Who Is Entitled to the NRAS Tax Offset in Their Annual Tax Return?

October 20, 2011 by  Filed under: Taxes 

The Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) is responsible for administering and implementing the scheme.

What are the Incentives?

The NRAS offers annual incentives for a period of ten years. The incentive compromises:

  • A Federal Government contribution in the form of a refundable tax offset or payment to the value of $6,000 per dwelling per year in the first year of operation of the scheme
  • A state or territory contribution in the form of direct financial support or an in-kind contribution to the value of at least $2,000 per dwelling per year in the first year of operation of the scheme.
  • There are no capital gains tax consequences for providing incentives or other benefits under the NRAS.

The scheme will be indexed in line with the rental component of the consumer price index.

The incentives are paid 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
  • The state and territory contributions you receive in cash or in-kind for participating in the NRAS are non-assessable and non-exempt for tax purposes. This means they are not included in your assessable income.

Who is entitled to the NRAS Tax Offset in their Annual Tax Return?

Depending on their circumstances, the following entities are entitled to claim the NRAS:

  • Individuals
  • corporate tax entities
  • Super funds
  • A partnership or trust that is a party to a non-entity joint venture

Dwelling owners investing under a head lease agreement

The ATO is aware of certain NRAS arrangements where a dwelling owner leases their dwelling to a housing provider under a head lease and that housing provider subleases the dwelling to eligible NRAS tenants for at least 20% below market value rent. A housing provider in this context is an approved participant under the NRAS scheme and includes charitable housing organizations.


Madeline is a business woman who has decided to participate in NRAS.

Madeline plans to build 20 rental dwellings of appropriate standard to meet the requirements to participate in the NRAS. Madeline applies under the NRAS and receives an allocation.

Once the dwellings are complete, Madeline, through her real estate agent, finds eligible NRAS tenants to whom she rents the dwellings at 20% below market value. Madeline complies with all the requirements set out by FaHCSIA and lodges her first statement of compliance on 13ÿMay 2010.

On 30 June 2010, Madeline receives an NRAS tax offset certificate from the Housing Secretary. The certificate is for the NRAS year 1 May 2009-30 April 2010.

As Madeline is participating in NRAS as an individual and she has received a tax offset certificate, she is entitled to claim under section 380-5 of the Income Tax Assessment Act 1997

To fully understand the business impact of the National Rental Affordability Scheme (NRAS), please visit AJML Group, or to get advice on small business tax accounting.

The AJML Group is a Sydney based public accountancy practice, specialising in small to medium businesses. AJML’s aim is to facilitate their clients’ continued success by looking for ways to add value and improve client accounting and tax affairs. AJML covers the needs of businesses in accounting, taxation, bookkeeping, company formation, trusts, superannuation funds and business advisory services.

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