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Edited version of private advice

Authorisation Number: 1051797892028

Date of advice: 15 February 2021

Ruling

Subject: Assessable income

Question

Are your payments assessable income in Australia?

Answer

Yes.

This ruling applies for the following period:

Year ended 30 June 20XX

The scheme commences on:

1 July 20XX

Relevant facts and circumstances

You are a resident of Australia for taxation purposes.

You have been appointed as a member of a professional organisation.

You receive an amount of money.

The payment of the money does not require you to undertake any work.

You are reimbursed any costs associated with travel etc.

Relevant legislative provisions

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

Reasons for decision

Section 6-5 of the Income Tax Assessment Act 1997 (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 to be ordinary income.

Subsection 6-15(2) of the ITAA 1997 provides that if an amount is exempt income, it is not assessable income.

Section 51-10 of the ITAA 1997 provides, subject to some exceptions listed in section 51-35 of that Act, 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.

As previously discussed with you Section 51-10 of the ITAA 1997 has replaced the repealed Section 23(z) of the ITAA 1936.

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.

The payments do not meet the requirements set out in Section 51-10 of the ITAA 1997.

You are not a student and you are not undertaking a course of study.

The payments are therefore assessable in Australia.

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