Example 4: Members of an NRAS consortium participating in the NRAS

Karma Housing Ltd has the support of developers and real estate agents to secure 300 dwellings to participate in the NRAS.

The dwellings are sold to individual investors who are interested in participating in NRAS. At the time the investors purchase the dwellings, they enter into a contract with Karma Housing, which meets the definition of a non-entity joint venture.

Under the contract, Karma Housing manage the dwellings, including finding eligible NRAS tenants.

On finding an eligible NRAS tenant, Karma Housing helps the dwelling owner enter into a lease with the tenant. The tenant pays the rent to Karma Housing who passes it on to the dwelling owner. In these circumstances, Karma Housing does not derive any rent, even though the rent is paid to them. This is because Karma Housing receives the rent as an agent for the dwelling owner1.

No lease is entered into between the dwelling owner and Karma Housing. The NRAS rent is derived by the dwelling owner. As the dwelling owner is a party to a non-entity joint venture and derives NRAS rent, if the non-entity joint venture receives a certificate from the Housing Secretary for the dwelling from which the dwelling owner derives the NRAS rent, the dwelling owner will be entitled to the NRAS tax offset under section 380-10 of the Income Tax Assessment Act 1997.

The dwelling owner must claim their NRAS tax offset in their tax return.

End of example
    Last modified: 30 Jul 2015QC 21519