Real NRAS Numbers

My Croydon property was my fault, it wasn't a great buy because I didn't get the proper advice and @euro73 really got me out of the **** with that one, it could have been much much worse. But its in a great area so I'll keep it.

The 2 Orange properties, I expected better. But even at 9% after tax return, its acceptable. Lets say they add a modest 2% annual growth, over 10 years it will be a decent return. Now if my private tax ruling gets up it will improve again!

 

@euro73, what do you say about this ? R u doing yoour tax return as suggested by LibGS Accountant or r u claiming all 100% expense as deductible ? Happy to receive PM if you are not comfortable to share this publicly.

 

@euro73,

May be you have missed my above post which i posted 2 years back. But i think you have moral responsibility to respond to that since you have promoted NRAS on this forum. I still think its great product and i do not fault you for promoting that. But i think you should respond to points raised by @Terry_w, @LibGS and myself about apportionment of interest expenditure.

I am sure you do not want to be seen as someone who cherrypicks facts to prove his point. I have observed that you always show your point with numbers. However, in this case, it looks like you have either intentionally or unintentionally, fudged your numbers by appx 20% or so.

@Westminster,
What you are doing for aportionment of interest for NRAS ?

 

Bloody autocorrect. I must have replied on my phone when i wrote this.
it should be:
You can't claim all the interest on a loan used to buy a NRAS property

 

I'm sorry I don't know the exact answer as my accountant did the apportion.

 

Thanks @Westminster . I have always apportioned interest based on information on ATO website, its right thing to do unless @euro73 can enlighten us.

 

see my thread
Tax Tip 70: NRAS Property and Deductibility of Interest and other expenses Tax Tax 70: NRAS Property and Deductibility of Interest and other expenses

 

I'm going to leave this to the taxation experts to debate. When I wrote about NRAS there was no public ruling nor private ruling yet. That came much later- long after implemtation of the NRAS, when someone ( from these forums actually) went and waved a red rag at a bull and obtained a private ruling , and that turned up the NANE loophole. and it became a public ruling much later on

What I will say is this. I was advised more than once by the tax man that this was one of those mistakes that was never intended. The choice of NANE as a vehicle to deliver the state component was not intended to create an apportioning issue. It only became a "thing" when bright spark sought a private ruling. I am audited every year because of the size of my claim/number of NRAS credits - in fact 5 years running I have been audited. Not once has the question been asked of me. I have asked the tax man about it each year though.... and they have NEVER applied the apportioning - in fact more often than not they don't have any understanding of NRAS, RTO's or NANE whatsoever . Take that as you will...its certainly not tax advice. I'm just relaying my experiences.

 

Thanks for clarification @euro73 . Appreciate your feedback.

 

NRAS was always going to be NANE and really didnt even need a ruling. Its was people who didnt know better. The ATO's education arm likely issued the ruling for public awareness but it didnt need a decision or ruling as such. I have had several clients checked (two this week !!) to test the apportionment prior to getting their refund. Yes the large refunds does tend to spit the return out for review. Usually a quick call from the ATO who match the Item 13 certificates which also SHOULD be described eg 1-XART432-106 in the relevant field as this cuts down on delays cross matching to Centrelink data. They always ask about apportioning adjustments to deductions. We use a method that shows what the adjustment is to reduce the deductions and point them to that. Happy days. Quick n easy. Clients get their refund asap.

We also find we have to remind clients every year about why we do this and how. Telling a client they lost $6500 of deductions to get a state incentive of $3700 raises eyebrows but when they run through the Commonwealth tax free offset on top they seem to remember it all works out. Most also want to claim the provider fees which we point out arent deductible either (as they relate to claiming the incentive)

The basis is quite straight forward but many tax advisers have no idea. Wait until the new low income housing CGT scheme starts up - 60% CGT discount and NRAS clients try to incorrectly claim it

 

? What does Centrelink have to do with NRAS?

 

Dept of Human Services includes Centrelink as one of its agencies. DHS manage NRAS and co-ordinate with NRAS managers.

 

That's interesting.....I worked at Centrelink for 13 years earlier in my life, and some say I also have some experience with NRAS , so I was genuinely surprised to learn that the Department of HUMAN services had taken over the Department of SOCIAL services ....

Was even more surprised to learn that Centerlink co-ordinate with NRAS managers. How could I have missed this, I wondered....?

It really got me thinking.... so I visited Uncle Google and found this... Australian Government Department of Human Services and searched "NRAS" .... and found this







Found it here easily enough though

About the National Rental Affordability Scheme (NRAS) | Department of Social Services, Australian Government

It all took the best part of 10 seconds or so....