Dáil Éireann Debate, Tuesday - 15 April 2014
165. Deputy Caoimhghín Ó Caoláin asked the Minister for Finance the total amount given in tax relief to investors in the building of private hospitals (details supplied); if he will provide a breakdown of this scheme based on individual-company involved; the amount contributed and tax relief received; the hospital site involved; and if he will make a statement on the matter. [17320/14]
View answerA scheme of capital allowances was available for qualifying capital expenditure incurred on the construction or refurbishment of private hospitals from 2002 onwards. The phasing out of the relief was announced in Budget 2009, not just for private hospitals but also in respect of other health related facilities such as registered nursing homes, convalescent homes and mental health centres. Transitional arrangements were provided, at the time, for projects which were already in the pipeline. The final date for incurring qualifying expenditure on private hospitals was 12 December 2013. Under the scheme, qualifying expenditure was allowed to be written-off over 7 years (15% pa. for the first 6 years with the remaining 10% in year 7). The relief was not available to companies, the trustees of a trust, property developers connected with the project or anyone engaged in the management of the hospital itself.
There are a number of statutory provisions, introduced in recent years, which can also potentially affect the rate at which these allowances can be used and, in some cases, terminate the carry-forward of allowances altogether. These are
- The High Earners Restriction, which was introduced to ensure that, in the case of certain individuals, a minimum effective rate of income tax of 30% is paid annually. This is achieved by restricting the rate at which certain reliefs, including property incentives, can be used to shield income. While the reliefs themselves are not lost, their use is spread out potentially over a much longer time period.
- An upper limit on the annual use of excess capital allowances to shield other income of taxpayers. This provision applies primarily to passive investors in such projects.
- An additional charge to Universal Social Charge (USC) for certain higher income individuals on their use of these property reliefs.
From 2015, it will not be possible for passive investors to carry-forward unused capital allowances beyond a building's tax life. Where the tax life has already ended, unused allowances will be lost on 1 January 2015. The Revenue Commissioners have provided me with the following information regarding the amount invested in the construction of private hospitals in each of the years 2004 to 2012, the latest year for which information is available, as well as the potential Exchequer cost of income tax forgone:
|
Year |
Amount Invested |
|
€m |
|
|
2004 |
4.5 |
|
2005 |
7.7 |
|
2006 |
25.2 |
|
2007 |
29.3 |
|
2008 |
30.1 |
|
2009 |
30.4 |
|
2010 |
40.8 |
|
2011 |
35.0 |
|
2012* |
29.1 |
|
Total |
232.1 |
*Provisional
Due to the existence of the restrictions which I have already described as well as the fact that investors may, due to the availability of other deductions or reliefs, not have obtained full relief in all years, it is not possible to say with certainty what these reliefs have cost. However, the maximum cost to the Exchequer of this relief, based on a total investment of over €232m., is estimated at €95.6m. This estimate assumes tax forgone at the higher rate of income tax applying in the relevant years. It should be noted that the cost to the Exchequer does not arise in the year of the expenditure but rather is spread out over the 7 year writing-down period, provided there is sufficient income in those years to absorb the allowances.
The other detailed information which the Deputy has sought in relation to the individuals/companies involved in specific hospital projects is not available. The annual tax returns, which are received by the Revenue Commissioners and which form the basis of the information available in this area, do not require specific projects to be identified.
