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Scholarships
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Scholarships


Printable version

What is a scholarship?

An amount is a scholarship if :

  • education of the person receiving the scholarship is one of its purposes, and
  • the selection of the persons to receive the scholarship is based on merit or some other rational criterion.

A scholarship may include a bursary, educational allowance or educational assistance.

A payment made to a student, other than for educational purposes, is not a scholarship. For example, a payment made to a student to research a specific topic for the benefit of the payment provider is not a scholarship. This is because the payment is not provided for the education of the student ? it is provided to carry out research for the benefit of the provider. The fact that the recipient is a full-time student is irrelevant and does not change the nature of the payment. In this situation, the payment would be included in the student?s assessable income. However, a payment will be a scholarship if it is provided to a student who is required to undertake research that is assessed as part of completing the course of study. This is often the case for post-graduate students.

Is your scholarship exempt from tax?

If you are a student receiving full-time education at a school, college or university, your scholarship will be exempt subject to certain exceptions. Both private and public scholarships received by full-time school, college or university students in Australia or overseas can be exempt from income tax.

Exempt income should not be included on your tax return, but may affect losses carried forward from previous years and entitlements to certain tax offsets. For more information, refer to Exempt income.

Note

    The exemption only applies to amounts that are ordinary or statutory income. Therefore, if you receive the amount as a gift it may not have the necessary character of income to qualify for the exemption.

Payments that are not exempt

The amount you receive will not be exempt from tax in the following circumstances:

  • It is a Commonwealth education or training payment. This includes allowances or reimbursements the Commonwealth makes to, or on behalf of, a participant in a Commonwealth labour program or to, or on behalf of, a student (who has turned 16) under:
    • ABSTUDY
    • the Assistance for Isolated Children (AIC) Scheme
    • the Veterans' Children Education (VCE) Scheme
    • the Youth Allowance Scheme, or
    • austudy.

    However, any supplementary component of the above payments is exempt (for example, payments for rent, accommodation assistance, certain types of travel, books and equipment).

  • As a condition of the scholarship, you will (or will if required) become or continue to be an employee of the scholarship provider.
  • As a condition of the scholarship, you will (or will if required) become or continue to be a party to a contract with the scholarship provider that is wholly or principally for your labour.
  • The scholarship is not provided principally for education purposes.
  • It is an education entry payment.

What to read/do next

Is your scholarship taxable? is a tool which can help you to work out the status of your scholarship.

For further information about when scholarships are exempt, please contact the Personal Tax Infoline on 13 28 61.

Last Modified: Thursday, 22 April 2004

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