I move amendment No. 52:
In page 55, before section 26, to insert the following new section:
26.--(1) Part 9 of the Principal Act is amended
(a) in section 268
(i) in subsection (3A)
(I) by substituting "Subject to subsections (3B) to (3E), in this section" for "In this section", and
(II) by substituting the following for subparagraph (i) of paragraph (d):
"(i) is leased to a person and, as the case may be, the spouse of that person
(I) who is or, as the case may be, are not connected (within the meaning of section 10) with the lessor,
(II) who has or have been selected as the occupant or occupants of the house by the registered nursing home, and
(III) either the person or the spouse of that person has been certified by a person, who is registered in the General Register of Medical Practitioners, as requiring such accommodation by reason of old age or infirmity,or",
(ii) by substituting the following for subsection (3B):
"(3B) (a) For the purposes of this section ‘house’, in relation to a qualifying residential unit, has the same meaning as in section 372AK.
(b) For the purposes only of the making of allowances and charges under this Part but subject to subsection (3C) and sections 270 and 316 (as amended by the Finance Act 2007), as respects capital expenditure incurred in the period commencing on 25 March 2002 and ending on 30 April 2010, a house in use as a qualifying residential unit shall be deemed to be a building in use for the purposes of a trade referred to in subsection (1)(g).”,
and
(iii) by inserting the following after subsection (3C):
"(3D) Where the relevant interest in relation to capital expenditure incurred on the construction or refurbishment of all qualifying residential units in a development is held by a company (within the meaning of section 4(1)) then subsection (3A) shall apply as if subparagraphs (iv) and (v) of paragraph (c) of that subsection were deleted.
(3E) A house shall not be a qualifying residential unit for the purposes of this section unless
(a) the following information has been provided to the Health Service Executive, by the person who is entitled to the relevant interest in relation to the capital expenditure incurred on the construction or refurbishment of the house, for onward transmission to the Minister for Health and Children and the Minister for Finance:
(i) the amount of the capital expenditure actually incurred on the construction or refurbishment of the house;
(ii) the number and nature of the investors that are investing in the house;
(iii) the amount to be invested by each investor; and
(iv) the nature of the structures which are being put in place to facilitate the investment in the house, together with such other information as may be specified by the Minister for Finance, in consultation with the Minister for Health and Children, as being of assistance in evaluating the costs, including but not limited to exchequer costs, and the benefits arising from the operation of tax relief under this Part for qualifying residential units,
(b) the Health Service Executive, in consultation with the Minister for Health and Children, gives a certificate in writing after the house is first leased or, where capital expenditure is incurred on the refurbishment of a house,first leased subsequent to the incurring of that expenditure stating that it is satisfied that
(i) the house and the development in which it is comprised complies with all the conditions mentioned in paragraphs (a), (b), (c) and (d) of subsection (3A), and
(ii) the information required in accordance with paragraph (a) of this subsection has been provided,
and
(c) an annual report in writing is provided, by the person who is entitled to the relevant interest in relation to the capital expenditure incurred on the construction or refurbishment of the house, to the Health Service Executive, for onward transmission to the Minister for Health and Children and the Minister for Finance, by the end of each year in the 20 year period referred to in section 272(4)(fa) (inserted by the Finance Act 2007), which—
(i) confirms whether the house and the development in which it is comprised continue to comply with all the conditions mentioned in paragraphs (a), (b), (c) and (d) of subsection (3A), and
(ii) provides details of the level of occupation of the house for the previous year including the age of and, as the case may be, the nature of the infirmity of the occupants.",
(b) in section 270 by inserting the following subsection after subsection (7):
"(8) Where capital expenditure is incurred on or after 1 May 2007 under a contract or agreement which is entered into on or after that date for the construction, refurbishment or development of a qualifying residential unit as is referred to in subsection (4)(i), then--
(a) subsection (4) shall apply as if the reference to ‘31 July 2008’were a reference to ‘30 April 2010’,
(b) subsection (5) shall apply as if—
(i) the reference to ‘subject to subsections (6) and (7)' were a reference to ‘subject to subsections (6) to (8)', and
(ii) the following paragraphs were substituted for paragraphs (a) and (b):
‘(a) in the case of expenditure incurred by a company(within the meaning of section 4(1)) in the period from 1 May 2007 to 30 April 2010, to 75 per cent, and
(b) in the case of expenditure incurred by a person other than a company (within the meaning of section 4(1)) in the period from 1 May 2007 to 30 April 2010, to 50 per cent,’,”,
(c) in section 272(4)—
(i) in paragraph (f), by inserting “subject to paragraph (fa),” before “in relation to”, and
(ii) by inserting the following paragraph after paragraph (f):
"(fa) where subsection (8) of section 270 applies in relation to a qualifying residential unit as is referred to in subsection (4)(i) of that section--
(i) 20 years beginning with the time when the unit was first used, or
(ii) where capital expenditure on the refurbishment of the unit is incurred, 20 years beginning with the time when the unit was first used subsequent to the incurring of that expenditure,",
(d) in section 274(1)(b)--
(i) in subparagraph (ii a), by inserting “subject to subparagraph (iib),” before “in relation to”, and
(ii) by inserting the following subparagraph after subparagraph (ii a):
"(iib) where subsection (8) of section 270 applies in relation to a qualifying residential unit as is referred to in subsection (4)(i) of that section--
(i) 20 years after the unit was first used, or
(ii) where capital expenditure on the refurbishment of the unit is incurred, 20 years after the unit was first used subsequent to the incurring of that expenditure,",
and
(e) in section 316(2B)--
(i) by deleting "or" at the end of paragraph (b) and by substituting “31 July 2008, or” for “31 July 2008,” in paragraph (c), and
(ii) by inserting the following paragraph after paragraph (c):
"(d) where subsection (8) of section 270 applies in relation to a qualifying residential unit as is referred to in subsection (4) (i) of that section, the period from 1 May 2007 to 30 April 2010,”.
(2) Subsection (1) of this section applies as respects capital expenditure incurred on or after 1 May 2007 under a contract or agreement for the construction, refurbishment or development of a qualifying residential unit (within the meaning of section 268(3A) of the Principal Act) which is entered into on or after that date.”.
This amendment inserts a new section 26 in page 55 of the Bill. The new section amends Part 9 of the Taxes Consolidation Act 1997 in order to extend the qualifying period for the scheme of capital allowances for qualifying residential units associated with registered nursing homes from 31 July 2008 to 30 April 2010, and to insert new conditions and requirements which must be met to qualify for capital allowances in respect of future expenditure.
These amendments are being made following a comprehensive review of the scheme by Indecon Consultants which has recently been presented to my Department. This review found that the tax incentive involved has been effective in increasing the level of supply of residential unit spaces in the period since the introduction of the scheme in the Finance Act 2002.
The review recommends a number of changes be made to ensure that, among other things, the scheme achieves the objective for which it was introduced. The main changes being made include the following: the selection of residents of units must be made by the nursing home involved and such units may not be connected with the lessor of the unit; in future the spouse of an aged or infirm person may also live in a qualifying unit in circumstances where the spouse would not be entitled to the necessary certification from a medical practitioner; the holding period of these buildings is being increased to 20 years; and the level at which capital expenditure may qualify is set at 50% for individuals and 75% for companies.
Additionally, in order to qualify for relief, residential units will have to be certified by the HSE as meeting the relevant conditions set out in the legislation. As part of the certification process, information on the nature of investors, whether they are individuals or companies, and the amount of capital expenditure incurred will have to be provided to the HSE. This information will be passed on to the Minister for Health and Children and to my Department in order to inform future policy decisions in a timely manner.
In addition to the initial certification requirement the section introduces an annual reporting requirement by claimants of capital allowances during the 20 year period referred to in the Bill. This report will include a requirement to confirm whether the conditions of the legislation are still being satisfied. These changes apply to capital expenditure incurred under contracts or agreements entered into on or after 1 May 2007.