Income from boarders and lodgers 108-05040010

A boarder or lodger is a near relative if they are the person's:

• parent (may include step-parent, foster parent or adoptive parent)
• child (may include step-child, foster child or adoptive child, or
• sibling (may include step-brother, step-sister, foster brother, foster sister, adoptive brother or adoptive sister)

Is the boarder or lodger a near relative?

• Yes, go to Step 2
• No, go to Step 3

Payments for board and/or lodging are not income if the near relative is living in the principal home of the customer.

The area occupied by the near relative is still part of the customer's principal home even if:

• it is a self-contained living area, or
• the home is a dual occupancy

See Determining homeowners and non-homeowners

If the customer is temporarily absent from their principal home, any payment received from a near relative for living in the principal home is not income for social security purposes. However, once the temporary absence provisions cease to apply because the customer has not returned within the allowable absence period, then the property becomes a normal rental property. The board and lodging rules do not apply and the income from the near relative is assessable under normal rules for rental income.

If a partnered child is living with the customer, it is accepted that any board or lodging paid to the customer is paid by the child, and not by the child's partner.

If the customer is receiving payment for board and lodging from a near relative:

• no income is to be assessed
• if Rent Assistance (RA) is being paid for the home, the rate paid may be affected by the 'total household rent' rules. See:
• References, and
• Completing the Accommodation Details (AC) screen and assessing Rent Assistance (RA)
• procedure ends here

If a customer is single, and the boarder is not a near relative, verification of their living arrangements may need to be assessed. Verification of a customer's living arrangements is based upon information obtained from the Living Arrangements question set. Issue Relationship Details (SS284) or Relationship Details - Separated under one roof (SS293), if appropriate. For more information, see Member of a Couple (MoC) and Separated under one roof (SUOR) assessments.

Go to Step 4.

Is the customer running a commercial boarding house? More than 5 rooms let is considered a commercial venture:

• Yes, the customer is considered to be running a business and should be issued with a Module F - Business details (MOD F). See Requesting information (CLK)
• For assessment information, see Assessing sole trader income or Assessing partnership income
• Procedure ends here
• No, go to Step 5

• Yes, go to Step 6
• No, the property is assessed as real estate. See Assessing income from real estate and timeshare for income assessment and Assessment and sale of real estate and timeshare asset for asset assessment. Procedure ends here

For example, is the customer renting out a flat in their own backyard on an ongoing basis and it is rented out for most of the year?

• Yes, see Determining homeowners and non-homeowners to determine assessment depending on who paid for construction costs. Assessing income from real estate and timeshare contains information about income assessment and Assessment and sale of real estate and timeshare asset provides information about asset assessment. Procedure ends here
• No, go to Step 7

Is the boarder a student staying as part of Homestay International Student Accommodation, Australian Asian Centre Exchange, or similar organisations?

• Yes, go to Step 8
• No, go to Step 9

If only one student

The income is not assessed. This is treated as exempt income. Record details on a DOC or NOTE. Procedure ends here.

More than one student

Service Officers must determine if the arrangement is intended to make a profit.

If the customer is providing:

• a 'board and lodging' arrangement for profit it is assessed as being of a commercial nature and the customer must declare the income:
• Issue a MOD F and request a profit and loss statement from the customer
• When the forms are returned, see Assessing and coding the Business details for sole traders and partnerships MOD F
• Procedure ends here
• personal services not usually offered by boarding houses, for example driving students to school and taking them on sightseeing trips, this is a domestic arrangement and not commercial in character:
• The income is treated as income from boarders and lodgers
• Go to Step 9

Use the following percentages to determine how much income is to be assessed from board and lodging received by the customer:

• If the customer provides accommodation only - 70% of the amount received is assessed as income.
• If the customer provides accommodation and breakfast only (bed and breakfast) - 50% of the amount received is assessed as income
• If the customer provides accommodation and meals in addition to breakfast - 20% of the amount received is assessed as income

Note: the system cannot determine the amount to be assessed as income, therefore it must be manually calculated. The exception is if the customer provides the income received from boarders or lodgers through an online update. The prepopulated 'provisional' update in Process Direct automatically applies the above calculation.

A lower amount may be assessed if the customer claims and shows evidence (generally via an Income Tax Return) that more than the figure allowed is expended in costs.

Go to Step 10.

Does the customer own their principal home (where boarders and lodgers reside) outright/freehold (that is, there is no mortgage used to purchase the property)?

• Yes, go to Step 12
• No, go to Step 11

Principal home mortgaged

Deduct the interest on the mortgage from the assessed percentage of income. If more than one boarder and lodger, add together the assessed percentage of income for each before applying this deduction.

If the mortgage is secured over both the principal home and another property, only the portion of the interest that relates to the home property will be allowed. For example if the home property is 40% of the total value of property used as security, then 40% of the interest can be deducted from the income.

When the net assessed amount calculated is:

• Less than the interest from the mortgage, no income is assessed for the customer. Record a DOC or NOTE to explain this assessment
• Greater than the interest paid on the mortgage, the difference between the two amounts is recorded as assessed Income. Record a DOC or NOTE to explain this assessment. Go to Step 12

See the Resources page for an example of calculation of interest payable on a mortgage.

Principal home rented

If the assessed income from all boarders and lodgers is:

• Less than the rent, no income is assessed for the customer. Note: nil income must be recorded on the Other Income (OIN) screen
• Greater than the rent paid, the difference between the two amounts is recorded as assessed income

See the Resources page for an example of calculation when a customer is paying rent for principal home and has a boarder.

The rate of Rent Assistance (RA) payable to the customer may be affected by the 'total household rent' rules. See Completing the Accommodation Details (AC) screen and assessing Rent Assistance (RA) for assistance with coding the Accommodation Details (AC) screen. To work out the amount considered to be lodging (or rent) for RA purposes, see Policy.

If customer's own rent details have changed due to changes with having a boarder, determine if new rent verification is needed.

To record income from boarders and lodgers in:

• Process Direct, go to Step 12
• Customer First or Customer Record, go to Step 13

The Income and Assets Update Task Selector (START) in Process Direct can be used to update income from boarders and lodgers.

If the update is not already commenced:

• Access the customer's record in Process Direct Customer Summary
• Use Super Key to navigate to screens
• Enter START into the Super Key
• Select Income and Assets Update from the Task Selector options
• Select Other Income (OIN/OINS)
• Select START initiate the workflow

Note: if the customer provides their income received from boarders or lodgers through an online update, the prepopulated 'provisional' update in Process Direct will automatically apply the required calculation.

For a manual update, calculate the assessed percentage of income. If more than one boarder and lodger, record the assessed percentage of income for each.

One off or irregular instances of income from board and lodgings are only maintained whilst room/dwelling is occupied. See the Resources page for an example of coding.

Nil income: Even if there is nil income to record, or income has ceased, Other Income (OIN) must be coded to reflect this. For cessation of income, code Start Date as the date of change. Code amount as zero.

If all the details are not available, request the required information from the customer. Procedure ends here.

If details are available:

• Code the net assessable income from boarders and lodgers on OIN
• For new income details, select Add New Row to access the Create Other Income options
• Complete all fields on the Create Income options screen except Reference: field, as this is optional

Use the Income and Assets Update Task Selector (START) in Process Direct, next navigation to go to Other Income (OINS, OIN). Code:

• Type: field, select from:
• 'BOA' - PROFIT FROM BOARDERS if customer is providing accommodation and breakfast
• 'BOL' - PROFIT FROM BOARD AND LODGINGS if customer is providing accommodation and meals in addition to breakfast, or
• 'LOD' - PROFIT FROM LODGINGS if customer is providing accommodation only
• Description: field. Enter any relevant description, for example, if customer has one boarder, two boarders, method of assessment etc.
• Reference: field. Optional
• Start Date: field. Enter appropriate date of event (DOV)
• Frequency: field. Enter the frequency the customer receives the income. If income has ceased do not complete this field
• Gross Amount: field, enter assessable amount even if nil or enter zero if the income has ceased
• Click Save when updates made
• Update Receipt Date and Channel. Save
• Check the Other Income (OINS/OIN) displays the updated income details
• Click Assess
• Check the payment outcome on Entitlements (ELD).Click Finish
• If using the Process Direct Income and Assets workflow, NOTES will prepopulate and display for review when Finish is selected
• At this point any additional information can be added. See Creating, reviewing and deleting documents (including Fast Notes and DOA DOCs)

When NOTES are complete, Finalise. The transaction will complete and NOTES replicate to the Document List (DL).

For updating existing records, expand the details on the Other Income (OINS/OIN) and on the Frequency of income line Add New Row to access the 'Create Frequency of income' options.

Rent Assistance: If customer is also receiving or claiming Rent Assistance the full rent amount may not be assessable due to sharing accommodation and net rent rules. See Completing the Accommodation Details (AC) screen and assessing Rent Assistance (RA).

Record the details on a DOC.

Advise customer of outcome.

Calculate the assessed percentage of income. If more than one boarder and lodger, record the assessed percentage of income for each.

One off or irregular instances of income from board and lodgings are only maintained whilst room/dwelling is occupied. See the Resources page for an example of coding.

Nil income: Even if there is nil income to record, or income has ceased, the Other Income (OIN) screen must be coded to reflect this. For cessation of income code Event Date as the date of change. Code amount as zero.

If all the details are not available, request the required information from the customer. Procedure ends here.

If details are available, code the net assessable income from boarders and lodgers on the OIN.

For new income details complete all fields on the OIN screen except Reference: field, this is optional

Go to OIN screen and code:

• Type: field, enter
• 'BOA' or Profit from Boarders if the customer is providing accommodation and breakfast
• 'BOL' or Profit from Board and Lodgings if the customer is providing accommodation and meals in addition to breakfast, or
• 'LOD' or Profit from Lodgings if the customer is providing accommodation only
• Description: field. Enter any relevant description, for example if customer has one boarder, two boarders, method of assessment etc
• Reference: field. Optional
• Event Date: field. Enter appropriate date
• Amount $: field. Enter assessable amount even if nil or enter zero if the income has ceased
• Freq: field. Enter the frequency the customer receives the income. If income has ceased do not complete this field
• Source: field. Enter the source of the information
• DOR: field. Enter the date of receipt of the information
• Finalise activity via the Assessment Results (AR) screen

For updating existing records, select the details on the Other Income Summary (OINS) screen and update from the Event Date: field.

Rent Assistance: If customer is also receiving or claiming Rent Assistance the full rent amount may not be assessable due to sharing accommodation and net rent rules. See Completing the Accommodation Details (AC) screen and assessing Rent Assistance (RA).

Record the details on a DOC.

Advise customer of outcome.