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,
• additional allowance,
• 'approved' scholarships awarded outside Australia,
• value of board and lodging,
• ABSTUDY allowances,
• other ABSTUDY payments NOT counted as income, and
• Rural Tertiary Hardship Fund (RTHF) grants.

 

Scholarships & similar payments

Scholarships or similar payments are income 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. These scholarships were introduced in 2004 as Commonwealth Learning Scholarships to assist students from low socio-economic backgrounds, particularly Indigenous students and those from rural or regional areas who have to move away from the family home to undertake higher education studies. From 1 January 2008 the program became known as the Commonwealth Scholarships Program. The scholarships are the:

• Commonwealth Education Costs Scholarships (CECS) of $2,254 (in 2010) a year for up to 4 years to assist with their education costs, and
• Commonwealth Accommodation Scholarships (CAS) of $4,508 (in 2010) a year for up to 4 years to assist them with accommodation costs when they move to undertake higher education.

 

The value of the CECS and CAS are indexed each year.

 

From 1 April 2010, new Commonwealth scholarships may only be awarded to eligible commencing Indigenous students. Scholarships under the Commonwealth Scholarships Program have been replaced by student start-up and relocation scholarships. However, all recipients of a Commonwealth scholarship awarded prior to 1 January 2010 will continue to receive their Commonwealth scholarship until their scholarship entitlement has been consumed provided they remain eligible for the scholarship.

 

Act reference: SSAct section 8(8) Excluded amounts-general, see (zja)

 

Student start-up scholarships & relocation scholarships

Student start-up scholarships and relocation scholarships are NOT treated as income for social security purposes. From January 2012, eligible higher education students receiving YA or Austudy may receive these scholarships:

- student start-up scholarship of an amount of $2,050 (paid in 2 instalments of $1,025), and

- relocation scholarships, (YA recipients only):

• students with their family home located in inner regional, outer regional, remote and very remote Australia: $4,000 in the first year they need to live away from home, $2,000 in the second year and third years and $1,000 a year thereafter, and
• students with their family home located in a major city area: $4,000 in their first year they live away from home, and $1, or 000 a year thereafter if the following circumstances apply:
  • the student has previously received a relocation scholarship or equivalent scholarship payment (3.8.15), OR
  • in the calendar year prior to payment qualification, the student undertook a course that would have been an approved scholarship course had the person undertaken it at the qualification time, AND was independent (in the circumstances described at 3.8.15) OR required to live away from home, for more than 6 months prior to payment qualification.

 

The values of the student start-up scholarships and relocation scholarships are indexed each year.

 

From 1 April 2010 to 31 December 2010, the student start-up scholarship was worth $1,300 (paid in 2 instalments of $650).

 

From 1 January 2011 to 31 December 2011, the student start-up scholarship was worth $2,194 (paid in 2 instalments of $1,097).

 

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.

 

Act reference: SSAct section 8(8AA) For the purposes of paragraph (8)(zjd)...

Military Rehabilitation and Compensation Act 2004

Veterans' Entitlement Act 1986

 

Merit or equity-based scholarships

From 1 April 2010, merit or equity-based scholarships (1.1.M.136) are treated as exempt income for social security purposes up to a threshold of $7,223.

 

The value of this threshold is indexed 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

From 1 January 2005 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.

Explanation: From 11 May 2004 non-discretionary scholarships that waive or pay a student's tuition fee or course charge are exempt from the social security income test. This exemption applies to all non-discretionary fee waiver and fee pay scholarships in all 3 education sectors: higher education, VET, and secondary; irrespective of the source of funding.

 

Act reference: SSAct section 8(1)-'income amount', section 8(8) Excluded amounts-general, see (zjb) and (zjc), section 569B Approved course of education or study

Higher Education Support (Transitional Provisions and Consequential Amendments) Act 2003 refer to section 22A

Policy reference: SS Guide 1.1.A.210 Approved course of education or study (YA (full-time student), Austudy, PES), 1.1.V.25 Valuable consideration, 4.3.2.30 Income Exempt from Assessment - Legislated

 

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 refer to section 169-20

 

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 4.3.2.30 Income Exempt from Assessment - Legislated

 

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. Information about the Budget 2009-10 changes to the additional income free area for dependent children can be found in 4.2.1.20.

 

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.

 

Information about changes to the pension income test in the Budget 2009-10 can be found in 4.2.1.10.

 

Act reference: SSAct section 8(8) Excluded amounts - general, see (j)

Policy reference: SS Guide 4.2.1.20 Additional Free Area for Dependent Children, 4.3.2.10 Income Received to Cover Expenses

 

Approved scholarships awarded outside Australia

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

 

The Administrative Arrangement Orders (AAOs) issued by the Governor General on 3 December 2007 changed the previous responsibilities (issued 26 October and 16 December 2004) of departments in terms of social security legislation. Two different departments became responsible for administering different types of income support payments made under the social security law. All subsequent determinations are now signed by the Ministers for FaHCSIA and DEEWR to ensure uniform application to payment types administered by both departments. Ministers for FaHCSIA and DEEWR are the ONLY people who have the power to exempt scholarships awarded outside Australia from the income test. Requests to have a scholarship awarded outside Australia treated as an approved scholarship may be made through Centrelink. Supporting documentation, (including reasons for exemption), will be forwarded by Centrelink to FaHCSIA Means Test Policy Section.

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:

• 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) Excluded amounts-general, see (zj)

 

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 under another paragraph of SSAct section 8(8) apart from 8(8)(za)). However it will be exempt to the amount of $6,762 under sections 8(8)(zjd) and 8(8AB).

 

Act reference: SSAct section 8(8) Excluded amounts-general, see (za), (zjd), section 8(8AB) For the purposes of paragraph (8)(zjd), a person's threshold amount...

Policy reference: SS Guide 3.8.1.108 Assessing RA Payable, 4.3.2.30 Income Exempt from Assessment - Legislated

 

ABSTUDY allowances

Generally a person cannot receive both ABSTUDY and social security payments (section 23(1)-'social security payment') at the same time.

 

ABSTUDY allowances paid to a person or their partner (1.1.P.70) are NOT income for social security purposes.

Explanation: A couple are 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.

Note: The former SFSS payable to recipients of the ABSTUDY Living Allowance or Pensioner Education Supplement was not counted as income. This scheme closed on 31 December 2003. No new loans were issued after this date.

 

Act reference: SSAct section 8(8) Excluded amounts-general, see (zf) and (zfa), section 1061PW Meaning of multiple entitlement exclusion

SS(Admin)Act section 42 Start day, Schedule 2 clause 30 Pensioner education supplement

 

Rural Tertiary Hardship Fund (RTHF) grants

On 1 January 2012, the RTHF ceased and no further grants will be made. RTHF grants made before this date (3.14) are treated as exempt income for social security purposes. The RTHF was established to reduce barriers faced by rural and regional students who are under 25 years of age as per the program guidelines and who would experience financial hardship in undertaking higher education without this assistance.

 

The fund was to provide $20 million of financial assistance from January 2011 to June 2013 in addition to the benefits that rural and regional students have available to them under the students' income support. Financial assistance under the fund was available as a one-off single payment to successful applicants.

 

Act reference: SSAct section 1061ZZFW Scheme for higher education assistance for rural and regional students

Rural Tertiary Hardship Fund Scheme 2011

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Last reviewed: 10 August 2012