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Edited version of your private ruling
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Ruling
Subject: Income from boarder
Question
Are you assessable on the income you receive from having a boarder?
Answer
No.
This ruling applies for the following period
Year ended 30 June 2012
Year ended 30 June 2013
Year ended 30 June 2014
The scheme commenced on
1 July 2011
Relevant facts
You have a boarder living with you who pays you a fortnightly amount.
The boarder pays for their own food.
The boarder has two animals which are kept on your property and the cost covers them as well.
The boarder has access to a furnished room, kitchen, bathroom, laundry and living room.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 6-5
Reasons for decision
Section 6-5 of the Income Tax Assessment Act 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 13 ATC 445; (1982) 65 FLR 121; 82 ATC 4478).
Taxation Ruling IT 2167 considers the consequences of different rental income producing situations. Paragraph 18 of IT 2167 states that:
Situations arise where the owner of a residence permits persons to share the residence on the basis that all the occupants, including the owner, bear an appropriate proportion of the costs actually incurred on food, electricity etc. Arrangements of this nature are not considered to confer any benefit on the owner. There is no assessable income and the question of allowable deductions does not arise.
In your case, you currently board a person in your home who has their animals on your property. You provide a room which is furnished. The person can use the kitchen, bathroom, laundry, fridge and entertaining areas of the house. The boarder buys their own food. You charge them an amount per fortnight for board and expenses. There would be a negligible surplus after you paid for expenses.
The amount you charge is not considered to be a commercial rate as there is no built in benefit component to you for the use of part of your home.
Therefore, the boarding arrangement is considered to be a non-commercial or domestic arrangement. The board amounts you receive are not included in your assessable income.