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Edited version of private ruling
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Ruling
Subject: assessable income - boarder
Question
Are the payments you receive from your boarder assessable?
Answer
No
This ruling applies for the following periods:
Year ending 30 June 2012
Year ending 30 June 2013
The scheme commences on:
1 July 2011
Relevant facts and circumstances
You own a house which is your main residence.
You have allowed a friend to board at your house until he is able to secure employment and relocate.
You are unsure as to how long your boarder will stay as he has nowhere to go until he is able to save some money.
You charge him an amount per week for board. He also pays half the electricity and gas but not food. You pay for the water.
Your boarder is not been able to pay the full amount regularly as he is in and out of work and is not financial to do so.
Relevant legislative provisions
Income Tax Assessment Act 1997 Subsection 6-5(1)
Reasons for decision
Subsection 6-5(1) of the Income Tax Assessment Act 1997 provides that the assessable income of a taxpayer includes income according to ordinary concepts.
Taxation Ruling IT 2167 examines the situation where a property is let to relatives in a non-arms length transaction. Where the rent payment received amounts to a contribution to expenses, and is not considered as a reward to the home owner but is considered a private arrangement, the rent is not considered assessable income.
In your case, it is considered that the amount that your friend will pay you is simply a contribution to the expenses of your home and a private arrangement. Although your friend is not a relative of yours, it is considered that the principles of IT 2167 apply to your circumstances. As you are not paid the full amount every week and you do not derive a benefit, the amount you receive is not regarded as being rental income. This payment is not ordinary income and is not considered to be assessable income.