Ch 11 Taxation Under the Education Schemes

All VCES and MRCAETS payments made to students under 16 years of age are exempt from tax (see s51-10 table item 2.1A of the ITAA).

Payments made to students who are over the age of 16 are considered to be 'Commonwealth education or training payments' under s52-145 of the Income Tax Assessment Act 1997 (ITAA).

Education Allowances paid to students 16 years of age and over are taxable, but supplementary payments (this refers to all payments other than Education Allowance, such as Special Financial Assistance and Additional Tuition) are exempt from tax (see s52-140(3) of the ITAA for the supplementary payments exemption).  The one exception to this is under MRCAETS where the payments are received as a result of a person's death.  Payments made to Eligible Young Persons (EYPs) (such as Education Allowance and supplementary payments) who are 16 years and older are exempt from tax if the EYP was a dependant of the deceased member immediately before the death (see Schedule 4, Part 2 of the Military Rehabilitation and Compensation (Consequential and Transitional Provisions) Act 2004).

The Student-Start Up and Relocation Scholarships are both non-taxable.