Given the strong historical involvement of the nonprofit sector in affordable housing, from its inception the Scheme anticipated the participation of the sector. Enactments to the Extension of Charitable Purposes Act 2004 (Cth) were introduced to ensure the charitable endorsements of NFPs would not be effected by participation in rounds 1 and 2 of the Scheme. Subsequently the Treasurer has expressed his view that, subject to the circumstances outlined in the Commissioner of Taxation v Word Investments Ltd (2008) 236 CLR 204, NFPs participating in the Scheme will retain their charitable endorsements under the tax laws where they direct surplus generated from their participation in the Scheme towards their charitable purpose.
There are several forms that NFP participation in the Scheme may take, including property and tenancy management, joint equity involvement, syndication or outright ownership. The novel aspect for many NFP providers entering the Scheme may be the level of direct engagement with private and institutional investors and consequently, the tension between market imperatives and tenant interests.
Subject to the property structuring model adopted, an NFP may play any of the following roles (any of which the NFP may elect to subcontract):
- Application to Federal Government for Incentive (as approved participant);
- Tenancy and property management; and
- Compliance reporting to Federal (and State) Government.