How empty nesters can earn tax-free cash and make global connections

Starts at 60 readers with big homes now full of empty bedrooms, may be able to top-up their pension payments with tax-free income. At the same time, you could be making new overseas friends.

A single room in Melbourne could generate more than $15,000 per year in additional income and a similar room on the Gold Coast, $14,800.

Making things even sweeter is that in most cases, only a small portion of that income is counted towards Centrelink’s income means test.

Schemes that link up overseas students with Australian “hosts” called homestay arrangements, provide the students with reliable and safe boarding, while they complete their Australian studies and training.

The students gain additional benefits while living in the Australian community. This is usually through cultural interactions with their hosts, along with conversational English skills.

While there are several commercial players operating in the Homestay space (just Google “homestay”), Australian Homestay Network claims to be the largest operator of homestay connection services.

The homestay program pays hosts a weekly amount depending on location and the type of board provided.

In the Melbourne metropolitan area for example, a host providing full food and accommodation for a student in 2025 can expect a payment of $390 per week. That amount is paid fortnightly and regional hosts usually receive an extra $10 per week.

The cost to the student for a Melbourne based student would be $440 per week, meaning the Homestay Network organisation collects $50 per week.

A Sydney based home-owning host with 3 spare bedrooms could receive 3 lots of $395 per week or 2,370 per fortnight. In exchange for this payment, they would need to provide 3 meals per day and a private bedroom for each of the students.

Under this arrangement, Centrelink would typically assess 20 percent of the payment or $474 per fortnight. This is counted as assessable income towards the income test and assuming no other Centrelink assessable income, a couple’s pension would be reduced by $51 a fortnight resulting in a total combined income of $4,044 per fortnight.

For a single, the income test on the same homestay income results in a $131 reduction in the age pension but still leaves the pensioner with a total income of $3,383 per fortnight.

If you are renting yourself, you can still operate a homestay service and the income test effect is even better.

In this case and assuming the rent paid is higher than the payments you receive, none of the income from homestay will be assessed by Centrelink.

Fewer meals or other differences result in a lower payment and a change in the amount of income Centrelink will disregard. Providing accommodation only in the Perth Metro area would see a $260 per week payment but in that case, 70 percent of the payment or $364 per fortnight would be assessed by Centrelink under the income test.

Under a tax ruling issued in 2001, the ATO has said that income received through a homestay arrangement is not assessable income. In simple terms, you don’t need to declare this income in your income tax return which also means that if you no longer lodge a tax return after retirement, you won’t need to do so now.

Importantly however, this ruling uses an example of 2 students at any one time and you would need to check if you plan on having more.

Unlike most Airbnb or similar short-stay arrangements, homestay does not normally expose you to Capital Gains Tax (CGT) liabilities when you eventually sell your home.

Late last year, the ATO warned that CGT can apply when rooms in a private dwelling have been used for short-stay accommodation like Airbnb or Stayz.