Age Pensioners taking in a boarder or lodger get concessional Centrelink treatment: only 20-70% of the payment counts as income depending on whether meals are provided, and the home stays exempt from the assets test. Payments from a parent, child, or sibling aren't assessed as income at all, and mortgage or rent costs can be deducted from the assessable amount.
For Australian Age Pension recipients with spare bedrooms — common as children leave and households shrink — taking in a boarder or lodger can provide useful supplementary income with surprisingly favourable Centrelink treatment. Many pensioners assume that any new income source would substantially affect their pension. The reality for board and lodging arrangements from the principal home is more nuanced: only a portion of board income is counted as assessable income, and the principal home remains exempt from the assets test regardless of whether someone is living in it.
What concessional treatment applies to boarders and lodgers?
The key point that surprises many pensioners is that Centrelink applies a concessional treatment to income from boarders and lodgers in the principal home. Rather than counting the full gross board payment as income, a portion is treated as covering the pensioner's costs — utilities, food, maintenance, the use of facilities — and only the remaining portion is assessable income under the income test.
The specific percentages depend on the nature of the arrangement. As a general framework: for a lodger (room only, no meals provided), a smaller share of the payment is counted; for a boarder (room plus some meals and services), a larger share; and for full board (room, all meals, and substantial services), a higher share still. Specific percentages assessed as income (per DSS Social Security Guide 4.3.8.40, https://guides.dss.gov.au/social-security-guide/4/3/8/40):
- Accommodation only (no meals): 70% of payment counted as income
- Lodging + breakfast: 50% counted
- Lodging + all meals (full board): 20% counted
These are well below 100% — the rationale is that the host incurs real costs in providing the accommodation, so only a portion of the gross payment is treated as net assessable income.
Family-member exception: payments received from a boarder/lodger who is the pensioner's parent, child, or sibling (including step-, adoptive-, and in-law relations) are not assessed as income at all for social security purposes — a meaningful concession for multi-generational households.
Mortgage/rent deduction: if the host has a mortgage on the home or rents the principal residence, the relevant interest or rent paid is deducted from the assessed-income figure. If that deduction exceeds the percentage assessed as income, no income is assessed at all.
The effect is that the income test impact of board income is substantially lower than for an equivalent payment received as investment property rental income, where the net income is fully counted.
How does this compare to investment property rental income?
This distinction matters a great deal. A pensioner who rents out a spare room to a boarder in their principal home receives the concessional treatment described above, and the home itself remains exempt from the assets test. A pensioner who owns a separate investment property receives no such concession: net rental income is fully counted under the income test, and the investment property is counted as an assessable asset at market value. For a comparable cash income, the boarder arrangement consistently produces a better Centrelink outcome than investment property rental.
Short-term holiday letting (such as Airbnb) sits in a different category from traditional board and lodging and may be treated differently under the income test. Pensioners considering short-term letting rather than longer-term boarding should confirm the treatment with Services Australia before proceeding.
Does the home remain exempt from the assets test?
Having a boarder or lodger in the principal home does not affect the home's exempt status under the Age Pension assets test. The home is already exempt because it is the principal place of residence — a boarder's presence does not change that. The only relevant Centrelink impact of taking in a boarder is through the income test, and even then only on the assessable portion of the board income under the concessional treatment.
What about informal family contribution arrangements?
A common question is whether regular contributions from adult children or other family members living in the home — for groceries, bills, or an informal "board" — are treated as income. Centrelink looks at the substance of the arrangement rather than the label. A genuine commercial arrangement at market rates, with a clear separable household economy, is more likely to be treated as board. A genuine family co-residence arrangement where costs are pooled — common where an adult child moves back in and contributes to household running costs — may not be assessed as income at all. The line between the two is not always obvious, and pensioners with family living in and contributing financially should discuss the specific arrangement with Services Australia to understand how it will be treated.
What are the reporting requirements?
Pensioners who receive board income must report it to Services Australia. This includes specifying the nature of the arrangement — room only, room and meals, or full board — since the type of arrangement affects the portion counted as income. When the arrangement changes or ends, that change must also be reported. The usual 14-day notification window for changes in financial circumstances applies. Clear documentation of the arrangement, even if not legally formal, makes accurate reporting easier.
What if I have multiple boarders?
Pensioners with multiple spare rooms can take in more than one boarder. Each arrangement is reported and assessed separately. At higher levels of boarding activity, Centrelink may assess whether the arrangement has become a commercial boarding house operation, which is treated differently from the concessional framework that applies to one or two boarders in an owner-occupied home.
What's the broader picture for pensioners considering this?
For pensioners considering their options, the boarder arrangement offers something relatively rare: a source of supplementary income that receives concessional Centrelink treatment and does not affect the home's exempt status. For a pensioner near the income test threshold, even a modest amount of board income counted at the concessional rate — rather than the full gross amount — can make a meaningful difference to the actual pension impact. The companionship and security value of having another person in the home can also be a non-financial consideration.
Pensioners contemplating a boarder arrangement should confirm the current percentage treatment directly with Services Australia, consider the tax implications of a commercial arrangement (board income that is genuinely commercial is typically assessable for tax purposes), and review their home and contents insurance to ensure the policy covers a commercial boarding arrangement.
Sources
- DSS Social Security Guide
- allianzretireplus.com.au — Social security how income from boarders and lodgers is assessed
Key takeaways
- Centrelink applies concessional treatment to board and lodging income from the principal home: only 70% is counted for accommodation only, 50% for lodging plus breakfast, and 20% for full board — well below the 100% counted for investment property rental income.
- Payments from a boarder or lodger who is the pensioner's parent, child, or sibling (including step-, adoptive-, and in-law relations) aren't assessed as income at all — a significant concession for multi-generational households.
- If the host has a mortgage on the home or rents the principal residence, the relevant interest or rent paid is deducted from the assessed-income figure — and if that deduction exceeds the percentage assessed as income, no income is assessed at all.
- The principal home remains fully exempt from the Age Pension assets test regardless of having a boarder or lodger — the only Centrelink impact is through the income test, and only on the assessable portion of board income.
- Board income must be reported to Services Australia, specifying the type of arrangement (room only, room and meals, or full board), and any change to or end of the arrangement must also be reported within the usual 14-day window.
Frequently asked questions
How much of my boarder or lodger's payment counts as income for the Age Pension?
It depends on what's included. For accommodation only with no meals, 70% of the payment is counted as income. For lodging plus breakfast, 50% is counted. For full board — room and all meals — only 20% is counted. This concessional treatment reflects the real costs the host incurs in providing the accommodation.
Does taking in a boarder affect my home's exemption from the assets test?
No. The principal home remains exempt from the Age Pension assets test regardless of whether a boarder or lodger is living in it. The only Centrelink impact of a boarder arrangement is through the income test, applied only to the assessable portion of the board income under the concessional percentages.
Do I need to declare board income if it comes from my adult child?
If the boarder or lodger is your parent, child, or sibling (including step-, adoptive-, and in-law relations), the payment isn't assessed as income at all for social security purposes. However, informal family contribution arrangements — like an adult child pooling costs rather than paying genuine board — are assessed on their substance, so it's worth confirming the specific arrangement with Services Australia.
How does boarder income compare to investment property rental for the Age Pension?
Boarder income gets a much better outcome. Net rental income from an investment property is fully counted under the income test, and the property itself is an assessable asset at market value. A boarder in your principal home only has a portion of the payment counted as income, under the concessional percentages, and the home stays exempt from the assets test.