assessment Act 1997 section 6-5 Income Tax Assessment Act 1997 section 11-15 Income Tax Assessment Act 1997 section 51-10

Summary To meet the requirements set down in section 51-10 of the ITAA 1997, the taxpayer must be a full-time student at a school, college or university when in receipt of the funds. You are studying part-time as you are not capable of full-time study due medical reasons. The income tax law specifically limits the tax exemption of certain scholarships to full-time students. No such concession is available to part-time students under the income tax law. Detailed reasoning 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 during the income year. Ordinary income is generally considered to include: •                amounts received in return for personal services, whether received in the capacity of an employee or otherwise, and •                amounts received periodically or regularly and which the recipient relies on for the maintenance of themselves and/or their dependants Payments received under a scholarship are considered to be ordinary income except if an amount is exempt income.

Section 11-15 of the ITAA 1997 lists certain types of exempt income, including Item 2.1A of the table in section 51-10 of the ITAA 1997, which makes exempt from income tax amounts paid as a scholarship, bursary, educational allowance, or educational assistance to a full-time student at a school, college or university. Section 51-10 provides that, subject to some exemptions and special conditions, 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. In general terms, for a scholarship to be exempt from income tax: •                you must be a full-time student at a school, college or university; •                you must receive a scholarship and the scholarship must be provided principally for educational purposes; and •                there must be no condition that you be an employee of the scholarship provider or enter into any contract with the scholarship provider that is wholly or principally for labour. ATO ID 2002/222 Personal Tax: Exemption of summer vacation scholarship income - meaning of full-time student

considers the circumstances of a full-time student receiving scholarship income over a part time summer vacation period. The student in this case was classified as a full-time undergraduate student while studying part time over the summer vacation, which did not alter their status as a full-time undergraduate student. Application to your circumstances Your situation differs from ATO ID 2002/222 as you are classified as a part-time student. While your reasons for studying part time are recognised, there is no flexibility to extend the provision to exempt part-time students. You do not meet one of the essential requirements set down by section 51-10, that is, that you must be a full-time student at a school, college or university. The Commissioner has no discretion to ignore the requirement that the recipient must be a full-time student. Your scholarship is not exempt from income tax because you are a part-time student.