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Individual income tax
Te take whiwhinga mo te takitahi

How to tax income from private boarders

If you receive income from private boarders, including student homestays you can choose either the standard-cost method or the actual-cost method to work out whether you have to pay tax on this income.

The standard-cost method

Definition

The standard-cost method uses an average price for basics such as the cost of food, heating, power and transport. The amount is an average across the country and is inflation-adjusted annually.

If your income from boarders is less than the standard cost allowed, you will not have to file a tax return, keep records of related expenditure, or pay tax.

The current year’s rates (year ended 31 March 2015) will be adjusted for inflation after 1 April 2015.

For the year ended 31 March 2014

If you have... then the standard cost is...
one or two boarders $254 a week for each boarder.
three or four boarders $254 each for the first two boarders, and
$208 for each subsequent boarder.

For the year ended 31 March 2013

If you have... then the standard cost is...
one or two boarders $250 a week for each boarder.
three or four boarders $250 each for the first two boarders, and
$204 for each subsequent boarder.

For the year ended 31 March 2012

If you have... then the standard cost is...
one or two boarders $247 a week for each boarder.
three or four boarders $247 each for the first two boarders, and
$202 for each subsequent boarder.

For the year ended 31 March 2011

If you have... then the standard cost is...
one or two boarders $243 a week for each boarder.
three or four boarders $243 each for the first two boarders, and
$198 for each subsequent boarder.

For the year ended 31 March 2010

If you have... then the standard cost is...
one or two boarders $232 a week for each boarder.
three or four boarders $232 each for the first two boarders, and
$189 for each subsequent boarder.

For the year ended 31 March 2009

If you have... then the standard cost is...
one or two boarders $227 a week for each boarder.
three or four boarders $227 each for the first two boarders, and
$185 for each subsequent boarder.
Note

If you have five or more boarders you cannot use the standard-cost method. You are required to complete a tax return and include all payments received as income. You may claim actual allowable expenditure but you must keep records to support your claim.

Example 1

If you have two boarders and they pay you $180 each a week, you do not need to file a tax return or pay tax.

Example 2

If you have two boarders each paying you $255 a week, you may need to file a return and pay tax, depending on your circumstances. The standard-cost method includes an annual capital house cost component as a further deduction before tax is payable.

Calculator

You can go to "Work it out" and use the "Standard cost home-based boarding services calculator" to help you calculate if you have any tax liability.

Losses

You are not able to claim any loss if you use the standard-cost method. Losses can only be claimed where you provide a return showing all payments received and claim actual expenditure incurred, with sufficient records available to support your tax position.

Actual-cost method

You may choose to keep full records of your actual income and expenses for the year. If you choose this option you will need to complete a tax return to declare any profit or claim any loss.

 


Date published: 24 Oct 2014

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