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Standard cost method for boarders and home-stay students

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Who can use it

You may be able to use the standard cost method if you had 4 or fewer boarders or home-stay students at all times throughout the income year.

How it works

Rather than working out your actual costs you can use the standard cost method. The standard costs reflect the expenses that hosts of boarders or home-stay students typically incur.

There are 3 groups of standard costs:

  • weekly standard costs
  • annual housing standard costs
  • annual transport standard costs.

Weekly standard costs

This covers things like:

  • food
  • power
  • phone and internet
  • use of furniture
  • entertainment and leisure.

We set the weekly standard costs rate every year. It's adjusted for inflation so we cannot set the rate until the Consumer Price Index (CPI) figures are confirmed each year.

We usually set the rate in May for the tax year that ended on 31 March.

The rate for the 2019-2020 income year will be $186 plus the CPI adjustment.

This rate applies for each boarder or home-stay student you have, up to a maximum of 4. If you have 5 or more boarders or home-stay students you cannot use the standard cost method. You need to use the actual cost method.

Annual housing standard costs

This covers things like:

  • mortgage interest or rent 
  • insurance
  • rates
  • home repairs and maintenance.

There is a formula for housing standard costs. It takes into account the cost of your home and the number of people living there.

Annual transport standard costs

This covers things like:

  • fuel
  • vehicle insurance
  • vehicle registration and warrant of fitness
  • vehicle repairs and maintenance.

There is a formula for transport standard costs. If you want to deduct transport costs from your income from boarders or home-stay students you need to keep a log book of kilometres travelled. You can only count the kilometres you travelled:

  • when the main purpose of the trip was to take your boarder or home-stay student to an activity or event
  • if the boarding agreement says you will provide transport as part of your hosting services.

Changes to standard cost method from 2019-2020

The weekly standard costs rate has reduced because it no longer includes a transport allowance. Typically hosts no longer incur transport costs so we have removed this allowance from the 2019-2020 weekly standard costs rate. Depending on your situation you may be able to deduct the transport standard costs from the income you get from boarders or home-stay students.

Also, in previous years we had different weekly standard costs rates for your third or fourth boarder or home-stay student. From 2019-2020 the same rate applies to all boarders or home-stay students, up to a maximum of 4.

See if you need to pay tax

If your income from boarders or home-stay students is lower than the weekly standard costs rate you do not need to do anything.

You do not need to:

  • file an income tax return for this income
  • keep records of related expenses
  • pay tax on this income.

If your income from boarders or home-stay students is higher than the weekly standard costs rate you can also deduct the following costs from that income:

  • housing standard costs
  • transport standard costs, if you are eligible
  • both of these.

If you still have remaining income from boarders or home-stay students after deducting all the standard costs that you are eligible to deduct, you need to pay tax on that remaining income.

Most hosts will not have to deduct the transport standard costs as the total of the weekly standard costs plus the housing standard costs will be higher than their income.

You cannot claim any losses from providing a boarding or home-stay student service. This means that if your total standard costs are higher than your income from boarders or home-stay students you cannot deduct the excess from any other income you receive such as salary or wages.

The easiest way to work out if you need to pay tax is to use the calculator below.

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Standard cost home-based boarding services calculator

Check if you need to file a tax return for income you get from having boarders living in your home.

Go to this tool