Owners/Investors
NRAS Incentive and Accessing ATO Information
The
NRAS Tax Incentive is $6,504 from the Commonwealth and $2,168 from
the State per dwelling per year for 10 years. This is indexed in line
with the
rental component of the Consumer Price Index each year.
The
Commonwealth Tax Incentive is payable as a Refundable Tax Offset,
this means it reduces your tax bill or if
you do not pay enough tax you can receive it as a tax refund. The
States
contribution is ‘non assessable and non exempt’ for tax purposes.
In
laypersons terms these Incentives are ‘Tax-Free’.
The
Incentive is available to individuals, corporations and
superannuation funds.
The Consortium has established its arrangement to ensure that the full
value of
the Incentive is received by its investor-partners. It does this
through
creating ‘Non-Entity Joint Venture Arrangements’. These arrangements do
not
interfere with the normal investor roles and responsibilities but do
create a
mechanism for the appropriate distribution of the Tax Incentive.
Click
here to access the Australian Tax
Office advice on NRAS and
‘non-entity joint ventures’. The ATO provides advice on how Tax
Incentives can be distributed through Unit Trusts and other Trust
Arrangements.
ATO Private Ruling
The
Consortium has applied for an ATO
Private Ruling to provide certainty for its investors. The outcome of
this
ruling will be communicated directly to Consortium Members and a
summary posted
on this site.
Annual Statement of Compliance
The
Consortium will provide an Annual Statement of Compliance to the
Commonwealth as at 30th April each year. If timelines and requirements
are met
the Commonwealth will guarantee that tax offset certificates (or cash
for
charities) is issued by 30th June.
Payments will be pro-rata if properties become available to rent
part-way
through the year.
Further
details can be found at www.facsia.gov.au. Click
on ‘Housing and Homelessness’ and then on ‘National Rental
Affordability
Scheme.’
Property Managers
The
Consortium will mainly use not-for-profit Property Managers that are
regionally based and members of the Consortium to manage NRAS
properties.
Managers have extensive rental management experience, including the
management
of privately owned housing.
In
some States, not-for-profit Housing Managers are regulated by State
Governments. For example, in
In
most States, not-for-profit Property Managers have to meet certain
standards. The Consortium will only select managers that meet the
required
standards. This may include meeting the National Community Housing
Standards.
The
Consortium is open to using for-profit Property Managers, this will
be in the following situations:
- There is no suitable not-for-profit Manager in the area, or the for-profit entity has better capability.
- The for-profit Manager agrees to meet the relevant national standards.
- Management
rights
have been sold to a private company and agreement has been made with
the
Consortium on a case-by-case basis.
The
role and performance of the Property Manager is governed by the
Property Management Agreement that is signed by the Manager, the
Consortium and
the Owner.
The
10% plus GST Property Management Fee is all inclusive. There are no
‘additional charges’ for re-letting, correspondence, reporting etc. The
fee
also covers 2 week vacancy cover for each RTA lease period. Please see
the
Consortium's Secured Income Stream and Group Insurance
Documents.
Eligible Tenants
The
Australian Government has identified 1.5 million households
nationally that are eligible for NRAS assistance. This is a large pool
of
potential tenants.
The
NRAS Scheme is targeted at low and moderate income earners that
require affordable rental housing. This includes working families as
well as
those on pensions.
The Gross Household Income Limits are:
| Household Types | Annual
income limit for initial tenant eligibility |
Upper
income limit for maintaining eligibility |
| One adult | $41,514 | $51,892 |
| Two adults | $57,391 | $71,739 |
| Three adults | $73,268 | $91,585 |
| Four adults | $89,145 | $111,431 |
| Sole parent with 1 child | $57,432 | $71,790 |
| Sole parent with 2 children | $71,200 | $89,000 |
| Sole parent with 3 children | $84,968 | $106,210 |
| Couple with 1 child | $71,159 | $88,949 |
| Couple with 2 children | $84,927 | $106,159 |
| Couple with 3 children | $98,695 | $123,369 |
The
Government has indicated that NRAS should help create longer-term
security for eligible households. To assist this goal and to recognise
the
flexibility in many household's income profile, once in affordable
rental
housing, households can earn up to 25% above their limit and remain
eligible
for ongoing assistance.
Income Limits will be indexed and revised every 6 months.
Management Rights Options and the Consortium
The
Consortium will negotiate with developers and owners on a case-by-case
basis to secure a mutually beneficial outcome. This will be guided by
the Options set out below:
OPTION
A) You can offer to sell the management
rights to a
non-profit housing company that is a member of the Consortium. This
could ensure a single management arrangement that can cover sites with
100% NRAS or a mix of NRAS and other owners and tenants. [However, only
a handful of non-profits are currently in a position to finance this
option, so it will very much depend on who is available locally to
consider an offer.]
OPTION B] The private
sector management company joins the Consortium and agrees to meet the
national standards. In this case it can be the approved management
entity. [Practical assistance is available from the community housing
Learning & Resource Centre to 'map' existing housing management
systems into the National Standards and to provide assistance to
upgrade policy/procedures and systems as required. This is fee for
service based on the scope of works.]
OPTION C]
The management company keeps control of the higher level
functions and property functions but sub-contracts the tenancy
management functions to our approved non-profit manager. Depending on
what works best, the management company might sub contract just NRAS
stock or all rental stock [including market rental stock] in order to
maximise efficiency.
OPTION D] For some sites,
particularly larger sites where 100% of stock is NRAS, the Developer or
Investor may wish to establish their own management company and take on
a management role and receive the Consortiums tenancy management fee.
We are able to assist with such developments and explore both
non-profit models or for-profit models that can be tailor-made to meet
the Standards required by NRAS.
The Consortium is happy to
discuss any or all these options with Owners and we understand the need
to find the right option for the commercial return for the allocation
of rights and, importantly, the right option for the longer term care
of the assets and its occupiers and the efficiency of the provision.
The Consortiums 'Secured Income Stream' depends on management that
meets our Standards and carry the appropriate risks.
Owner
Obligations
Whilst
the NRAS
arrangements provide tax-free incentive to stimulate the supply of new
affordable rental homes, such arrangements do have a number of
potential costs.
These are set out below.
It
is important to
note that investors retain existing rights and responsibilities under
tax law,
including the right to set out depreciation schedules and to claim
legitimate
business expenses. Some of the fees below will fit under the existing
ATO
guidance.
The
Consortium has
structured its arrangement to maximise efficiency and scale of
operation and to
enable Owners to be relatively ‘hands-off’ in terms of compliance and
management.
- Pay
for the compulsory AON insurance policy. This policy has been developed
specifically for the Consortium's NRAS stock and is an efficient way to
manage risks, including tenant risks. Click here for more information.
- Pay
for rental valuations of the property. This NRAS obligation must be
undertaken at commencement, in year 4 and year 8. The valuation is
organised by the Consortium. Click here to see the current schedule
of fees.
- Provide
a certificate of occupancy.
- Meet
the Ready to Let Checklist, provided in accordance with NRAS rules.
- Pay a fee to the Consortium for undertaking the role of ‘Approved Participant’ and meeting Commonwealth and State Compliance requirements. This fee is $12 per week/per approved dwelling.
- Pay
legal fees associated with the Headlease and the Property Management
Agreement.
Insurance Policy
To provide a higher level of protection for the owners income stream, property and public liability, the Consortium has organised a compulsory AON insurance policy for the owners on all properties approved under NRAS through the Consortium. Owners pay for the insurance and the Consortium administrates the policy.
This is a Group Insurance Policy that has been specially developed for the Consortium by AON and Lumleys and is based on detailed risk management under the NRAS program.
A copy of the insurance policy can be obtained from QAHC.
Valuation
A valuation must be conducted on the property in order to determine the market rent. This will allow QAHC to determine what the discounted rent will be under the National Rental Affordability Scheme.
Certificate of Occupancy
A certificate of occupancy must be received by the Consortium and lodged with the Government. The tenant process cannot begin until this is received.
Ready to Let Checklist
The property manager will complete a ready-to-let checklist on the property once it has been completed. This checklist is done in order to ensure that the property is fit to be occupied and that all work has been completed. All problems must be rectified before tenancy can go ahead.
At this time, photos will be taken for the website so that prospective tenants may view the property.
