4.3.9.40 Income from scholarships

Summary

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 4.3.2.30.

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

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CECS and CAS have been replaced by the student start-up scholarship, student start-up loan and relocation scholarship.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.

Student start-up scholarships & relocation scholarships

Student start-up scholarships and relocation scholarships (5.1.7.40) are NOT treated as income for social security purposes.

Student start-up scholarships and relocation scholarships paid under other schemes such as ABSTUDY, MRCA section 258 and VEA section 117 are also exempted income.

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 available.

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 $9,174 (in 2023).

The value of this threshold is indexed on 1 January each 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.

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.

HECS-HELP exempt places

A scholarship that provides a student with a HECS-HELP exempt place is not valuable consideration and not income.

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, that is, the nature of the scholarship does not fall into the general scope of the types of scholarships that are generally exempted.

Additional allowance

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.

Approved scholarships awarded outside Australia

Scholarships that have been approved by the Minister under SSAct section 24A are NOT income.

The only current approved scholarship is:

• 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 is not approved, and is therefore assessable as income.

However, there are certain scholarships that were awarded outside Australia that were previously approved scholarships where the approval determination has been repealed which include:

• Rotary Foundation Ambassadorial Scholarship, provided that it does not contain any component for living expenses (from 13/12/2000 and repealed from 01/04/2017. Refer to Note A.), and
• Cambridge Commonwealth Trust Fees Scholarship (from 01/09/1990 and repealed from 30/11/2018. Refer to Note A).

These determinations were repealed as those scholarships are no longer in existence.

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 $9,174 (in 2023)).

ABSTUDY allowances

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.

Other ABSTUDY payments NOT counted as income

ABSTUDY pensioner education supplement is NOT counted as income.