With the Deputy's permission, I will take Questions Nos. 257 and 258 together.
I am informed by the Revenue Commissioners that individuals may claim tax relief in respect of the cost of ‘service charges' (i.e. charges in respect of the provision of water for domestic purposes, domestic refuse collection or disposal or domestic sewage facilities) the details of which are contained in Revenue's Explanatory leaflet and claim form IT 27 Tax Relief for Service Charges which is available on Revenue's website at www.revenue.ie.
Where the management fee payable by residents to a management company set up to manage an apartment or other residential complex identifies an element in respect of such ‘service charges', that element may, subject to the conditions outlined in Revenue's Explanatory Leaflet, qualify for tax relief up to the limits set out in that Leaflet.
As regards companies (including management companies), I am further informed by the Revenue Commissioners that, whilst there is no specific tax relief in respect of service charges and other expenditure, a company within the charge to corporation tax may claim a deduction, in computing its profits, in respect of expenditure wholly and exclusively incurred for the purposes of its trade. This is subject to any express prohibition in the legislation in respect of certain types of expenditure (e.g. business entertainment expenses which are prohibited by virtue of the provisions of section 840 TCA 1997).
In the case of a property management company, it is likely that expenditure on waste management services would meet the wholly and exclusively criteria and would be deductible in computing the profits of the company for tax purposes. However, to the extent that a property management company recovers any costs directly from the tenants in question in relation to service charges, such amounts should be ‘added back' in the preparation of the company's tax computation/return.
As the cost of all the items laid out by a company for its business are not separately captured on the tax return form, the value in tax terms of deductions claimed by management companies in respect of service charges is not available.