National Rental Affordability Scheme

The National Rental Affordability Scheme commenced by the enactment of the National Rental Affordability Scheme Act 2008 (Cth), the National Rental Affordability Regulations 2008 (Cth) and newly inserted Division 380 of the Income Tax Assessment Act 1997 (Cth). The Scheme’s principal aim is to stimulate the construction of 50,000 new dwellings within Australia, which dwellings are to be let to tenants for a maximum of 80% of the then current market rent, where those tenants meet means tested eligibility criteria.

Applicants have been invited to submit tenders to the Commonwealth for a share of 50,000 individual “allocations”, each of which are linked to an “approved rental dwelling”. These allocations are to be released across four rounds. All rounds are now closed, however further rounds may be opened. The holder of an allocation (“the approved participant”) will be entitled to an annual “incentive” in the amounts displayed at Table 1 (to increase in line with Consumer Price Index).

Table 1: Incentive value for 1 May 2011 – 30 April 2012

Under Division 380 of the ITAA 97 the approved participant may be one of the following:

• Individual;
• Partnership;
• Trust; or
• a participant to an NRAS Consortium.

Subject to the individual tax circumstances of the recipient, the incentive may take the form of either a refundable tax offset certificate or a payment. Entitlement to an incentive will be determined by the proportion of actual rent shared by an investor, which in turn is consequent upon the structuring of any model adopted by the approved participant. Ongoing entitlement to the incentive is conditional upon satisfaction of ongoing reporting and compliance requirements. Individual State Government requirements vary across Australia.