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Individual income tax
Tāke moni whiwhi mō 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

The standard-cost method uses an average price for basics such as the cost of food, heating, power, transport and includes an amount for outgoings such as rates, insurance, mortgage interest cost, repairs and maintenance. It 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 an income tax return, keep records of related expenditure, or pay tax on the income from boarders.

For the year ended 31 March 2018

If you have... then the standard cost is...
one or two boarders $266 a week for each boarder.
three or four boarders $266 each for the first two boarders, and
$218 for each subsequent boarder.
Example 1

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

Example 2

If you have two boarders each paying you more than $266 a week, you may need to file an income tax return and pay tax on the income from boarders, depending on your circumstances.

You can use the Standard cost home-based boarding services calculator to calculate if you have any income tax liability.

You will not be able to claim any loss if you use the standard-cost method.

Note

If you have five or more boarders you can't use the standard-cost method. You’ll need to complete an income tax return and include all payments received as income. You may claim actual allowable expenditure but you must keep records to support your claim.

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 an income an income tax return to declare any profit or claim any actual expenditure incurred. You’ll need to keep sufficient records to support your tax position.

Standard-cost rates for previous years

For the year ending 31 March 2017
If you have... then the standard cost is...
one or two boarders $263 a week for each boarder.
three or four boarders $263 each for the first two boarders, and
$215 for each subsequent boarder.
For the year ending 31 March 2016
If you have... then the standard cost is...
one or two boarders $257 a week for each boarder.
three or four boarders $257 each for the first two boarders, and
$210 for each subsequent boarder.

You can find earlier years' standard cost rates here