National Rental Affordability Scheme - amendments to the tax law provisions

On 3 February 2011 the Assistant Treasurer announced amendments to provisions in the tax law that relates to the tax offset under the National Rental Affordability Scheme (NRAS).

The amendments address the technical issues arising from the interaction between the NRAS legislation and the tax law provisions that provide the NRAS tax offset.

The amendments:

• introduce the concept of an NRAS consortium, which allows parties participating collectively in NRAS to access the NRAS tax offset without having to meet the requirements of being a non-entity joint venture (a narrower concept than an NRAS consortium)
• recognise that NRAS certificates issued by the NRAS Housing Secretary are issued to approved participants
• ensure that the structure of an NRAS consortium does not prevent the ultimate investors in NRAS from receiving the NRAS tax offset
• ensure that certain payments and non-cash benefits indirectly provided under NRAS (such as through an NRAS consortium) are treated as non-assessable non-exempt income.

The measure received royal assent on 29 June 2011.

Media release

For more information, refer to the Assistant Treasurer's media release number 024/2011.

Legislation and supporting material

Tax Laws Amendment (2011 Measures No. 5) Act 2011 and Explanatory Memorandum received royal assent on 29 June 2011.

Administrative treatment prior to the enactment of the amendments The ATO accepted tax returns as lodged during the period up until the law change was passed by parliament. As a result of the law change, taxpayers will need to review their positions back to the 2008-09 (State and Territory payments amendment) or 2009-10 (NRAS consortium amendment) income year as applicable: those taxpayers who treated indirect payments or claimed the tax offset in accordance with the amended law do not need to do anything more those taxpayers who did not treat indirect payments or did not claim the tax offset in accordance with the amended law can seek amendments if a reduction in liability results, interest on overpayment will be paid if an increase in liability results, no tax shortfall penalties will be applied and any interest accrued will be remitted to the base interest rate up to the date of enactment of the law change. In addition, any interest in excess of the base rate accruing after the date of enactment will be remitted where taxpayers actively seek to amend assessments within a reasonable timeframe after enactment.

More information For more information, refer to Exposure draft - amendments to the tax law provisions related to the National Rental Affordability Scheme.