National Rental Affordability Scheme (NRAS)

The national rental affordability scheme (NRAS) is designed to encourage large-scale investment in affordable housing. The NRAS offers tax and cash incentives to providers of new dwellings on the condition that they are rented to low- and moderate-income households at 20% below market rates.

The NRAS offers annual incentives for a period of 10 years. The incentive comprises:

  • a Federal Government contribution in the form of a refundable tax offset or payment to the value of $8,187.78 per dwelling per year in 2015-16
  • a state or territory contribution in the form of direct financial support or an in-kind contribution to the value of at least $2,729.26 per dwelling per year in 2015-16.

The incentive will be indexed in line with the rental component of the consumer price index. The Department of Social Services (DSS) is responsible for administering and implementing the scheme.

What NRAS incentives are provided through the tax system?

The Federal Government contribution or incentive is paid in the form of refundable tax offsets for complying investors who can claim their entitlement to the tax offset using one of the following methods:

  • in their annual tax return
  • by lodging a short-form application if they are an income tax exempt entity who would not ordinarily lodge a tax return.

 What is a refundable tax offset?

Most tax offsets can only reduce the amount of tax you pay to zero – that is, if your tax offsets are greater than the amount of tax you are liable to pay, you do not get a refund of the excess amount. However, there are some exceptions to this general rule. These exceptions are classed as refundable tax offsets. Refundable tax offsets can reduce the amount of tax you are liable to pay to an amount less than zero, which results in a refundable amount. The NRAS tax offset is a refundable tax offset.

Who is entitled to the NRAS tax offset in their annual tax return?

Claims by individuals, corporate tax entities and super funds

An individual, corporate tax entity or super fund is entitled to claim a refundable tax offset provided both of the following apply:

  • they have been issued with a certificate from the Housing Secretary under the NRAS
  • the income year begins in the NRAS year to which the certificate relates.

Claims by a members of an NRAS consortium

An individual, corporate tax entity or super fund that is a member of an NRAS consortium

Circumstances may arise where an individual, a corporate tax entity or a super fund is a member of an NRAS consortium. In these circumstances, these entities are entitled to claim a refundable tax offset provided all of the following apply:

  • the NRAS approved participant of the NRAS consortium has been issued with a certificate from the Housing Secretary under the NRAS
  • the income year begins in the NRAS year to which the certificate relates.

Capital gains tax

There are no capital gains tax consequences from providing incentives or other benefits under the NRAS.

For more information on myTax 2019, online tax return 2019, myGov 2019, Tax Return 2019 , or any other tax related matter, please call our professional accountant on 1300 768 284 . For more information please contact us at 1300768284 or you can email us atenquiry@taxrefundonspot.com.au

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