DESCRIPTION
An Education or Scholarship Trust is established by relatives of a student for the provision of the student's education, through the granting of scholarships, bursaries, educational allowances or educational assistance. 2. The Education or Scholarship Trust Deed may have clauses which: (a) specify the name of the student eligible for the scholarship or educational assistance; (b) list the criteria which the student must satisfy in order to qualify for the scholarship or educational assistance; (c) ensure that the Education or Scholarship Trust is not open to other students who may meet the set criteria; and/or (d) specify a yearly educational allowance or educational assistance to be paid to the student. 3. The Trust Deed states that where the student is a minor, they are not under a legal disability, they are presently entitled and can demand trust income from the Trustee. 4. The Trustee distributes or expends funds to the student as an amount called a scholarship, bursary, educational allowance or educational assistance. 5. The student claims this income is exempt from tax. 6. In a variation to these arrangements, deductions for education expenses are being claimed by the Education or Scholarship Trust. 7. The arrangements seek to take advantage of section 51-10 of the ITAA 1997 which exempts from income tax, a scholarship, bursary, educational allowance or educational assistance. The arrangements seek to convert an assessable distribution from a trust to exempt income.