Dáil Éireann Debate, Tuesday - 11 May 2021
229. Deputy Michael Moynihan asked the Minister for Finance if the eligibility criteria for the accelerated capital allowance products will be amended to facilitate electric plant and site machinery such as electric telehandlers; if he will consider the addition of a new product category to encourage the use of alternative electric plant equipment in Ireland; and if he will make a statement on the matter. [23871/21]
View answerFinance Act 2008 introduced the Accelerated Capital Allowance (ACA) scheme for Energy Efficient Equipment (EEE). The purpose of the scheme is to improve the overall energy efficiency of Irish businesses, and thereby to aid Ireland in meeting our national targets and binding and non-binding EU targets on energy savings and the reduction of carbon emissions
The ACA scheme is based on the existing approach to the treatment of capital allowances for plant and machinery, whereby wear and tear can be taken into account as a deduction for tax purposes. In general, such capital allowances are claimed at a rate of 12.5% annually, over eight years. The ACA scheme allows taxpayers to deduct the full cost of expenditure on eligible equipment from taxable profits in the year of purchase. The benefit to the taxpayers is thus from a cash flow perspective, incentivising businesses to choose a qualifying energy efficient option when purchasing equipment.
To qualify for the scheme, equipment must fall within one of the 10 classes of technology specified in Schedule 4A of the Taxes Consolidation Act 1997. In order for equipment in these classes of technology to qualify for the scheme it must also meet detailed energy efficiency criteria as set by the Sustainable Energy Authority of Ireland (SEAI). Products which meet these criteria are listed on the SEAI’s Triple E Register. A statutory instrument by order of the Minister for Environment, Climate and Communications, with the approval of the Minister for Finance, sets the legal basis for the detailed energy efficiency qualifying criteria. A statutory instrument is also required to update such criteria.
Last year my officials, in conjunction with officials in the Department of Environment, Climate and Communications (DECC), the SEAI and the Revenue Commissioners, completed a Tax Expenditure Review of the scheme in accordance with the Department of Finance guidelines for evaluating tax expenditures. This review recommended the classes of technology included in Schedule 4A and the existing energy efficiency qualifying criteria be reviewed with a view to updating the criteria to reflect technological advances in energy efficiency.
The SEAI is the body responsible for setting the eligibility criteria and maintaining the register of eligible products for which the incentive can be claimed. The SEAI and DECC are currently undertaking a technical review of the classes of technology which currently qualify for the scheme and the detailed energy efficiency criteria to ensure the scheme reflects best in class energy efficiency standards. Should this review recommend amending the detailed energy efficiency criteria, this would fall within the remit of the SEAI under the aegis of DECC. If this review recommends amending Schedule 4A to include a new class of technology, officials in my Department will take this into consideration in advance of Finance Bill 2021.
