193 Income from scholarships

Summary

This section exempts from income tax certain scholarship payments received by individuals receiving full-time instruction at a university, college, school or other educational establishment. However, a benefit in kind charge applies where parents obtain a scholarship for their child under an employer sponsored scheme and the scholarship does not conform to certain requirements.

Details

Definitions and construction

(1)(a) “relevant body” is a body corporate, unincorporated body, partnership, individual or other body.

“relevant scholarship” is a scholarship provided directly or indirectly by a relevant body, or a person connected with that body, for employees or directors of the relevant body or any member of the household of such an employee or director (that is, a spouse, civil partner, family member, dependant, servant or child of the civil partner).

“scholarship” includes an exhibition, bursary or other educational endowment.

(1)(b) A person is connected with a relevant body if the person is a trustee of a settlement (within the meaning of section 10) made by a relevant body, or is a relevant body, and would be regarded as connected with that body under section 10.

Exemption from tax

(2) Income arising from a scholarship held by a person receiving full-time instruction at a university, college, school or other educational establishment is exempt from income tax and is disregarded in computing that person’s income for tax purposes.

(3) Only the person holding the scholarship in question is entitled to exemption from income tax in respect of scholarship income.

(4) A payment of income in respect of a relevant scholarship provided from a trust or under a scheme, and held by a person in full-time education, is exempt from income tax for any year of assessment in which not more than 25 per cent of the payments from the fund or under the scheme are in respect of relevant scholarships.

(5) In ascertaining whether income is qualifying scholarship income the Revenue Commissioners may consult the Minister for Education and Science.

Transitional measure

(6) The 25 per cent rule in relation to relevant scholarships payments does not apply to the payment of scholarship income made before 6 April, 1998 in respect of a scholarship awarded before 26 March, 1997 – see paragraph 2 of Schedule 32.

Relevant Date: Finance Act 2021