Example 3: A unit trust participating in NRAS

Goodhousing Ltd wants to participate in the NRAS. The company does not have the capital to finance the construction of the dwellings. DD Developer Pty Ltd approaches Goodhousing and agrees to provide 124 houses as NRAS dwellings.

DD Developer established a unit trust, NRAS Unit Trust, to enable individual investors who buy the NRAS dwellings to participate and receive the NRAS incentive. Goodhousing is the trustee of NRAS Unit Trust.

Raj was looking to invest in the property market and purchased a dwelling from DD Developer Pty Ltd. Raj then leases his dwelling to Goodhousing as trustee for the NRAS Unit Trust. In return for leasing the dwelling, Raj receives units in the NRAS Unit Trust. The number of units issued is proportionate to the rental value of Raj's dwelling. Goodhousing, as trustee for the NRAS Unit Trust, subleases the dwelling to the eligible NRAS tenants. The eligible tenants, under the sublease, pay rent (NRAS rent) to Goodhousing as trustee for the NRAS Unit Trust. Raj receives a share of the NRAS rent as a distribution made by the NRAS Unit Trust.

Goodhousing, as trustee, ensures that the NRAS Trust complies with all the requirements set out by the DSS and Goodhousing lodges a statement of compliance on 13 May 2014. On 30 June 2014, Goodhousing, as trustee for the NRAS Unit Trust, receives an NRAS tax offset certificate from the Housing Secretary. The certificate is for the NRAS year 1 May 2013 - 30 April 2014.

Goodhousing, as trustee of the NRAS Unit Trust, derives NRAS rent. Raj is assessable, as a beneficiary of the NRAS Unit Trust, on his share of the trust's net income, which constitutes a share of the NRAS rent. As NRAS rent flows indirectly to Raj and the NRAS Unit Trust received a certificate from the Housing Secretary, Raj is entitled to an NRAS tax offset under section 380-15 of the Income Tax Assessment Act 1997.

End of example
    Last modified: 30 Jul 2015QC 21519