Administration of ABSTUDY: Chapter 5 - Taxation

Payments intended to support the day-to-day living costs of students or Australian Apprentices are assessable forms of income for tax purposes. The exception to this is under the Income Tax Assessment Act 1936, when student assistance allowances paid on behalf of, or directly to, students aged less than 16 years are not regarded as taxable income. This is not affected by whether the student is dependent or independent for ABSTUDY purposes.

The taxable status of an allowance is not affected by whether the payment is made to the student, Australian Apprentice, parent/guardian or other third party.

5.1.1 Taxable ABSTUDY Allowances

ABSTUDY allowances that are considered taxable are:

• Living Allowance for students aged 16 years or over;
• Living Allowance for Australian Apprentices aged 16 years or over;
• the reduced Living Allowance component of the Residential Costs Option;
• unused Group 2 School Fees Allowance that has been transferred to pay excess boarding costs;
• Additional Assistance, where it is paid as a fortnightly allowance.

5.1.2 Non-taxable ABSTUDY Allowances

ABSTUDY allowances that are considered non-taxable are:

• Living Allowance for students aged less than 16 years;
• Living Allowance for Australian Apprentices aged less than 16 years;
• Rent Assistance;
• Remote Area Allowance (non-taxable but affects tax rebate);
• Pharmaceutical Allowance;
• Incidentals Allowance;
• Additional Incidentals Allowance;
• Residential Costs component of the Residential Costs Option;
• School Term Allowance;
• Group 1 School Fees Allowance;
• Group 2 School Fees Allowance (except where unused component of Group 2 School Fees Allowance has been transferred to pay excess boarding costs);
• Fares Allowance;
• Away From Base entitlements;
• Pensioner Education Supplement;
• Relocation Allowance;
• Assistance to pay Commonwealth supported places or Course Fees for Masters and Doctorate students;
• Thesis Allowance;
• Lawful Custody Allowance;
• Under 16 Boarding Supplement;
• Additional Assistance paid as a lump sum

• Crisis Payment.

Centrelink issues payment summaries at the end of each financial year to students who have received taxable allowances during that year. The payment summary details:

• the gross amount of taxable income paid for the financial year; and
• the total amount (if any) of taxation instalments deducted for the financial year.