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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 2016) will be adjusted for inflation after 1 April 2016.

For the year ended 31 March 2015

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 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: 16 Jun 2015

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