126.96.36.199 Income from scholarships
This topic provides information on the following matters:
- scholarships and similar payments
- scholarships awarded within Australia
- Commonwealth scholarships
- student start-up scholarships and relocation scholarships
- merit or equity-based scholarships
- direct payment of tuition fees
- fee exempt scholarships
- waiver of fees
- HECS-HELP exempt places
- scholarships awarded as gifts or prizes
- scholarships paid as one-off lump sums in the nature of a gift or prize
- additional allowance
- 'approved' scholarships awarded outside Australia
- value of board and lodging
- ABSTUDY allowances, and
- other ABSTUDY payments NOT counted as income.
Scholarships & similar payments
Scholarships or similar payments are treated as income for social security purposes unless otherwise excluded. Scholarships awarded outside Australia may be excluded as income if they do NOT meet living expenses. The term scholarship is not defined in the SSAct, but is generally taken to mean a payment/s made to a student to assist with general living expenses.
Payments called bursaries, stipends, awards or grants may be similar to a scholarship. They may be:
- paid to the scholarship recipient directly (in the form of money, or valuable consideration such as computers or airline flights), or
- indirectly, in the form of a financial obligation paid on behalf of the scholar (such as prepaid fees), that the student is liable to pay in order to enrol.
Exception: Some payments may be treated as exempt lump sums, based on their characteristics.
Information on exempt lump sums can be found at 188.8.131.52.
Scholarships awarded within Australia
Scholarships awarded in Australia are income unless otherwise excluded and are generally provided to:
- assist recipients to complete an academic qualification
- obtain specialised training, or
- complete a special project.
Commonwealth scholarships are NOT treated as income for social security purposes. Commonwealth scholarships include:
- Commonwealth Education Costs Scholarship (CECS)
- Commonwealth Accommodation Scholarship (CAS)
- Indigenous Commonwealth Education Costs Scholarship
- Indigenous Commonwealth Accommodation Scholarship
- Indigenous Commonwealth Reward Scholarship.
CECS and CAS have been replaced by the student start-up scholarship, student start-up loan and relocation scholarship. However, all recipients of a CECS or CAS awarded prior to 1 January 2010 will continue to receive their scholarship until their scholarship entitlements has been consumed, provided they remain eligible for the scholarship.
Act reference: SSAct section 8(8)(zja) Excluded amounts-general
Social Security (Indigenous Student Assistance Scholarships - Excluded Amounts) Instrument 2016 section 5 Excluded Amounts
Student start-up scholarships & relocation scholarships
Note: On 1 January 2016, the student start-up loan replaced the student start-up scholarship. From 1 July 2017, the student start-up scholarship is no longer be available.
Act reference: SSAct section 8(8AA) For the purposes of paragraph (8)(zjd) …
Merit or equity-based scholarships
Merit or equity-based scholarships (1.1.M.136) are treated as exempt income for social security purposes up to a threshold of $8,355 (in 2020).
The value of this threshold is indexed on 1 January each year.
Act reference: SSAct section 8(8)(zjd) a payment of a scholarship to a person during a calendar year …
Direct payment of tuition fees
A payment made DIRECTLY to a university (or other education or training institution) or to the Commonwealth for payment of tuition fees for an approved course of education or study is NOT assessed as income for social security purposes.
Explanation: Where a student cannot access the scholarship as cash in hand, that is, the student has no discretion on how the scholarship is used, and the payment is not made at the direction of the student, the amount of the scholarship that is payment of tuition fees or course charges is not income.
Fee exempt scholarships
Scholarships offered by higher education providers that FULLY exempt a student from fees and/or contribution amount are NOT income.
Waiver of fee
The amount of a scholarship that waives a tuition fee or a course charge, either partly or in full, is NOT income.
Act reference: SSAct section 8(1)-'income amount', section 8(8)(zjb) Excluded amounts-general, section 8(8)(zjc) Excluded amounts-general, section 569B Approved course of education or study
HECS-HELP exempt places
A scholarship that provides a student with a HECS-HELP exempt place is not valuable consideration and not income.
Act reference: Higher Education Support Act 2003 section 169-20 Exempt students
Scholarships awarded as gifts or prizes
Some scholarships, or similar payments, that are provided to students purport to be 'gifts'. Some students can even be provided with a certificate or letter from the scholarship donor or benefactor stating that the scholarship is a 'gift', for example: 'This scholarship is provided as a gift and is not provided as income'. In such cases a delegate needs to investigate the nature of the scholarship to determine whether the payment is a gift, and therefore exempt, or not a gift and therefore income.
Scholarships paid as one-off lump sums in the nature of a gift or prize
A scholarship, or similar payment, (whether a gift or a prize) is to be treated as income if any of the following apply:
- more than one payment
- could reasonably be expected to be received or necessarily anticipated
- represent receipt of money for services rendered directly or indirectly
- the scholarship is for purposes, such as living expenses, cash for fees, books, cash for accommodation i.e. the nature of the scholarship does not fall into the general scope of the types of scholarships that are generally exempted.
Policy reference: SS Guide 184.108.40.206 Income exempt from assessment - legislated
In addition to the scholarship amount, recipients may be entitled to reimbursement of specified 'out of pocket' expenses such as photocopying, postage, printing and similar expenses. To obtain this allowance, the participant is usually required to present an itemised claim for reimbursement, together with receipts. The reimbursement amount is NOT income.
Any additional allowance paid in respect of dependent children (1.1.D.70) in a person's care is not income but serves to reduce the additional income free area for dependent children.
If any of these allowances are paid to a student child of the person, the payment is counted as the child's own personal income.
Act reference: SSAct section 8(8)(j) Excluded amounts - general
Approved scholarships awarded outside Australia
Scholarships that have been approved by the Minister under SSAct section 24A are NOT income.
Explanation: For a scholarship to be an approved scholarship, or an approved class of scholarship, it must be awarded outside Australia and not intended to be used wholly or partly to assist recipients to meet living expenses.
Current approved scholarships include:
- Rotary Foundation Ambassadorial Scholarship, provided that it does not contain any component for living expenses
- Cambridge Commonwealth Trust Fees Scholarship, and
- Scholarship awarded by Association of Mouth and Foot Painting Artists, Liechtenstein.
If a scholarship awarded outside Australia is not in the above list, then it has not been approved, and is therefore assessable as income.
Act reference: SSAct section 24A Approved scholarship, section 8(8)(zj) Excluded amounts-general
Value of board & lodging
If a scholarship provides for either free (or a reduced charge for) board and lodging or an amount is paid by the scholarship provider directly to an accommodation provider, then the value of the board and lodging provided IS NOT counted as income.
Amounts paid to a student to pay for accommodation IS counted as income (unless this amount could otherwise be exempted from the income test up to the amount of $8,355 (in 2020)).
Act reference: SSAct section 8(8)(za) Excluded amounts-general, section 8(8)(zjd) Excluded amounts-general, section 8(8AB) For the purposes of paragraph (8)(zjd), a person's threshold amount …
Generally a person cannot receive both ABSTUDY and social security payments at the same time.
ABSTUDY allowances paid to a person or their partner (1.1.P.85) are NOT income for social security purposes.
Explanation: A couple is treated as if both are claiming social security income support payments.
Act reference: SSAct section 23(1)-'social security payment'
Other ABSTUDY payments NOT counted as income
ABSTUDY pensioner education supplement is NOT counted as income.