Róisín Shortall
Question:139. Deputy Róisín Shortall asked the Minister for Finance the financial or other incentives that exist for the construction and delivery of commercial development. [36317/18]
View answerFriday, 7 September 2018
Questions (139)
Written answers
The payment of financial incentives for construction purposes is not within the remit of my Department. However, there are a number of tax based measures which are relevant to the Deputy's question.
Industrial Buildings Allowances – General Scheme
Industrial Buildings allowances are available for capital expenditure incurred on the construction or refurbishment of various types of industrial buildings in use for the purposes of a trade, such as mills or factories, hotels, laboratories in use for the analysis of minerals and dock undertakings. Expenditure incurred is written off at a rate of 4% per annum over 25 years. In the case of other trades such as market gardening and the intensive production of cattle, sheep, pigs, poultry or eggs, the rate of write-off is accelerated (10% per annum over 10 years). The qualifying period for incurring capital expenditure which would qualify for an accelerated allowance has terminated in relation to the trade of hotel-keeping and the operation and management of a registered nursing home amongst others. However, expenditure incurred may still be written-off at a rate of 10% over 10 years or 15% over years 1-6 and 10% in year 7 in some cases depending on when the asset was first brought into use.
Industrial Buildings Allowances – Living City Initiative
The Living City Initiative is a scheme of property tax incentives aimed at the regeneration of certain areas (known as “special regeneration areas”) in the historic centres of Cork, Dublin, Galway, Kilkenny, Limerick and Waterford. The scheme was launched in May 2015 and provides for tax relief for qualifying expenditure incurred on the refurbishment and conversion of both residential and commercial buildings. In relation to commercial buildings, expenditure is written off at rate of 15% per annum over 6 years and 10% in year 7. Relief is only available for refurbishment or conversion work (not for “new build”) that is carried out during the qualifying period which runs from 5 May 2015 to 4 May 2020 for the commercial element. To conform to EU State Aid de minimis guidelines, a cap is imposed on the amount of capital expenditure that can qualify for relief at the accelerated rate provided for under the scheme.
Property developers or connected persons are precluded from obtaining relief under the commercial element of the scheme where either the property developer or the connected person incurred the capital expenditure on the refurbishment or conversion of the premises or it was incurred by some other person connected with the property developer. The restriction on the offset of unused current year capital allowances against other income of €31,750 applies to individual passive investors (investors who are not actively engaged in the business). Additionally, in the case of passive investors, any unused capital allowances under this scheme which are carried forward beyond the tax life (the period within which the allowances can be transferred to a subsequent owner) of the building to which they relate, are immediately lost. The property relief surcharge may apply to certain claimants under the commercial element of the scheme and relief is not available for any part of expenditure consisting of grants from the State or other State bodies.
Industrial Buildings Allowances – Aviation Services Facilities
Finance Act 2013 introduced a scheme of accelerated capital allowances for the construction and refurbishment of certain specialist buildings and structures for use in the maintenance, repair or overhaul of commercial aircraft. The relief applies to buildings or structures in use for the purposes of such operations at all airports within the State. Relief for capital expenditure incurred is given via industrial buildings allowances at a rate of 15% per annum over 6 years and 10% in year 7. To qualify for relief under the scheme capital expenditure must be incurred during the qualifying period which runs from 13 October 2015 to 12 October 2020. To conform to EU State Aid de minimis guidelines, a cap is imposed on the amount of capital expenditure that can qualify for relief at the accelerated rate provided for under the scheme. Additionally, capital expenditure which is not specified capital expenditure can qualify for capital allowances at the standard rate of 4% per annum over 25 years providing it is incurred on or after 13 October 2015.
Capital expenditure will not be regarded as specified capital expenditure for the purposes of claiming accelerated allowances under the aviation services facilities scheme where the relevant interest is held by a property developer or a person connected with a property developer and the capital expenditure on the construction or refurbishment is incurred by either of those persons or by some other person connected with the property developer. The restriction on the offset of unused current year capital allowances against other income of €31,750 applies to individual passive investors (investors who are not actively engaged in the business). Additionally, in the case of passive investors, any unused capital allowances under this scheme which are carried forward beyond the tax life (the period within which the allowances can be transferred to a subsequent owner) of the building to which they relate, are immediately lost. The property relief surcharge may apply to certain claimants under the scheme and relief is not available for any part of expenditure consisting of grants from the State or other State bodies. However, where such grant assistance has been received the capital expenditure may still qualify for capital allowances at the standard rate of 4% per annum net of any grants.
Industrial Buildings Allowances – Area Based Property Incentive Schemes
These schemes are now terminated i.e the periods during which qualifying expenditure could be incurred to avail of industrial buildings allowances under the schemes have expired. However, allowances may continue to be written off in some cases.
Question No. 140 answered with Question No. 132.