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                                                               VISION SECRETARIAT: PO Box 826, Mt Eliza 3930
                                                               PH: 9787 3245 FX: 9775 2142 E:

                              Regulations? What Regulations?
There is general concern in the industry that there is no regulatory body which governs homestays so
the fees that are charged, the expectations of what a homestay provides and everything else is very
much subject to market forces and individuals. There are, however, laws and regulations at various
levels which affect homestay practice. At the Federal level, the Australian Tax office has clear
regulations on homestays and at which point a homestay becomes a business.

At State level, the regulations which derive from Health, Building and Planning are in place and then
these are carried out at Local level through the Local Councils. Because of certain ambiguities in the
regulations, Councils are prone to interpreting the rules a little differently. The regulations are State
regulations but in administering them it appears that there can be some variation in interpretation, for

In the research that VISION International carried out, one of the first questions asked of the person
representing the Local Council was to ascertain their familiarity with „homestay‟ and this varied from
council to council.

Homestay is best defined as “a form of accommodation in which a person visiting or temporarily
staying in another country (often homestay student) lives with a family in the host country and gives
reimbursement for the homestay services. Homestay is unlike a boarding house, hotel or rental
experience, in that the aim of the homestay is not just to provide a place to stay but to create a
learning experience for both homestay student and the homestay host (QETI Page 8).

Rooming House
    “A building in which there is one or more rooms available for occupancy on payment of rent …
       in which a total number of people who may occupy these rooms is not less than 4.”
(Residential Tenancies Act. Victoria, 1997

    A homestay, then, by this definition should have no more than three paying occupants whence it
    becomes a Rooming House and is subject to the Residential Tenancies Act (State Government).

What regulations affect the number of students residing in a homestay at any one time?

There is no shared delineation of a maximum number of students that can be provided for in one
homestay. However, institutions and homestay providers can specify the number they consider the
maximum and this is often two students. And yet we have all heard of so-called homestays that
accommodate 10 or more students.

However, Local Council regulations appear to draw the line at 5. Once there are more than 5

Australian Tax Office Regulations
The only Federal Law which impinges on homestay are the ATO regulations but advice from the ATO
is that they do not impose or limit the number of students a homestay can host before the homestay is
required to declare it as taxable income. They say that they are not interested, even if the homestay
does make a slight profit.

                                                              VISION SECRETARIAT: PO Box 826, Mt Eliza 3930
                                                              PH: 9787 3245 FX: 9775 2142 E:

In the Guide to Homestay Manual produced by the Queensland government, it is claimed that the
ATO limits the number of students in a homestay to one or two, thereafter, it is considered a business
and is subject to taxation laws, including the GST.

We believe that this is a misinterpretation of the answer to the question posed to the ATO which
asked specifically about one or two students
We have advice from the ATO that this is not so as the ATO does not cite a specific number of
students to differentiate between a homestay being a hobby (whence the homestay fee is considered
reimbursement for expenses) and when it is deemed a business with an expectation of a making a
profit. It is up to the individual to decide which it is. This means that someone who has built or
renovated a home to accommodate 9 or 10 students and has an income of say $2,250 per week, can
claim that they are not making any profit from this and it is not a business. They simply have to
complete the Statement by a Supplier form in which they give a reason for not quoting an Australian
Business Number (ABN) to an enterprise. We are in the process of asking the same question about 3
to 5 students in a homestay to see if the response is the same. Putting in place a limited number of
students would put an end to this ambiguity.

Building Regulations
Under the Building Code of Australia, buildings are classified into several classifications:
Class1A - a single detached dwelling or a group of dwellings separated by a firewall including a row
house, terrace house, townhouse or villa unit.
Class 1B - a single dwelling used as a boarding house, guest house, hostel or the like having a total
floor area of less than 300m2 (32.3 squares and which houses not more than 12 people.
This is the category that most homestays would come under. The house is required to have hard
wired (not battery operated) smoke alarms in each bedroom and a hard wired smoke alarm with
evacuation lighting in each passageway leading to a nominated exit.
Most councils agreed that anyone hosting a student or renting out a room with a communal kitchen
and bathroom would need to be reclassified as a class 1b residence. The cost of reclassification is
between $600 - $800. Another council said that you could argue that the students were deemed
Planning Regulations
A planning permit is not required if there are less than 10 habitable rooms, and it does not matter what
number of students inhabit those rooms.
Health Regulations
Nothing specific if there are no more that 5 students
Payment of Homestay Fees
It is becoming more common practice for institutions to collect the homestay fees from the student
and then pay the homestay, keeping some of that payment to cover administrative costs and make a
profit. This is fine as long as the institution declares this to the student as follows:

        To Consumer Affairs, it simply means that where the student
        does not pay the homestay direct, and where an institution takes the homestay payments
        from the student (eg $230) and keeps $30 as an administrative fee, thus paying the homestay
        $200 of that, this must be declared to the student at the time of booking. Otherwise the
        institution could be found to have is misrepresented the true cost and is therefore engaging in
        false representations in relation to goods and services (section 12 Fair Trading Act 1999).
        Such conduct is regarded as a breach of the Act and would attract a penalty. While
        institutions are exempt from the Residential Tenancies Act, they are expected to act ethically.

                                                                 VISION SECRETARIAT: PO Box 826, Mt Eliza 3930
                                                                 PH: 9787 3245 FX: 9775 2142 E:

        It is not illegal to take a fee from the homestay payment, but it MUST be declared to the
        student to comply with the Fair Trading Act.” (Deborah Westfield, May 2007)

Release and Copying of Police Checks
It is not uncommon for institutions to ask for copies of police checks but this is in contradiction of the
regulations that accompany such checks. This is an extract from the letter which is provided with
police checks when they are released:

“[The police check] must not subsequently be forwarded to any other institution or organisation or
individual, this strict instruction includes the person on whom the check has been conducted.
“The police record must not be incorporated into any manual or electronic database or filing system.
No copies of the certificate are to be made.
… the information that gas been released yo your organisation must be securely destroyed.”

Further information is available by emailing or by phoning (03) 9247

Airport Greeting and Transfer to Accommodation
Some institutions are using homestays and staff members driving private cars to collect students at
the airport. As long as this service is provided free of charge, there is no problem. However, if in that
instance a fee is charged to the student, the driver is liable for a fine of $2,000 and in the case of an
accident, the insurance is invalidated.

In addition to this, it has been advised that anyone collecting an unfamiliar student at the airport must
check the student‟s passport to be absolutely sure that they have the right student and not just rely on
hearsay (even from a student) or a piece of paper. This is especially important for students under 18.

The information is available from the Victorian Taxi Directorate and is in regard to SVs (Specific
Purpose Vehicles) and MVs (Multi-purpose Vehicles). For information about fines, you will get that
from Compliance on 9320 4302. If the person who has done this has used their personal car for the
purpose, it is considered an unlicensed commercial vehicle and the fine is $2,000.

An institution can pick up students and charge for it as long as the person driving the car is employed
by the institution and the car being used is owned by the institution and is not a private vehicle.

Further information is available at:
          Telephone (03) 9320 4300 or
                        1800 638 802 (toll-free for country callers only)

                 Mail   PO Box 666
                        North Melbourne Victoria 3051

     Street address     Level 6, 14-20 Blackwood Street
                        North Melbourne 3051

                                  VISION SECRETARIAT: PO Box 826, Mt Eliza 3930
                                  PH: 9787 3245 FX: 9775 2142 E: