The Australian, 5 April 2017
By Julie Hare
An Australian Taxation Office review of whether education-related scholarships should continue to be tax exempt has been described as “deeply concerning” and could have a “damaging impact on collaboration and innovation in the economy”.
In response to the review, the Group of Eight has said the ATO seemed to be driven primarily by regard to its administrative burden in addressing anomalies to the present rulings on tax, and had given scant regard to the public policy and wider implications of what it was proposing.
Under the review, the ATO says it has to direct a “disproportional” application of resources that are of “little benefit to the community” when making rulings on scholarship-related tax issues and is seeking to reduce the number of individual rulings it makes.
But the Go8 says any changes suggested in the discussion paper could have a detrimental effect on students, particularly those from disadvantaged backgrounds, and therefore a detrimental longer-term impact on the economy.
“The ATO changes would generate marginally more income for the government, but at what cost?” Go8 chief executive Vicki Thomson said. “It will have a potentially significant impact on the day-to-day lives of students on modest scholarships, will increase the complexity and expense for business, especially SMEs (small and medium enterprises), and runs contrary to government policy to encourage collaboration with universities.”
The Go8 says scholarships are particularly important to students from poor families and any taxation of their tax-free allowance could force them to work more hours.
“This in turn may heighten risks of exploitation as well as increase the potential for students to drop out as the pressures of combining work and study continue to mount in combination of reduced overall scholarship support,” the submission says.
“The Go8 recognises the ATO’s desire to reduce reliance on case rulings in the treatment of scholarships but believes that the approach suggested in the discussion paper to increase the range of scholarships taxable, particularly those linked to industry engagement, is 180 degrees from where it should be.”