Explanatory GuideNational Rental Affordability Scheme

Version 1.0DSS August 2016

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Explanatory GuideNational Rental Affordability Scheme

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Table of ContentsAbout this guide..............................................................................................................1

Glossary..........................................................................................................................2

Allocation of dwellings into the Scheme...................................................................4

Offers of allocations.....................................................................................................4

Reservations of allocation...........................................................................................4

Allocating reserved offers of allocation.......................................................................5

Applications to vary conditions of reservations of allocation (change requests).......6

Eligibility to receive an incentive...............................................................................7

Conditions of allocations..............................................................................................7

Statements of Compliance..........................................................................................9

Eligible tenants...........................................................................................................10

Market value rent and rent charged..........................................................................10

Market value rent.......................................................................................................10

Rent charged..............................................................................................................13

Provisional allocations...............................................................................................15

Vacancies...................................................................................................................17

Receiving an incentive...............................................................................................17

Conclusion of the 10 year incentive period...............................................................17

Administrative Action.................................................................................................18

Withdrawing a reservation of allocation....................................................................18

Transfer of allocation to another rental dwelling......................................................19

How do substitutions and market rent valuations interact?.....................................19

Transfer of allocation to another approved participant.............................................20

Revoking the allocation (other than provisional allocation)......................................21

Revoking a provisional allocation..............................................................................21

Internal review of NRAS decisions............................................................................22

A decision not to make an offer of allocation or a decision not to make an offer of allocation that relates to a particular dwelling. ....................................................22

A determination of reductions made from an incentive amount. ........................22

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About this guide

This guide provides details of the implementation and administration of the National Rental Affordability Scheme (“NRAS” or the “Scheme”) to complement the legislative and regulatory framework.

The NRAS is established by the National Rental Affordability Scheme Act 2008 (“the Act”) and the National Rental Affordability Scheme Regulations 2008 (“the Regulations”).

If there is any inconsistency between the Explanatory Guide and the above mentioned legislation, the legislation prevails to the extent of the inconsistency.

The Explanatory Guide outlines: the allocation process; eligibility to receive an incentive; and administrative action by the Department.

The Department reserves the right to amend the Explanatory Guide at its discretion and will provide reasonable notice of amendments once made.

A copy of the Act and the Regulations can be found at https://www.legislation.gov.au/

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Glossary

AFAR “Actual first available for rent date”, the term used in FOFMS portal.

ARAD “Agreed rental availability date”. The term “current estimate of first available for rent” is the term used in FOFMS portal and is synonymous with the agreed rental availability date.

Approved participant This term has the same meaning as in the National Rental Affordability Scheme Regulations 2008.

Approved rental dwelling This term has the same meaning as in the National Rental Affordability Scheme Regulations 2008.

Conditions of allocation The conditions approved participants are to comply with in order to be eligible to receive an incentive under the Scheme.

Department The Department of Social Services.

Endorsed charitable institution An entity that is endorsed as exempt from income tax by the Commissioner of Taxation under section 50-105 of the Income Tax Assessment Act 1997.

Incentive An incentive that is paid or issued as a tax offset under the National Rental Affordability Scheme Regulations 2008.

NRAS or the Scheme National Rental Affordability Scheme.

NRAS year Short for National Rental Affordability Scheme year, and means (1) the period beginning on 1 July 2008 and ending on 30 April 2009 for the first year of the Scheme; (2) the period beginning on 1 May and ending on 30 April for subsequent years.

NRAS incentive index This term has the same meaning as in the National Rental Affordability Scheme Regulations 2008.

NRAS market index This term has the same meaning as in the National Rental Affordability Scheme Regulations 2008.

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AFAR “Actual first available for rent date”, the term used in FOFMS portal.

Provisional allocations Where the agreed rental availability date has passed and the reservation of allocation has not been allocated into the Scheme, the reservation of allocation will be provisionally allocated. Provisional allocations start the 10 year incentive period on the agreed rental availability date but will not be eligible to receive an incentive until the provisional allocation has been allocated into the Scheme.

The Act National Rental Affordability Scheme Act 2008.

The Regulations National Rental Affordability Scheme Regulations 2008.

Please refer to Section 4 of the Act and Regulation 4 for the meaning of all defined terms.

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Allocation of dwellings into the Scheme Offers of allocationsNRAS Rounds One to Five plus the Shovel Ready round have been announced, assessed, and are now closed. No offers were made under Round Five, as announced in the 2014-15 Federal Budget. There are no open funding rounds for the Scheme.

An applicant is a person or entity that made an application during one of the offer of allocation rounds. If the applicant was successful during the application process, the applicant received an offer of allocation. When an applicant accepts an offer of allocation they become known as an approved participant in the Scheme.

Reservations of allocationIn situations where the dwelling is not yet available for rent at the date of the offer, the offer of allocation is reserved. The Secretary may withdraw a reservation of allocation if any of the following events occur:

a) the dwelling is not available for rent by the agreed rental availability date;b) the Secretary is satisfied that the dwelling will not be available for rent by the

agreed rental availability date;c) the applicant fails to comply with any conditions of the reserved allocation;d) any advertisement relating to the reservation of allocation:

i. is likely to mislead; orii. misrepresents the Scheme; oriii. exaggerates or overstates the tax or other financial advantages

resulting from involvement in the Scheme; oriv. presents the government as underwriting or endorsing the applicant,

the dwelling or a proposed investment; orv. presents the government as dealing directly with investors; orvi. presents the government as being in partnership with any applicant,

person or entity publishing details in association with the Scheme;e) the application for the allocation:

i. includes information that is false or misleading; orii. fails to include information that the applicant knew, or ought reasonably

to have known, was relevant;f) an application made under Division 2 in relation to the reservation of the

allocation:i. includes information that is false or misleading; orii. fails to include information that the applicant knew, or ought reasonably

to have known, was relevant.

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Allocating reserved offers of allocationReserved offers of allocations will be allocated into the Scheme on the earlier of the date when the conditions of the reservation of allocation are satisfied or the agreed rental availability date for the dwelling. Reservations of allocation cannot have an agreed rental availability date after 30 June 2016. For reservations of allocations offered under the Shovel Ready Round, these reservations of allocation cannot have an agreed rental availability date after 31 July 2015.

When applicants are seeking to become approved participants by obtaining an allocation they need to ensure the conditions of the reservation of allocation are satisfied. In order to do this, applicants are required to provide evidence and confirmation of the following information:

The date a dwelling is first made available for rent including providing an electronic copy of the certificate of occupancy or equivalent document demonstrating that the dwelling is fit for tenant occupancy as of the first available for rent date. The certificate of occupancy is to be uploaded to the NRAS Portal.

A written market rent valuation (MRV) that specifies a date, within the permitted valuation period (i.e. 13 weeks either side of the first available for rent date) to which the market value rent relates; and is lodged (i.e. uploaded to the NRAS Portal) within 13 weeks of the first available for rent date.

The MRV must include the market value rent. The market value rent must exclude any additional services such as meals, Foxtel, internet service etc.

The address on the MRV must match the address on the NRAS Portal and on the certificate of occupancy.

The dwelling size on the MRV must match the dwelling size on the NRAS Portal.

The dwelling style on the MRV must match the dwelling style on the NRAS Portal.

The MRV must be completed by a registered valuer in the state where the dwelling is located.

The MRV must provide a market value rent amount exclusive of Goods and Services Tax (GST).

The dwelling must meet any special conditions agreed to in the letter of offer, for example, any specified energy efficiency ratings or accessibility levels.

The MRV must adhere to the checklist provided to all approved participants and available on the DSS website.

The Secretary must notify the applicant when a reservation of allocation is allocated or withdrawn.

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Applications to vary conditions of reservations of allocation (change requests)Provisional allocations cannot be varied. This means that the dwelling must be built in accordance with all approved dwelling attributes. A location change may only be made if, as a result of a natural disaster, the dwelling cannot be built in the approved location. The agreed rental availability date for provisional allocations cannot be varied.

Applicants or approved participants may make one application to vary the agreed rental availability date for reserved allocations and the requested date must be no later than three months after the original agreed rental availability date and no later than 30 June 2016. For reservations of allocation, location or style cannot be changed, except in the event of a natural disaster.

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Eligibility to receive an incentive Conditions of allocationsThe Regulations were made in 2008 and have always provided that approved participants in the Scheme can only receive an incentive where they meet all conditions of allocation in an NRAS year (defined as a period beginning on 1 May of each year). Regulation 25 (subject to any proportionate reduction available under regulation 28) essentially requires all conditions of allocation to be met, not just some. Once allocated into the Scheme, the 10 year incentive period starts on the actual first available for rent date in relation to reserved allocations and the 10 year incentive period starts on the agreed rental availability date for provisional allocations.

Where there has been an allocation for an incentive period in respect of an approved rental dwelling, there are mandatory conditions that must be met before an incentive can be issued. These conditions are outlined in Regulation 16. They include:

that either (i) the approved rental dwelling has not been lived in as a residence at any time before the first day of the incentive period; or (ii) the approved rental dwelling was unfit for anyone to live in, and since the day on which it has been made fit for living in, it has not been lived in as a residence between that day and the first day of the incentive period;

to the extent that the approved rental dwelling is rented during an NRAS year that falls within the incentive period, the approved rental dwelling is rented to a tenant or tenants of a kind prescribed by the Regulations;

the rent that is charged for the approved rental dwelling is, at all times during the year, at least 20% less than the market value rent for the approved rental dwelling;

the approved rental dwelling must not be vacant for longer than 26 weeks in an NRAS year or vacant longer than a continuous period of 26 weeks across two NRAS years;

the approved participant must lodge Statements of Compliance for the approved rental dwelling with the Department in accordance with Regulation 17;

each approved rental dwelling complies with the landlord, tenancy, building and health and safety laws of the state or territory and local government area in which the dwelling is located;

the approved participant complies with all special conditions; the MRVs must:

o relate to the market value rent for the dwelling on a date within the permitted valuation period, and

o specify the date to which the market value rent relates;

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the approved participant must lodge MRVs for the first, fifth and eighth years of the incentive period which will apply as of the first day of the incentive period, and as of the first day of the fifth and eighth years of the incentive period, within the permitted valuation period; and

the permitted valuation period for the MRV begins 13 weeks before and ends 13 weeks after the day when the dwelling is first available for rent, or for the fifth and eighth years of the incentive period, 13 weeks either side of the anniversary of the first available for rent date.

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Statements of ComplianceThe approved participant must lodge an annual Statement of Compliance with the Department for the approved rental dwelling in relation to each NRAS year during the incentive period for which they wish to receive an incentive. The Statement of Compliance must be lodged by 30 June after the end of the NRAS year, or a later date if approved by the Secretary (note: no extension will be granted beyond 30 September). Statements of Compliance must include:

(a) a statement confirming that at all times during the year, any tenant or tenants of the dwelling were eligible tenants, or details of any way in which this requirement was not met; and

(b) details of the rental charged over the year; and(c) a statement confirming the rent charged during the year was at all times at

least 20% less than the market value rent for the dwelling, or details of any way in which this requirement was not met; and

(d) details of any period during which the dwelling was vacant; and(e) details of the tenancy manager of the rental dwelling; and(f) a statement confirming the approved participant complied at all times during

the year with the landlord, tenancy, building, and health and safety laws of the state or territory and local government area in which the dwelling is located, or details of any way in which this requirement was not met; and

(g) a statement confirming that all special conditions have been complied with or details of any way in which this requirement was not met; and

(h) if applicable, the names of each natural person or legal entity participating in a joint venture at the end of the NRAS year.

Under subregulation 17(3) it is mandatory that the requirements in paragraphs (a) – (h) are included in the Statement of Compliance.  These requirements have been designed so that a delegate who is assessing eligibility for an incentive is able to determine whether the conditions of allocation outlined in Regulation 16 have been met. 

The Department assesses approved participants’ annual Statements of Compliance to determine whether approved participants are eligible to receive incentives at the end of each NRAS year. All conditions of allocation must also be met in order for an incentive to be issued.

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Eligible tenantsPotential NRAS tenants are required to meet gross household income limits in order to be considered eligible tenants. The income limits vary according to the composition of the household. The income limits are indexed annually and the latest income limits can be found at www.dss.gov.au/nras .

The assessment of household income occurs prior to the commencement of the tenancy and at the annual anniversary of the tenancy start date. The assessment is based on the household’s income for the previous 12 months.

In order for a household to become eligible tenants for NRAS purposes, their combined gross income must fall below the limit set for their household composition.

Tenants cease to be eligible tenants if they cease to be tenants of the NRAS dwelling or if their household income exceeds the income limit for their household by 25% or more in two consecutive tenant eligibility years. The existing tenant income limit is also listed at www.dss.gov.au/nras .

All tenancy matters and lease agreements are overseen by legislation as determined by state or territory governments.

The Australian Government does not select or manage NRAS tenancies. You can apply to rent an NRAS property through an NRAS approved participant or their tenancy manager in your State or Territory.

For further information in relation to eligible tenants, an information sheet can be found at www.dss.gov.au/nras .

Market value rent and rent chargedNRAS has two separate rent components: market value rent and rent charged.

The market value rent represents the full market value that is expected to be paid to reside in a dwelling.

Rent charged is the amount of rent that an eligible NRAS tenant pays to reside in that approved rental dwelling.

Market value rent

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The market value rent is determined by written MRVs performed by an independent valuer who is registered and/or licensed (depending on state and territory requirements):

as a valuer in the state or territory in which the dwelling is located; and with a professional organisation that has a code of conduct and adopts the

professional practice standards of the Australian Property Institute; and has no commercial relationship with, or interest in:

o the registered owner or manager of the dwelling; oro a recipient of a Commonwealth, State or Territory government benefit in

relation to the dwelling.

A valuer preparing an MRV must assess the market value rent of an approved rental dwelling on the basis of the condition in which the dwelling is to be rented, including whether the dwelling will be rented fully or partially furnished. The MRV must exclude any additional services such as meals, Foxtel, internet service etc.

Written MRVs apply as of the first day of the incentive period, and as of the first day of the fifth and eighth years of the incentive period.

MRVs must:

specify the market value rent for the dwelling, and the market value rent must relate to a date within the permitted valuation period, and

specify the date to which the market value rent relates.

The permitted valuation period for the MRV begins 13 weeks before and ends 13 weeks after the day when the dwelling is first available for rent, and for the fifth and eighth year of the incentive period, the permitted valuation period is 13 weeks either side of the anniversary of the first available for rent date.

The approved participant must lodge with the Department the written MRV within 13 weeks of the first available for rent date. If the MRV is not lodged within 13 weeks of the first available for rent date the approved participant must apply for an extension to lodge the MRV.

Once an approved participant lodges a MRV with the Department, the Department assesses it and it is this MRV which will be used for ongoing compliance requirements. Lodging multiple MRVs for the same prescribed NRAS year does not have the effect of removing the original MRV, which was assessed as valid by the Department.

For the interim years (which are years two, three, four, six, seven, nine and ten), the market value rent is indexed on the anniversary of the first available for rent date for

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the dwelling and can be increased or decreased by the NRAS market index, which is the CPI value for capital city where the dwelling is located. This is detailed in Regulation 18(1A)(d) of the Regulations. When the next MRV is due, the market value rent is then re based lined in accordance with the new valuation provided.

The NRAS market index is not applicable for any year of the incentive period where a MRV is required for a dwelling.

How do substitutions and market rent valuations interact?

When transferring an allocation to another rental dwelling, the proposed dwelling must not have been lived in as a residence prior to the first day of the incentive period for the original dwelling. It is possible to transfer an allocation to a brand new rental dwelling, but not to a dwelling which was lived in prior to the first day of the incentive period. The delegate may require approved participants to provide evidence that a rental dwelling has not been lived in prior to the date the dwelling it is proposed to replace was lived in, before considering the application to transfer the allocation.

If there is a gap between the date the initial dwelling is withdrawn and the date the replacement dwelling is substituted into the Scheme, approved participants need to be aware that they will not be eligible to receive an incentive for the gap period.

It is important to note that there is no change to the Actual First Available for Rent (AFAR) date, or the first day of the incentive period when an allocation is transferred.

When a dwelling is substituted into the Scheme, a new MRV needs to be submitted. Regardless of the incentive year in which the substitution occurs, this new MRV is used as a baseline to calculate the applicable NRAS rent over forthcoming months and/or years. This new MRV is effective for the replacement dwelling which enters the Scheme, with the market rate index applied on the anniversary of the original incentive period date, until the next scheduled MRV is due.

The next scheduled MRV will be for either the fifth or eighth year of the NRAS incentive period. This means 13 weeks (91 days) either side of the last date of the fourth or seventh year of the NRAS incentive period. The incentive period is that of the original dwelling, i.e. the AFAR date and subsequent fifth and eight year MRVs are due as per the incentive period of the original NRAS dwelling.

How do provisional allocations and market rent valuations interact?

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Regulation 18 outlines how to determine market value rent for an approved rental dwelling. A provisionally allocated dwelling also falls under the definition of approved rental dwelling.

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An approved participant of a provisionally allocated dwelling must obtain MRVs of the dwellings:

(a) when the dwelling is first available for rent (AFAR) under the NRAS; and

(b) at the end of the fourth and seventh years of the incentive period.

With regard to determining the market value rent for each of the years of an incentive period, paragraph 18(1A)(d) states that the market value rent for any other year is the market value rent for the year immediately preceding the relevant year indexed on the first day of the relevant year in accordance with the NRAS market index. ‘First day of the relevant year’ refers to the first day following the end of the 12 month period prior to it. This provision applies for years two, three, four, six, seven, nine and ten.

It follows that:

for year one of the incentive period, the market value rent will be as per the MRV and effective from the AFAR date;

for year two of the incentive period, the market value rent will be the market value rent for year one, with the NRAS market index applied, and effective from the AFAR anniversary date;

for years three and four of the incentive period, the market value rent will be based on market value rent for the preceding year, with NRAS market index applied, and effective from the AFAR anniversary date;

for years five and eight, as per paragraphs 18(1A)(c) and (d), the market value rent will be based on the updated MRVs and effective from the date specified pursuant to paragraph 16(5)(b) (i.e. the beginning of the incentive period for that year);

for years six, seven, nine and ten, the market value rent will be the market value rent for the preceding year, with NRAS market index applied, and effective from the anniversary of the incentive period.

Rent charged Rent charged for an approved rental dwelling under the Scheme must be at least 20% less than market value rent for that approved rental dwelling, as determined in accordance with MRV requirements set out in the Regulations. This is a core tenet of the Scheme.

In other words, rent charged must always remain at or below 80% of market value rent. Charging a higher rate of rent for any period during the NRAS year is considered a failure to satisfy the conditions of allocation and will result in either a proportioned incentive or no payment of the incentive, and may ultimately result in the revocation of the incentive.

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The rent charged may be set at more than 20% below the market value rent if, for example, participating organisations wish to achieve greater improvements in affordability and/or to maintain the tax concessions available to endorsed charities, that require rents to be set below specified levels. State and territory governments may impose further restrictions on the amount of rent that can be charged (e.g. in the case of social housing providers). Market conditions may also compel the participant to charge lower rent in order to ensure tenancy with an eligible tenant so as not to exceed the maximum vacancy limit as stipulated in the Regulations. Any changes to rent charged must be in accordance with state or territory government tenancy laws.

If the MRVs for the fifth or eighth year obtained under subregulation 16(4) of the Regulations shows that the existing rent charged is above 80% of the market value rent on the new MRV, the approved participant must reduce the rent charged either prior to or on the anniversary of the AFAR date in the relevant NRAS year in question to at least 80% of the market value rent on the new MRV or be in breach of subparagraph 7(2)(b)(ii) of the Act.

A condition of allocation is that, in any NRAS year, the rent charged must, at all times during that NRAS year, be at least 20% less than the market value rent for the dwelling. If an approved participant charges rent above what this condition allows the approved participant is required to report this in the Statement of Compliance, and will be subject to the Secretary either issuing a proportioned incentive, a nil incentive or taking action under Regulation 22 to revoke the allocation and recoup incentives.

An approved participant is not able to rectify any rent overcharged by issuing a refund. This would not, fulfil the conditions of allocation under the Regulations. The requirements in subparagraph 7(2)(b)(ii) of the Act and in paragraph 17(3)(b) of the Regulations are concerned with:

a) the rent that is charged; andb) whether the rent charged is 20% less than market rent at all times during the

relevant NRAS year.

For further information in relation to market value rent and rent charged, an information sheet can be found at www.dss.gov.au/nras .

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Provisional allocationsWhere the agreed rental availability date has passed and the reservation of allocation has not been allocated into the Scheme, the reservation of allocation will be provisionally allocated. Provisional allocations start the 10 year incentive period on the agreed rental availability date but will not be eligible to receive an incentive until the provisional allocation has been allocated into the Scheme.

Once the dwelling is made available for rent in the Scheme (and therefore can meet the conditions of allocation), it is eligible to attract an incentive for the balance of the 10 year incentive period, subject to compliance with all other Scheme requirements.

A dwelling that has been provisionally allocated under Regulation 14(2C) cannot be varied. As such, an application to vary a dwellings attributes cannot be accepted by the Department as the Regulations have no provisions to vary conditions of allocation for provisionally allocated dwellings. A dwelling that is provisionally allocated has to be delivered in accordance with all dwelling attributes as agreed to in the letter of offer.

Regulation 18 outlines how to determine market value rent for an approved rental dwelling. A provisionally allocated dwelling also falls under the definition of approved rental dwelling.

An approved participant of a provisionally allocated dwelling must obtain MRVs of the dwellings:

(c) when the dwelling is first available for rent (AFAR) under the NRAS; and

(d) at the end of the fourth and seventh years of the incentive period.

With regard to determining the market value rent for each of the years of the an incentive period, paragraph 18(1A)(d) states that the market value rent for any other year is the market value rent for the year immediately preceding the relevant year indexed on the first day of the relevant year in accordance with the NRAS market index. ‘First day of the relevant year’ refers to the first day following the end of the 12 month period prior to it. This provision applies for years two, three, four, six, seven, nine and ten.

It follows that:

for year one of the incentive period, the market value rent will be as per the MRV and effective from the AFAR date;

for year two of the incentive period, the market value rent will be the market value rent for year one, with the NRAS market index applied, and will be effective from the AFAR anniversary date;

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for years three and four of the incentive period, the market value rent will be based on market value rent for the preceding year, with NRAS market index applied, and effective from the AFAR anniversary date;

for years five and eight, as per paragraphs 18(1A)(c) and (d), the market value rent will be based on the updated MRVs and effective from the date specified pursuant to paragraph 16(5)(b) (i.e. the beginning of the incentive period for that year);

for years six, seven, nine and ten, the market value rent will be the market value rent for the preceding year, with NRAS market index applied, and effective from the anniversary of the AFAR date.

For further information in relation to provisional allocations, an information sheet can be found at www.dss.gov.au/nras .

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VacanciesAn approved rental dwelling may be vacant for up to 13 weeks in one NRAS year, or up to 13 weeks continuously across two NRAS years, without any reduction of the incentive amount. However, it is a condition of allocation that the approved rental dwelling must not be vacant for longer than 26 weeks in an NRAS year or for longer than a continuous period of 26 weeks across two NRAS years. To be eligible to receive an incentive, the approved rental dwelling must meet the conditions of allocation. Vacancy periods in excess of 26 weeks in one NRAS year will receive a nil incentive. Additionally, vacancy periods for longer than a continuous period of 26 weeks over two NRAS years will also result in a nil incentive in the second year in which the vacancy period ends.

Incentives will be proportionately reduced where:

the approved rental dwelling was vacant for more than 13 weeks in an NRAS year but less than 26 weeks, or

the approved rental dwelling was vacant for a continuous period of more than 13 weeks across two NRAS years but less than 26 weeks.

Receiving an incentiveIf all of the conditions of an allocation are satisfied for an NRAS year, the approved participant is entitled to receive the Commonwealth incentive. If the approved participant is not a charitable institution, the approved participant will receive their incentive as a refundable tax offset certificate. If the approved participant is a charitable institution, the approved participant receives their incentive as a cash payment, unless the approved participant elects, using the approved form, to receive their incentive as a refundable tax offset certificate.

An election to receive the incentive as a refundable tax offset certificate must be made in writing to the Secretary before the end of 31 December of that NRAS year.

The approved form to change the way charitable institutions receive their incentive can be found at www.dss.gov.au/nras .

Conclusion of the 10 year incentive periodUpon conclusion of the 10 year incentive period, the dwelling will no longer be in the Scheme. The dwelling will not be required to comply with the conditions of allocation and will be ineligible to receive further incentives.

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Administrative ActionWithdrawing a reservation of allocationThe Secretary may withdraw a reservation of allocation if any of the following occurs:

a) the dwelling is not available for rent by the agreed rental availability date for the dwelling;

b) the Secretary is satisfied that the dwelling will not be available for rent by the agreed rental availability date for the dwelling;

c) the applicant fails to comply with any condition of the reservation;d) any advertisement relating to the reservation:

i) is likely to mislead; orii) misrepresents the Scheme; oriii) exaggerates or overstates the tax or other financial advantages resulting

from involvement in the Scheme; oriv) presents the government as underwriting or endorsing the applicant, the

dwelling or a proposed investment; orv) presents the government as dealing directly with investors; orvi) presents the government as being in partnership with any applicant,

person or entity publishing details in association with the Scheme;e) the application for the allocation:

i) includes information that is false or misleading; orii) fails to include information that the applicant knew, or ought reasonably to

have known, was relevant;f) an application made in relation to the reservation of allocation:

i) includes false and misleading information; orii) fails to include information that the applicant knew, or ought reasonably to

have known, was relevant.

The approved form to withdraw a reservation of allocation can be found at www.dss.gov.au/nras .

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Transfer of allocation to another rental dwellingThe approved participant may request the Secretary to transfer the allocation to a different rental dwelling using the approved form. The Secretary may transfer the dwelling as requested – the decision is not automatic and will be made in the best interest of the Scheme. The Secretary must not transfer an allocation that is a reserved allocation or that has been provisionally allocated.

The transfer of an allocation is often referred to as a “substitution”. When considering substitutions, it is important to bear in mind that a substitution is not about two dwellings. It is about one allocation and therefore one incentive period of ten years.

When a dwelling is substituted into the Scheme, a new MRV needs to be submitted. Regardless of the incentive year in which the substitution occurs, this new MRV is used as a baseline to calculate the applicable NRAS rent over forthcoming months and/or years. This new MRV is effective for the replacement dwelling which enters the Scheme, with the market rate index applied on the anniversary of the original incentive period date, until the next scheduled MRV is due.

The next scheduled MRV will be for either the fifth or eighth year of the NRAS incentive period. This means 13 weeks (91 days) either side of the last date of the fourth or seventh years of the NRAS incentive period. The incentive period is that of the original dwelling, i.e. the AFAR date and subsequent fifth and eighth year MRVs are due as per the incentive period of the original NRAS dwelling.

For further information in relation to transferring to another rental dwelling, an information sheet can be found at www.dss.gov.au/nras .

The approved form to transfer an allocation to another rental dwelling can be found at www.dss.gov.au/nras .

How do substitutions and market rent valuations interact?

When transferring an allocation to another rental dwelling, the proposed dwelling must not have been lived in as a residence prior to the first day of the incentive period for the original dwelling. It is possible to transfer an allocation to a brand new rental dwelling, but not to a dwelling which was lived in prior to the first day of the incentive period. The delegate may require approved participants to provide evidence that a rental dwelling has not been lived in prior to the date the dwelling it is proposed to replace was lived in, before considering the application to transfer the allocation.

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If there is a gap between the date the initial dwelling is withdrawn and the date the replacement dwelling is substituted into the Scheme, approved participants need to be aware that they will not be eligible to receive an incentive for the gap period.

It is important to note that there is no change to the Actual First Available for Rent (AFAR) date, or the first day of the incentive period when an allocation is transferred.

When a dwelling is substituted into the Scheme, a new MRV needs to be submitted. Regardless of the incentive year in which the substitution occurs, this new MRV is used as a baseline to calculate the applicable NRAS rent over forthcoming months and/or years. This new MRV is effective for the replacement dwelling which enters the Scheme, with the market rate index applied on the anniversary of the original incentive period date, until the next scheduled MRV is due.

The next scheduled MRV will be for either the fifth or eighth year of the NRAS incentive period. This means 13 weeks (91 days) either side of the last date of the fourth or seventh year of the NRAS incentive period. The incentive period is that of the original dwelling, i.e. the AFAR date and subsequent fifth and eight year MRVs are due as per the incentive period of the original NRAS dwelling.

Transfer of allocation to another approved participantThe approved participant may request to the Secretary to transfer the allocation to another approved participant using the approved form. The Secretary may transfer the dwelling as requested – the decision is not automatic and will be made in the best interest of the Scheme. The Secretary must not transfer an allocation that has been provisionally allocated.

Approved participants should be aware that there are no provisions enabling an incentive to be split between the previous approved participant and the current approved participant when a Regulation 21 transfer has occurred during an NRAS year. The approved participant who holds the allocation at the point when the incentive is issued will receive the incentive. Any arrangements regarding the division of the incentive between the approved participant and the previous approved participant would be a matter for those two entities to determine privately (for example, a contractual agreement for the new approved participant to pay the previous approved participant the proportionate value of the incentive up until the point in the NRAS year when the transfer occurred).

For further information in relation to transferring allocations to another approved participant, an information sheet can be found at www.dss.gov.au/nras .

The approved form to transfer an allocation to another approved participant can be found at www.dss.gov.au/nras .

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Revoking the allocation (other than provisional allocation)A revocation may only occur after the allocation has been delivered into the Scheme.

The Secretary may revoke an allocation (other than a provisional allocation) if any of the conditions of the allocation have not been met, or the application for the allocation includes false or misleading information or fails to include information that the applicant knew, or reasonably ought to have known, was relevant.

If an allocation is revoked, no incentive is payable for the NRAS year in which the revocation occurred, or in any subsequent NRAS year.

The approved form to revoke an allocation can be found at www.dss.gov.au/nras .

Revoking a provisional allocationThe Secretary may revoke a provisional allocation if:

a) any conditions of the allocation are not complied with; orb) any advertisement relating to the allocation:

(i) is likely to mislead; or(ii) misrepresents the Scheme; or(iii)exaggerates or overstates the tax or other financial advantages

resulting from involvement in the Scheme; or(iv)presents the Commonwealth as underwriting or endorsing the approved

participant or the dwelling; or(v) presents the Commonwealth as dealing directly with investors; or(vi)presents the Commonwealth as being in partnership with the approved

participant or any person or entity publishing details in association with the Scheme; or

c) the application for the allocation:(i) includes information that is false or misleading; or(ii) fails to include information that the applicant knew, or ought reasonably

to have known, was relevant; ord) an application made under Division 2 to vary the conditions of the reservation

of the allocation:(i) includes information that is false or misleading; or(ii) fails to include information that the applicant knew, or ought reasonably

to have known, was relevant.

The approved form to revoke an allocation can be found at www.dss.gov.au/nras .

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Internal review of NRAS decisionsThe NRAS Internal Review Guidelines have been developed to assist approved participants who are seeking an internal review of a decision made by the Secretary or Delegate. A copy of the guidelines can be found at www.dss.gov.au/nras .

The Regulations stipulate two types of decisions for which a person is entitled to request an internal review. These decisions are set out below. The Department will conduct an internal review of these types of decisions when requested. The Regulations do not require the Department to provide an internal review of other decisions.

A decision not to make an offer of allocation or a decision not to make an offer of allocation that relates to a particular dwelling.

Subregulation 13(1) authorises the Secretary to determine whether or not to make an offer of allocation, or an offer of allocation that relates to a particular dwelling, to an applicant.

Under subregulation 13(5), if the Secretary does not make an offer under subregulation 13(1) to an applicant, the applicant may apply in writing to request the reasons for the Secretary’s decisions.

Subregulation 13(7) provides that if the Secretary does not respond within 28 days after receiving the request for reasons or the applicant does not agree with the Secretary’s reasons, the applicant can apply for an internal review of the Secretary’s original decision.

An applicant cannot apply for an internal review of the original decision unless the applicant has first made an application in writing for the reasons for the original decision under subregulation 13(5).

A determination of reductions made from an incentive amount.

Subregulation 28(1) authorises the Secretary to determine the reductions that are to be made from the amount of an incentive for each allocation under certain conditions set out in subregulation 28(2). If this occurs, subregulation 28(3) provides that the approved participant may request a review by the Secretary of the amount of the incentive, in accordance with guidelines issued by the Department.

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