Issue
Is a scholarship paid to a student exempt from income tax under section 51-10 of the Income Tax Assessment Act 1997 (ITAA 1997) where the student is enrolled as a part-time student due to personal circumstances and is undertaking the maximum study load that their personal circumstances permit?
Decision
No. A scholarship paid to a student is not exempt from income tax under section 51-10 of the ITAA 1997 where the student is enrolled as a part-time student due to their personal circumstances and is undertaking the maximum study load that their personal circumstances permit.
Facts
The taxpayer initially enrolled as a full-time student at a university.
The taxpayer was awarded a scholarship in relation to these studies.
For the current income year the taxpayer changed their enrolment from full-time to part-time due to a change in their personal circumstances.
The taxpayer is completing the maximum study load that their personal circumstances permit. Their study load is less than that of a full-time student.
The scholarship would be exempt from income tax if paid to a full-time student.
Reasons for Decision
Item 2.1A of the table in section 51-10 of the ITAA 1997 provides that, subject to the exceptions and special conditions in section 51-35 of the ITAA 1997, amounts received by way of scholarship, bursary, educational allowance or educational assistance by a 'full time student' at a school, college or university are exempt from income tax.
The term 'full-time student' is not defined for the purposes of section 51-10 of the ITAA 1997. Accordingly, it is necessary to consider the ordinary meaning of the term. The Macquarie Dictionary , 2001, rev. 3rd edn The Macquarie Library Pty Ltd, NSW ( Macquarie Dictionary ) defines 'full-time' as: ....taking all the normal working hours (opposed to part-time).
Further, the Macquarie Dictionary defines 'part-time' as: participating in an activity for less than the full timetable or program: a part-time student.
The taxpayer is undertaking a study load which is less than the full-time requirement for the university, therefore, the taxpayer is not considered to be a full-time student. The fact that the taxpayer is completing the maximum study load that their personal circumstances permit does not alter their status as a part-time student.
As the taxpayer is a part-time student they do not satisfy one of the requirements set down by section 51-10 of the ITAA 1997, that is, the taxpayer must be a full-time student at a school, college or university.
Accordingly, a scholarship paid to the taxpayer, a part-time student, is not exempt from income tax under section 51-10 of the ITAA 1997.