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 2012) will be adjusted for inflation after 1 April 2012.
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 $250 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: 10 Aug 2011
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