Dan Neville
Question:174 Mr. Neville asked the Minister for Finance if he will introduce in the budget 120% free depreciation for on-farm investments. [18834/02]
Written Answers. - Tax Reliefs.
Persons chargeable for tax on their farming profits may claim a farm buildings allowance in respect of 100% of capital expenditure incurred on the construction of farm buildings, other than buildings used as a dwelling, and certain other works, such as fences, roadways, holding yards, drains, land reclamation and other works such as walls, water and electrical installation and sewerage. The cost is written off at the rate of 15% of the cost in each of the first six years with the remaining 10% in year seven.
Farmers may also avail of a special scheme of capital allowances for farm pollution control in respect of 100% of qualifying capital expenditure incurred on certain structures for the control of farmyard pollution. This scheme, which was introduced in the Finance Act, 1997, originally applied for three years from 6 April 1997 to 5 April 2000. It provided for a special year one allowance limited to the lesser of 50% of expenditure incurred or €12,700. The rest of the expenditure could be written down over seven years giving a total writing down period of eight years. The limit was increased to €19,050 with effect from 6 April 1998. The Finance Act, 2000, made a number of changes to the scheme. Firstly, it extended the scheme for a further three years to 5 April 2003. Secondly, for expenditure incurred on or after 6 April 2000, it reduced the writing down period from eight to seven years. Thirdly, it increased the limit to the lesser of 50% of the expenditure or €31,750. Finally, it converted the year one allowance into a floating allowance to be taken in whole or in part at any time over the writing down period. The deadline for incurring qualifying expenditure was further extended until 31 December 2003 in the Finance Act, 2001.
Farmers can, of course, also avail of the general five year write off period, i.e. 20% per annum, for capital allowances for plant and machinery which was introduced in the 2001 budget.
There are no plans to increase the level of relief available to farmers in respect of on farm investment to 120% or to amend the writing down arrangements in respect of such reliefs so as to provide for free depreciation. The reliefs currently available to the farming sector are very favourable when compared to the reliefs available generally to non-farm sectors. Farmers can, for example, avail of a seven year writing off period in respect of expenditure incurred on farm buildings while the writing down period for expenditure incurred on the construction or refurbishment of industrial buildings generally is 25 years.