This topic provides information on the following matters:
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:
Exception: Some payments may be treated as exempt lump sums, based on their characteristics.
Information on exempt lump sums can be found at 18.104.22.168.
Scholarships awarded in Australia are income unless otherwise excluded and are generally provided to:
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:
The value of the CECS and CAS are indexed each year.
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 Scholarships under the Commonwealth Scholarships Program have been replaced by student start-up and relocation scholarships.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)
Act reference: SSAct section 8(8AA) For the purposes of paragraph (8)(zjd)...
Merit or equity-based scholarships (1.1.M.136) are treated as exempt income for social security purposes up to a threshold of $7,310 (in 2013).
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...
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.
From 1 January 2005 scholarships OFFERED BY HIGHER EDUCATION PROVIDERS that FULLY exempt a student from fees and/or contribution amount are NOT income.
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
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
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.
A scholarship, or similar payment, (whether a gift or a prize) is to be treated as income if any of the following apply:
Policy reference: SS Guide 22.214.171.124 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. Information about the Budget 2009-10 changes to the additional income free area for dependent children can be found in 126.96.36.199.
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 188.8.131.52.
Act reference: SSAct section 8(8) Excluded amounts - general, see (j)
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:
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)
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 $7,310 (in 2013) under SSAct 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...
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.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'
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
Last reviewed: 11 November 2013