To be eligible for tax exemption, a scholarship, bursary, educational allowance, or educational assistance must be open to a wide range of candidates.
Scholarships, bursaries or other educational allowances are exempt from pay-as-you-go (PAYG) withholding and personal income tax where payment is:
There also must not be a condition that the student 'will' render or 'continue' to render services. Furthermore, the mere fact that a scholarship holder has to lodge an annual progress report to the scholarship provider also does not constitute a requirement to render services.
If you are not sure whether your scholarship is taxable, visit the Australian Taxation Office for more information.