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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

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Edited version of private ruling

Authorisation Number: 1011839689423

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Ruling

Subject: NRAS Consortium

What this ruling is about:

Does the arrangement described within the NRAS Participation Agreement constitute an 'NRAS Consortium' as defined in subsection 995(1) of the Income Tax Assessment Act 1997 (ITAA 1997)?

Answer

Yes

This ruling applies for the following periods:

01 July 2010 to 30 June 2011

01 July 2011 to 30 June 2012

01 July 2012 to 30 June 2013

Ruling:

The arrangement as described within the NRAS Participation Agreement constitutes an 'NRAS Consortium' as defined in subsection 995(1) of the ITAA 1997.

The scheme that is subject to the ruling:

The Entity is incorporated as a company limited by guarantee.

The private binding ruling application lodged by the applicant included the following:

    The Entity is a not for profit housing provider within the NRAS.

    The Entity has adopted a NRAS Consortium structure to operate for the ten year NRAS incentive period. The Entity enters into an NRAS Consortium with an individual owner. (The NRAS Participation Agreement)

    Owners lease the property under a Registered Tenancy Agreement to a tenant who meets the eligibility criteria under the NRAS legislation. The owner, by a separate agreement, appoints a property manager to manage the tenancies.

    The circumstances on which the above questions are posed are as follows:

      1) The application is made on behalf of a NRAS Consortium, the participants to which are the owner ("Owner") of the rental dwelling and the Entity. The Entity acts as manager of the NRAS Consortium.

      2) The Owner falls within one of the following classes (as those terms are defined within the Income Tax Assessment Act 1997 (Cth)):

          (a) an individual;

          (b) a corporate tax entity;

          (c) a superannuation fund (or a person or entity holding an entitlement therein);

          (d) a partner to a partnership;

          (e) the trustee of a trust;

          (f) a beneficiary of a trust;

          (g) an FHSA (or a person or entity holding an entitlement therein);
          an approved deposit fund (or a person or entity holding an entitlement therein); or

          (h) a pooled superannuation trust (or a person or entity holding an entitlement therein).

      3) FaHCSIA offers an allocation pursuant to the NRAS to the Entity.

      4) The Entity accepts the allocation, the rental dwelling becomes an Approved Rental Dwelling and the Entity becomes the Approved Participant.

      5) The Approved Participant and the Owner enter a NRAS Consortium in relation to the rental of the Approved Rental Dwelling in the form supplied or as near thereto as is practicable.

      6) The Approved Rental Dwelling is tenanted to persons who are NRAS Eligible Tenants.

      7) The Owner receives rent at not more than the amounts allowed under the NRAS legislation.

      8) At the completion of each respective NRAS year during the ten year Incentive Period FaHCSIA issues a tax offset certificate in respect of the Approved Rental Dwelling NRAS certificate in relation to the NRAS year to the NRAS approved participant of the NRAS consortium.

    The relevant State Government issues a payment or a non-cash benefit to the person listed on the certificate issued by FaHCSIA in respect of the State Government component of the NRAS incentive. Such payment or non-cash benefit may be made at the completion of each respective NRAS year during the ten year Incentive Period or at another time.

The NRAS Participation Agreement enacted the above intention.

Reasons for decision

Issue 1

Question 1

An 'NRAS Consortium' is defined in Definitions of subsection 995-1 of the ITAA 1997 as:

NRAS consortium (short for National Rental Affordability Scheme consortium) means a consortium, joint venture or non-entity joint venture:

          a. Established by one or more contractual arrangements, the purpose of which are to facilitate the leasing of NRAS dwellings; and

          b. That is not a corporate tax entity, a superannuation fund, a trust or a partnership.

'Consortium' is not defined by the ITAA 1997, so its ordinary meaning must be considered. The Macquarie Dictionary (third edition) defines consortium as:

    …an association or union…

And further defines 'association' and 'union' as:

Association:

    …an organisation of people with a common purpose and having a formal structure…

Union:

    …a number of persons, societies, states, or the like, joined together or associated for some common purpose…

In your situation, it is accepted the arrangement described within the NRAS Participation Agreement constitutes an NRAS Consortium, as defined within section 995-1 of the ITAA 1997.


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