**General advice only, please contact your financial adviser for exact information relating to your circumstances**
No.
The amount received by a taxpayer with regard to a student who is boarding with them under a homestay arrangement is not assessable under section 6-5 of the ITAA 1997.
This applies if:
The taxpayer boards a student in their home under a homestay arrangement.
The taxpayer intends to board one or two students at any time.
The amounts paid to the taxpayer to board the homestay student are used to pay all of the household expenses of the student (food, phone, electricity etc).
There may be a negligible amount of surplus money after expenses in any particular week.
Explanation:
“Section 6-5 of the ITAA 1997 provides that the assessable income of an Australian resident includes all ordinary income derived directly or indirectly from all sources.
Rental income is normally regarded as ordinary income and therefore forms part of the taxpayer’s assessable income. However, where there is a non-commercial or domestic arrangement, amounts paid for board or lodging do not give rise to the derivation of assessable income (FC of T v. Groser 82 ATC 4478; 13 ATR 445).
Amounts received under the homestay arrangement are determined by the educational institution to cover the expenses of accommodating the student in the home. The amount of the payment is set with regard to the normal cost of supplying food, utilities and overheads for the student. These rates are not regarded as true commercial rates and there is no built in benefit component to the taxpayer for the use of parts of the house. While there might be some surplus on occasions to the home owner, these amounts will generally be small having regard to the expenditure incurred.
The amounts received by the taxpayer are made in relation to a non-commercial or domestic arrangement and are therefore not assessable income under section 6-5 of the ITAA 1997.”
Source: Australian Taxation Office for the Commonwealth of Australia
