13.3.8 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 Income Tax Assessment Act 1997 (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 ITAA. The Australian Tax Office considers the Schemes' allowances to be the student's income because the student is the person who derives income from the payments (i.e.: regardless of whether the payments are made or otherwise re-directed to a third party, including their parent/s).

Education Allowances paid to students 16 years of age and over are taxable, but supplementary payments are exempt. This exemption refers to all payments other than Education Allowance, such as Financial Assistance and Additional Tuition (see s52-140(3) of the ITAA).

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.

The following table is a guide as to what payments are taxable and non-taxable under the Education Schemes, and associated other benefits:

This chapter contains the following sections:

13.8.1 Tax withholding under VCES

13.8.2 Tax withholding under MRCAETS

13.8.3 Tax withholding for non-Australian residents

13.3.8 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 Income Tax Assessment Act 1997 (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 ITAA. The Australian Tax Office considers the Schemes' allowances to be the student's income because the student is the person who derives income from the payments (i.e.: regardless of whether the payments are made or otherwise re-directed to a third party, including their parent/s).

Education Allowances paid to students 16 years of age and over are taxable, but supplementary payments are exempt. This exemption refers to all payments other than Education Allowance, such as Financial Assistance and Additional Tuition (see s52-140(3) of the ITAA).

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.

The following table is a guide as to what payments are taxable and non-taxable under the Education Schemes, and associated other benefits:

This chapter contains the following sections:

13.8.1 Tax withholding under VCES

13.8.2 Tax withholding under MRCAETS

13.8.3 Tax withholding for non-Australian residents

13.3.8 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 Income Tax Assessment Act 1997 (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 ITAA. The Australian Tax Office considers the Schemes' allowances to be the student's income because the student is the person who derives income from the payments (i.e.: regardless of whether the payments are made or otherwise re-directed to a third party, including their parent/s).

Education Allowances paid to students 16 years of age and over are taxable, but supplementary payments are exempt. This exemption refers to all payments other than Education Allowance, such as Financial Assistance and Additional Tuition (see s52-140(3) of the ITAA).

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.

The following table is a guide as to what payments are taxable and non-taxable under the Education Schemes, and associated other benefits:

This chapter contains the following sections:

13.8.1 Tax withholding under VCES

13.8.2 Tax withholding under MRCAETS

13.8.3 Tax withholding for non-Australian residents