Example 7: Members of an NRAS consortium participating in the NRAS under a head lease/sublease arrangement for part of the year
The next year, the NRAS consortium of which Chameleon Housing is a manager agrees, part way through the year, with the dwelling owners that the owners will enter into the leases with the NRAS tenants directly (direct lease), as opposed to leasing dwellings to the manager.
Therefore, during the NRAS year, the dwelling owner will have derived an amount of ordinary rent (not NRAS rent) from the manager under the head lease and will also have derived an amount of NRAS rent for the period that the dwelling owner leased the dwelling directly to the tenant.
Following the completion of the NRAS year, the Housing Secretary issues the manager representing the consortium with a certificate in relation to the rental dwelling.
The dwelling owner would be entitled to a tax offset based on the proportion of the NRAS rent derived by them divided by the total NRAS rent for the dwelling (including that paid to the manager).
Likewise, the manager would be entitled to a tax offset based on the proportion of the NRAS rent derived by them divided by the total NRAS rent for the dwelling. The manager may then elect to relinquish their entitlement to the tax offset in favour of the dwelling owner who received the rent that was ultimately sourced from the NRAS rent derived by the manager.
In this example, the dwelling owners are the ultimate recipients of all of the rent in respect of the property (being ordinary rent under the head lease arrangement, and NRAS rent for the period of the direct lease). Each dwelling owner therefore would be entitled to a tax offset (in proportion to their share of the rent derived in relation to that dwelling), but only if the election is made. The manager, having made the election, and not being the ultimate recipient of any rent in respect of the dwelling, is no longer entitled to any tax offset.
End of example