Farm House Accommodation: What Farmers, Sharemilkers & Contract Milkers Need to Know
Housing on farms has always been part of how the rural sector works, especially in sharemilking and contract milking arrangements. But the rules around tax, Healthy Homes compliance, and employment law can get surprisingly complicated. So here’s a clear, practical guide to help.
1. When a Farm Owner Provides a House to a Sharemilker or Contract Milker
In most sharemilking setups, the house comes with the job. It’s treated as part of the farm infrastructure (much like a cowshed) - not as a residential rental.
That means:
No rental income needs to be declared for the farm owner
No accommodation benefit needs to be taxed for the sharemilker
Sharemilkers are not employees, so employment‑related accommodation rules don’t apply
House maintenance usually remains the farm owner's responsibility, just like any other farm asset.
Overall, it’s a straightforward arrangement — until a sharemilker brings their own staff into the mix.
2. When Sharemilkers Provide Housing to Their Employees
This is where things flip completely.
The moment a sharemilker houses their own worker, it becomes a service tenancy under the Residential Tenancies Act. That turns the sharemilker into the landlord, even if they don’t own the house.
This means they must:
Have a written tenancy agreement
Meet all Healthy Homes Standards
Keep the required tenancy records
Complete insurance & compliance statements
Handle bond obligations (even if no rent is charged)
And on the tax side?
The market rental value of the accommodation becomes taxable income to the employee, and must go through PAYE.
If the sharemilkers trades through a company - shareholder‑employees must be charged market rent (normally via year‑end journal entries).
3. Healthy Homes: Who’s Responsible?
Healthy Homes rules can trip people up, especially when multiple parties are involved.
Key points:
If the farm owner provides the house directly to the sharemilker (with no tenancy), Healthy Homes rules generally don’t apply between them.
But if the sharemilker houses staff in that same property, the sharemilker becomes liable for Healthy Homes compliance — even though they don’t own the home.
If the house is below standard, accepting a contract may immediately expose the sharemilker.
Good practice for sharemilkers:
Inspect the house before signing
Ask the owner to confirm (in writing) that Healthy Homes standards are met
Walk away if the farm owner won’t fix major issues
A substandard home can quickly become a costly problem.
4. Residential Rental Loss Ring‑Fencing: Who’s Affected?
Many rural houses are exempt from the residential rental loss ring‑fencing rules because they fall under business premises, farmland, or employee accommodation.
This usually means:
Farm owners providing a house to a sharemilker (with no rent) are outside ring‑fencing rules.
Farm owners providing a house to an employee are also excluded.
Sharemilkers housing employees may rely on the “employee accommodation” exemption, even if they don’t own the property.
Most sharemilkers aren’t likely to generate rental losses anyway, unless they’ve had to repair tenant damage.
5. Get the Paperwork Right
The best way to stay compliant is to align the documentation with reality.
Sharemilking or contract milking agreements should clearly state that the farmhouse is provided as part of the commercial farming arrangement — not as a tenancy.
If staff live in the house, there must be a proper service tenancy agreement. We recommend using the Federated Farmers contracts which include a Tenancy Agreement.
If the dwelling is below Healthy Homes standard, this should be a red flag, especially if the owner refuses to fix it.
Final Notes
Farmhouse accommodation can be straightforward, or it can create unexpected legal and tax obligations depending on who’s living in the home. The key is understanding the difference between contractor and employee arrangements, knowing when Healthy Homes rules apply, and making sure the paperwork supports the real situation on the ground.
Not all opportunities are worth the legal risk.