The National Rental Affordability Scheme commenced by the enactment of the National Rental Affordability Scheme Act 2008 (Cth), the National Rental Affordability Regulations 2008 (Cth) and newly inserted Division 380 of the Income Tax Assessment Act 1997 (Cth). The Scheme’s principal aim is to stimulate the construction of 50,000 new dwellings within Australia, which dwellings are to be let to tenants for a maximum of 80% of the then current market rent, where those tenants meet means tested eligibility criteria.

Applicants have been invited to submit tenders to the Department of Families, Housing, Community Services and Indigenous Affairs, the Commonwealth Department responsible for overseeing the Scheme, for a share of 50,000 individual "allocations", each of which are linked to an "approved rental dwelling". These allocations are to be released across three rounds. Rounds one and two are closed, with the final round remaining open to 31 August 2010. The holder of an allocation ("the approved participant") will be entitled to an annual "incentive" in the amounts displayed at Table 1 (to increase in line with Consumer Price Index).

Table 1: Incentive value for 1 May 2009 - 30 April 2010
(see http://www.fahcsia.gov.au/sa/housing/progserv/affordability/nras/Pages/default.aspx (sourced 04 February 2010))

Under Division 380 of the ITAA 97 the approved participant may be one of the following:

• Individual;
• Partnership;
• Trust; or
• a participant to a "Non-entity joint venture".

Subject to the individual tax circumstances of the recipient, the incentive may take the form of either a refundable tax offset certificate or a payment. Entitlement to an incentive will be determined by the proportion of actual rent shared by an investor, which in turn is consequent upon the structuring of the approved participant. Ongoing entitlement to the incentive is conditional upon satisfaction of ongoing reporting and compliance requirements. Individual State Government requirements vary across Australia.