Finance Act, 1997

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Income from scholarships.

11.—(1) Section 353 of the Income Tax Act, 1967 , is hereby amended by the substitution of the following for subsections (2) and (3):

“(2) Nothing in subsection (1) shall be construed as conferring on any person other than the person holding the scholarship in question any exemption from a charge to tax.

(3) Notwithstanding the provisions of subsection (2), a payment of income arising from a relevant scholarship which is—

(a) provided from a trust fund or under a scheme, and

(b) held by a person receiving full-time instruction at a university, college, school or other educational establishment,

shall be exempt from tax if, in the year of assessment in which the payment is made, not more than 25 per cent. of the total amount of the payments made from that fund, or under that scheme, in respect of scholarships held as mentioned in paragraph (b) is attributable to relevant scholarships.

(4) (a) In this section—

‘relevant body’ means a body corporate, unincorporated body, partnership, individual or other body;

‘relevant scholarship’ means a scholarship provision for which is made, either directly or indirectly, by a relevant body or a person connected with that relevant body and where payments are made, either directly or indirectly, in respect of such a scholarship to—

(i) an employee or, where the relevant body is a body corporate, a director of the relevant body, or

(ii) the spouse, family, dependants or servants of such employee or director;

‘scholarship’ includes an exhibition, bursary or other similar educational endowment.

(b) A person shall be regarded as connected with a relevant body for the purposes of this subsection, if that person is—

(i) a trustee of a settlement, within the meaning of section 131 of the Finance Act, 1996 , made by the relevant body, or

(ii) a relevant body,

and that person would be regarded as connected with the relevant body for the purposes of the said section 131.

(5) If any question arises whether any income is income arising from a scholarship held by a person receiving full-time instruction at a university, college, school or other educational establishment, the Revenue Commissioners may consult the Minister for Education.”.

(2) This section shall apply and have effect in relation to a payment made on or after the 26th day of March, 1997, other than a payment made before the 6th day of April, 1998, in respect of a scholarship awarded before the said 26th day of March, 1997.

(3) For the purpose of ascertaining, in accordance with the provisions of subsection (3) (as inserted by this section) of section 353 of the Income Tax Act, 1967 , the percentage of the total amount of the payments made in the year of assessment 1996-97 in respect of scholarships from any fund or under any scheme which, apart from the said subsection (3), would be chargeable to tax, this section shall be deemed to have applied and had effect in relation to all such payments made in that year.

(4) Section 178 of the Income Tax Act, 1967 , is hereby amended, in subsection (1), by the insertion of the following after paragraph (aaa) (inserted by the Finance Act, 1982 ):

“(aaaa) particulars of any relevant scholarships (within the meaning of section 353 (as amended by the Finance Act, 1997) of the Income Tax Act, 1967 ) in relation to those persons;”.