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Inland Revenue Seeks Views On New Tax Rules

20 October 2004

Inland Revenue Seeks Views On New Tax Rules For Private Boarding Arrangements

Inland Revenue has launched consultation on a proposed change to the tax rules for people who host paying boarders.

Under the existing practice people are not required to return their income if they have one boarder, but must usually pay tax at a rate of 20% if they have two to four boarders, and return income and claim expenditure in the normal way for businesses if they have more than four boarders.

Inland Revenue has been talking with industry players in order to draft a proposal, which has now been launched for wider consultation. The proposal bases tax liability not on the number of boarders, but on the amount of income people receive.

The proposed change also sets out a series of 'standard costs' that people can use when claiming tax deductible expenses to off-set against their income. If people choose to use these 'off-the-peg' costs for their expenditure, it will make completing and filing tax returns easier, as they will no longer have to keep detailed receipts.

Deputy Commissioner (Service Delivery) Naomi Ferguson said: "We believe the current rules need to change as they aren't up to date with today's environment. Our proposal corrects an anomaly where someone could have a similar - or even larger - income than some small businesses, yet not be obliged to file a tax return.

"Under our proposal, people who are already returning their income for tax purposes will not have to pay more - they may in fact pay less tax. They will find it easier to fill out returns and claim expenses. The only people who might have to pay more tax are those who are making a substantial profit after expenses, and haven't been returning that income. We consider that there is no reason why these people shouldn't have to pay the same rate of tax as people who make their money in other ways.

"The purpose of this is to make it easier for taxpayers to meet their obligations.

"These issues are all up for discussion, and we encourage people to contact us with their views and ideas."

For a copy of Determination ED - 0070 and an explanation of the proposal, please see the Inland Revenue website at People who want to make submissions are invited to send their comments - using the draft reference as the subject, and including your name and organisation by email to, or by post to: the Manager, Field Liaison & Communication, Adjudication & Rulings, Inland Revenue, PO Box 2198, Wellington.


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