Question

With reference to relevant legislation and case law, discuss whether the following receipts are assessable or exempt income. Give reasons.

a) Lucas is a full-time student and received a scholarship of $3,000 per annum from XYZ Engineering Solutions, conditional upon Lucas agreeing to accept employment with XYZ Engineering Solutions for at least three years after graduation

b)Remuneration of $600 earned for part-time services as a member of the Australian Army Reserve.

Answer 1

Solution:

a) The scholarship is not exempt income, beacuse as per section 51-10 and 51-35 of the (ITAA) , 1997 of Australia , the scholarship if given to a full time student which is conditional upon acceptance of any present or future job offer , is taxable.

As Locas is full-time student and received a scholarship of $3,000 per annum from XYZ engineering solutions , conditional upon accetance of employement with XYZ engineering solutions so it is taxable.

b) The remuneration is exempt income, Because as per section 51-5 item 1.4 of (ITAA) , 1997 of Australia , for the member of Army reserve , Air Force reserve and Naval reserve all the pays and allowances are exempt from tax except for full time continuous service.

Remuneration of $600 earned by member of Australian Army reserve is for part time services , is not taxable.