Partnerships and trust beneficiaries who indirectly derive NRAS rent from a rental dwelling

Circumstances may arise where the certificate is issued under the NRAS to an entity but the refundable tax offset is claimed by another entity - for example, when the certificate is issued to a trustee of a trust and the offset needs to be claimed by the beneficiaries. An entity is entitled to claim its share of the refundable tax offset consistent with its share of rental income from its participation in the NRAS through trusts and partnerships.

An entity that indirectly derives NRAS rent from a rental dwelling as a partner of a partnership, or as the trustee or a beneficiary of a trust, is entitled to claim the refundable tax offset provided both of the following apply:

  • the trust or partnership that directly receives the rental income has been issued, or is taken to have been issued, a certificate from the Housing Secretary under the NRAS applicable to the dwelling
  • the income year of that trust or partnership begins in the NRAS year to which the certificate relates.

The entity indirectly receiving the NRAS rent may be:

  • an individual
  • a corporate entity (at the time the NRAS rent flows indirectly to it)
  • the trustee of a trust that is liable to be assessed on a share of, or all or a part of, the trust's net income under section 98External Link, 99 or 99AExternal Link of the Income Tax Assessment Act 1936 (ITAA 1936) for that income year
  • the trustee of a first home saver account
  • a super fund, an approved deposit fund or a pooled super trust.

A beneficiary of a trust cannot receive NRAS rent indirectly in any year that the trust has no net income. In this situation, the trustee may be able to claim the refundable tax offset.

NRAS rent will be taken to flow indirectly to either a beneficiary or the trustee of a trust but not to both.

    Last modified: 30 Jul 2015QC 21519