Dáil Éireann Debate, Thursday - 21 March 2024
185. Deputy Richard Bruton asked the Minister for Finance if he is aware that “community gain” allocations under the process for developing renewal energy projects, is subject to income tax; and if he would consider altering its tax status or allowing a tax free amount, in order that it could become of greater value to the communities affected by these essential infrastructures for a net-zero world. [13548/24]
View answerI understand that the Deputy is referring to “Near Neighbour Payments” made from Community Benefit Funds established by renewable energy projects supported under the Renewable Electricity Support Scheme, which are to be made on an ex-gratia basis.
Where a payment is made to an individual, in circumstances where renewable energy activities are being undertaken on neighbouring land, I am advised by Revenue that the tax treatment of same will depend on the particular facts and circumstances of the case. Where the payment is in the nature of a once off ex-gratia payment, a charge to income tax will not generally arise. However, the receipt of such a payment may be within the scope of Capital Acquisitions Tax (CAT). CAT is a tax charged on a person who receives a gift or an inheritance. The Capital Acquisitions Tax Consolidation Act 2003 provides for a number of reliefs and exemptions from CAT. For example, under the small gifts exemption, a person may receive gifts up to the value of €3,000 from any person in any calendar year without having to pay CAT.
If the amount of the gift (i.e., the payment made under the scheme to an individual) is in excess of €3,000, the recipient’s liability to CAT will depend on the amount received and the applicable CAT Group threshold.
The relationship between the person providing a gift or inheritance and the beneficiary determines the maximum amount, known as the “Group threshold”, below which CAT does not arise. Any prior gift or inheritance received by a beneficiary since 5 December 1991 from within the same Group threshold is aggregated for the purposes of determining whether tax is payable on a benefit. Information on the CAT Group thresholds can be found on the Revenue website at www.revenue.ie/en/gains-gifts-and-inheritance/cat-thresholds-rates-and-aggregation-rules/cat-groups-thresholds.aspx.
In the absence of full information regarding the payments outlined by the Deputy, and knowledge of the facts and circumstances of persons receiving such payments, it is not possible for Revenue to determine the correct tax treatment of these payments. However, persons who are to receive such payments can contact Revenue directly via MyAccount and provide full details should they wish to have certainty in this matter. Revenue has also advised that it be willing engage directly with Department of the Environment, Climate & Communications who administer the scheme.
