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1 Is your part-time scholarship exempt from income tax under section 51-10 of the Income Tax Assessment Act 1997 (ITAA 1997)?

1 No. This ruling applies for the following periods : Year ended 30 June 20YY Year ended 30 June 20YY Year ended 30 June 20YY The scheme commenced on: DD MM YYYY

On DD MM YYYY, you enrolled in the program at a university. You met the eligibility criteria for the scholarship under section XX of the guidelines. Your scholarship is conditional on your continued enrolment in your course of study, which is subject to annual progress review. You receive the stipend payment fortnightly. Your stipend is not formally conditional on concurrent employment, labour or a guarantee of future employment. Since MM YYYY, you have been attending psychological sessions. On DD MM YYYY, you were registered with the inclusion and disability services. You are registered to access support services and academic adjustments to offset the impact of your disability on your studies. On DD MM YYYY, you changed your enrolment to part-time due to your disability. Under subsection XX(X) of the guidelines, you receive 50% of the prescribed rates because you are now part-time.

Income Tax Assessment Act 1997 section 6-5 Income Tax Assessment Act 1997 subsection 6-15(2) Income Tax Assessment Act 1997 section 51-10 Income Tax Assessment Act 1997 section 51-35

Summary You do not meet the conditions set out in section 51-10 of the Income Tax Assessment Act 1997 (ITAA 1997) which must be met for your scholarship income to be considered exempt from income tax. Detailed reasoning Section 6-5 of the ITAA 1997 provides that assessable income includes income according to ordinary concepts, that is, ordinary income. 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 ( Federal Commissioner of Taxation v. Dixon (1952) 86 CLR 540). Payments received under a scholarship are considered ordinary income. Subsection 6-15(2) of the ITAA 1997 provides that if an amount is exempt income, it is not assessable income.

Item 2.1A of the table under section 51-10 of the ITAA 1997 provides, subject to some exceptions listed in section 51-35 of the ITAA 1997, that a scholarship, bursary, educational allowance or educational assistance payment is exempt from income tax if it is paid to a full-time student at a school, college or university. In general terms, for a scholarship to be exempt from income tax: •                the taxpayer must be in receipt of a scholarship and the scholarship must be provided principally for educational purposes; •                the taxpayer must be a full-time student at a school, college or university; 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 circumstances Although you are not receiving the scholarship in return for your personal services, it is considered that the scholarship is ordinary income as it will be paid periodically or regularly and will be used for your maintenance. The scholarship payments therefore form part of your assessable income unless they are exempted by the income tax law.

Whilst we accept that you are studying part-time as you are not capable of full-time study due to your disability, 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. You do not meet one of the essential requirements set down by section 51-10 of the ITAA 1997, that you be a full-time student at a school, college or university. As your scholarship payments are income according to ordinary concepts and are not exempt under the provisions of the income tax law, your part-time scholarship is assessable income under section 6-5 of the ITAA 1997. The scholarship payments are therefore included in your taxable income.