National Rental Affordability Scheme (Consequential Amendments) Act 2008 (130 of 2008)

Schedule 1   Amendment of the Income Tax Assessment Act 1997

7   After Division 376 of Part 3-45

Insert:

Division 380 - National Rental Affordability Scheme

Table of Subdivisions

Guide to Division 380

380-A National Rental Affordability Scheme Tax Offset

380-B Payments made in relation to the National Rental Affordability Scheme etc.

Guide to Division 380

380-1 What this Division is about

This Division provides a tax offset to certain entities as a result of certificates issued under the National Rental Affordability Scheme Act 2008.

It also ensures that payments made, and non-cash benefits provided, by a State or Territory governmental body in relation to the National Rental Affordability Scheme are not assessable income and not exempt income.

Subdivision 380-A - National Rental Affordability Scheme Tax Offset

Table of sections

380-5 Claims by individuals, corporate tax entities and superannuation funds

380-10 Claims by a party to a non-entity joint venture

380-15 Claims by certain entities to whom NRAS rent flows indirectly

380-20 Claims by a trustee of a trust that does not have net income for an income year

380-25 When NRAS rent flows indirectly to or through an entity

380-30 Share of NRAS rent

380-5 Claims by individuals, corporate tax entities and superannuation funds

Entitlement

(1) An entity is entitled to a *tax offset for an income year if:

(a) the entity is an individual, a *corporate tax entity or *superannuation fund; and

(b) the *Housing Secretary has issued the entity with a certificate under the National Rental Affordability Scheme Act 2008; and

(c) the income year begins in the *NRAS year to which the certificate relates.

Amount

(2) The amount of the entity's *tax offset is the amount stated in the certificate.

(3) However, if the *Housing Secretary issues the entity with an amended certificate under the National Rental Affordability Scheme Act 2008, the amount of the entity's *tax offset is the amount stated in the amended certificate.

380-10 Claims by a party to a non-entity joint venture

(1) An entity is entitled to a *tax offset for an income year if:

(a) the entity has *NRAS rent for a rental dwelling covered by subsection (3) for the income year; and

(b) the entity is:

(i) a party to a *non-entity joint venture; and

(ii) an individual, a *corporate tax entity or *superannuation fund.

(2) The amount of the entity's *tax offset for an income year is the sum of all amounts worked out under subsection (4) for the income year.

(3) *NRAS rent for a rental dwelling is covered by this subsection if:

(a) NRAS rent is derived by a party to a *non-entity joint venture in relation to the rental dwelling for an income year; and

(b) the *Housing Secretary has issued the non-entity joint venture with a certificate under the National Rental Affordability Scheme Act 2008 in relation to the rental dwelling; and

(c) the income year begins in the *NRAS year to which the certificate relates.

(4) If an entity has *NRAS rent for a rental dwelling covered by subsection (3), work out an amount for the income year under this subsection using the following formula:

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(5) If a partnership or a trustee of a trust has *NRAS rent covered by subsection (3), for the purpose of applying sections 380-15 and 380-20, assume:

(a) a certificate was issued by the *Housing Secretary to the partnership or the trustee of the trust for the *NRAS year mentioned in paragraph (3)(c) of this section; and

(b) the rental dwellings covered by the certificate are those for which the partnership or the trustee has NRAS rent covered by subsection (3) of this section; and

(c) the amount stated in the certificate was the total of all amounts worked out under subsection (4) of this section in relation to those rental dwellings.

(6) However, if the *Housing Secretary issues an amended certificate under the National Rental Affordability Scheme Act 2008 in relation to the rental dwelling, the amounts under subsection (4) are to be worked out using the amount or amounts, as the case may be, stated in the amended certificate.

380-15 Claims by certain entities to whom NRAS rent flows indirectly

(1) An entity to whom *NRAS rent for a rental dwelling *flows indirectly in an income year is entitled to a *tax offset for that income year that is equal to the amount worked out under subsection (2), if:

(a) the entity is:

(i) an individual; or

(ii) a *corporate tax entity when the NRAS rent flows indirectly to it; or

(iii) 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 98, 99 or 99A of the Income Tax Assessment Act 1936 for that income year; or

(iv) the trustee of an *FHSA; or

(v) a *superannuation fund, an *approved deposit fund or a *pooled superannuation trust; and

(b) the *Housing Secretary has issued a certificate under the National Rental Affordability Scheme Act 2008 to a partnership or a trustee of a trust in relation to the rental dwelling; and

(c) the income year of the partnership or the trustee of the trust begins in the *NRAS year to which the certificate relates.

Note: The entities covered by this section are the ultimate recipients of the NRAS rent because the NRAS rent does not flow indirectly through them to other entities.

(2) Work out the amount using the following formula:

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(3) However, if the *Housing Secretary issues an amended certificate under the National Rental Affordability Scheme Act 2008 in relation to the rental dwelling, work out the amount under subsection (2) using the amount stated in the amended certificate.

380-20 Claims by a trustee of a trust that does not have net income for an income year

(1) An entity is entitled to a *tax offset for an income year if:

(a) the entity is a trustee of a trust; and

(b) the trust does not have a *net income for the income year; and

(c) *NRAS rent for a rental dwelling would otherwise *flow indirectly to the entity in the income year as if:

(i) the trust did have a net income for the income year; and

(ii) for the purposes of paragraph 380-25(4)(b), the entity has a share amount, being the net income referred to in subparagraph (i) of this paragraph; and

(iii) the entity's *share of the NRAS rent under section 380-30 was a positive amount; and

(d) the *Housing Secretary has issued a certificate under the National Rental Affordability Scheme Act 2008 to a partnership or a trustee of a trust in relation to the rental dwelling; and

(e) the income year of the partnership or the trustee of the trust begins in the *NRAS year to which the certificate relates.

(2) The amount of the *tax offset is the amount worked out in accordance with subsection 380-15(2), as if the reference in the formula to paragraph (1)(c) were a reference to paragraph (1)(e) of this section. For the purposes of working out the entity's *share of *NRAS rent for the rental dwelling, assume subparagraphs (1)(c)(i), (ii) and (iii) of this section apply.

(3) However, if the *Housing Secretary issues an amended certificate under the National Rental Affordability Scheme Act 2008 in relation to the rental dwelling, the amount of the entity's *tax offset is worked out in accordance with subsection 380-15(2) using the amount stated in the amended certificate.

(4) If the trustee of a trust is entitled to a *tax offset under this section:

(a) a beneficiary of the trust; or

(b) a subsequent entity to whom *NRAS rent for the rental dwelling *flows indirectly;

is not entitled to a tax offset under this Subdivision in relation to the NRAS rent for the rental dwelling.

380-25 When NRAS rent flows indirectly to or through an entity

(1) This section sets out the circumstances in which *NRAS rent:

(a) flows indirectly to an entity (subsection (2), (3) or (4)); or

(b) flows indirectly through an entity (subsection (5)).

Partners

(2) *NRAS rent flows indirectly to a partner in a partnership in an income year if, and only if:

(a) during that income year, the NRAS rent is *derived by the partnership, or *flows indirectly to the partnership as a beneficiary because of a previous application of subsection (3); and

(b) the partner has an individual interest:

(i) in the partnership's *net income for that income year that is covered by paragraph 92(1)(a) or (b) of the Income Tax Assessment Act 1936; or

(ii) in a *partnership loss of the partnership for that income year that is covered by paragraph 92(2)(a) or (b) of that Act;

(whether or not that individual interest becomes assessable income in the hands of the partner); and

(c) the partner's *share of the NRAS rent under section 380-30 is a positive amount (whether or not the partner actually receives any of that share).

Beneficiaries

(3) *NRAS rent flows indirectly to a beneficiary of a trust in an income year if, and only if:

(a) during that income year, the NRAS rent is *derived by the trustee of the trust, or *flows indirectly to the trustee as a partner or beneficiary because of a previous application of subsection (2) or this subsection; and

(b) the beneficiary has this amount for that income year (the share amount ):

(i) a share of the trust's *net income for that income year that is covered by paragraph 97(1)(a) of the Income Tax Assessment Act 1936; or

(ii) an individual interest in the trust's net income for that income year that is covered by section 98A or 100 of that Act;

(whether or not the share amount becomes assessable income in the hands of the beneficiary); and

(c) the beneficiary's *share of the NRAS rent under section 380-30 is a positive amount (whether or not the beneficiary actually receives any of that share).

Trustees

(4) *NRAS rent flows indirectly to the trustee of a trust in an income year if, and only if:

(a) during that income year, the NRAS rent is *derived by the trustee, or *flows indirectly to the trustee as a partner or beneficiary because of a previous application of subsection (2) or (3); and

(b) the trustee is liable or, but for another provision in this Act, would be liable, to be assessed in respect of an amount (the share amount ) that is:

(i) a share of the trust's *net income for that income year under section 98 of the Income Tax Assessment Act 1936; or

(ii) all or a part of the trust's net income for that income year under section 99 or 99A of that Act;

(whether or not the share amount becomes assessable income in the hands of the trustee); and

(c) the trustee's *share of the NRAS rent under section 380-30 is a positive amount (whether or not the trustee actually receives any of that share).

Note: A trustee to whom NRAS rent flows indirectly under this subsection is entitled to a tax offset under section 380-15 and the NRAS rent does not flow indirectly through the trustee to another entity.

(5) *NRAS rent flows indirectly through an entity (the first entity ) to another entity if, and only if:

(a) the other entity is the focal entity in an item of the table in section 380-30 in relation to the NRAS rent; and

(b) that focal entity's *share of the NRAS rent is based on the first entity's share of the NRAS rent as an intermediary entity in that or another item of the table.

380-30 Share of NRAS rent

Object of section

(1) The object of this section is to ensure that:

(a) *NRAS rent derived by a partnership or the trustee of a trust is allocated notionally amongst entities who *derive benefits from that NRAS rent; and

(b) that allocation corresponds with the way in which those benefits were derived.

(2) An entity's share of *NRAS rent is an amount notionally allocated to the entity as its share of the NRAS rent, whether or not the entity actually receives any of that NRAS rent.

(3) That amount is equal to the entity's share of the *NRAS rent as the focal entity in column 3 of an item of the table.

Note: An entity's share of the NRAS rent is based on the share of the NRAS rent of each preceding intermediary entity through which the NRAS rent flows, starting from the intermediary entity to whom the NRAS rent is paid.

This means that in some cases (see items 2 and 4 of the table), more than one item of the table will need to be applied to work out the share of the NRAS rent of an ultimate recipient of the NRAS rent.

Note: In item 3 or 4 of the table, the trustee of a trust can be both the intermediary entity and the focal entity in the same item.

Subdivision 380-B - Payments made in relation to the National Rental Affordability Scheme etc.

Table of sections

380-35 Payments made and non-cash benefits provided in relation to the National Rental Affordability Scheme

380-35 Payments made and non-cash benefits provided in relation to the National Rental Affordability Scheme

A payment made to you or a *non-cash benefit provided to you by:

(a) a Department of a State or Territory; or

(b) a body (whether incorporated or not) established for a public purpose by or under a law of a State or Territory;

in relation to your participation in the National Rental Affordability Scheme is not assessable income and is not *exempt income.