Boarder vs Flatmate

For tax, if you receive boarder income under the threshold, then you don’t have to return this income for tax.  This is great if you have a low or debt free personal house, as you are then making a great profit but not having to pay any tax on it.

 
Whereas, for tax, you do need to declare any flatmate income and you can claim any expenses against this.  If you have a high debt on your personal house, this might even result in a tax-deductible loss.
 
Boarder Threshold for 2018 year:

• $266 a week for first boarder
• Another $266 a week for second boarder
• Another $218 a week for third boarder
• Another $218 a week for fourth boarder

So, four boarders, the income could be $968 per week, and not taxed!
 
 
Boarder vs Flatmate
 
So, what is the difference?
 
A boarder is where you provide a lot more than simply a room.  For example, you might have an international student who pays $250 per week, for 2 meals a day, sheets and linen provided and washed, use of the other areas of the house, all furniture provided, power and internet.  The key difference in my mind, is that food is generally provided (not just the grocery bill shared or split), and this needs to be more than just some tea and coffee.
 
A flatmate generally rents a room, then pays a share of the power, a share of internet, and often provides their own furniture.  So, if the power bill is higher, they pay more.  Flatmates might put in money and share the food costs, but it is not one person supplying all the food and meals as part of the weekly amount charged.

I hope you have found this helpful.

Ross

Disclaimer: This article has been prepared for the purpose of providing general information, without taking into consideration any particular person's objectives, financial situation or needs. Any opinions contained in it are held by the author as at the report date and are subject to change without notice.

Any changes in law or the facts through a misrepresentation or error or consequential developments may lead to a modification or change to all or part of this opinion. We do not accept a general responsibility to update this opinion for such changes. The opinion expressed herein is not binding on the Inland Revenue Department and we cannot guarantee that they will adopt the same opinion as us. We recommend you receive specific, expert advice before making any structural changes.