Revenue Note for Guidance
A scheme of capital allowances is made available in respect of capital expenditure incurred in the qualifying period on the construction or refurbishment of certain buildings or structures in enterprise areas which are to be used by qualifying companies in the carrying on of certain trading operations (manufacturing or internationally traded services). The section provides that capital allowances for qualifying buildings in enterprise areas at regional airports cannot be claimed by property developers in certain circumstances (see subsection 11).
Qualifying companies must be certified by the Minister for Enterprise, Trade and Employment on the recommendation of Forfás. The full amount (100 per cent) of the expenditure so incurred is available for write off as follows—
(1) “property developer” means a person wholly or mainly involved in the trade of constructing or refurbishing buildings for sale,
“the Minister” is expressed to mean the Minister for Enterprise, Trade and Employment. The reference to “except where the context otherwise requires” is necessary to avoid any confusion with the one reference in the section to the Minister for Finance.
“qualifying building” is a building or structure the site of which is wholly within an enterprise area, and which is in use for the purposes of the carrying on of “qualifying trading operations” by a “qualifying company”, but does not include any part of a building or structure in use as, or as part of, a dwelling house. Thus, a qualifying building may be an industrial or a commercial (including offices) type building.
“qualifying company” is a company —
“qualifying trading operations” covers manufacturing activities qualifying for the 10 per cent rate of corporation tax, internationally traded services, that is, those services designated under the Industrial Development Act, 1986, and freight forwarding and certain allied services in enterprise areas adjacent to the regional airports.
(2) The Minister for Enterprise, Trade and Employment may give a certificate to a company certifying that a company is, with effect from a date to be specified in the certificate, to be treated as a qualifying company. Such a certificate may be given only —
(4) The Minister for Enterprise, Trade and Employment may not certify that a company is a qualifying company unless—
(5) In certain circumstances a certificate may be revoked. These are where—
In either case that Minister may revoke the certificate by way of notice served on the company by registered post. The revocation will take effect from such date as is specified in that notice.
(6) The Minister for Enterprise, Trade and Employment may take certain action if of the opinion that any activity of a company has had, or may have, an adverse effect on the use or development of the enterprise area or is otherwise inimical to the balanced development of the enterprise area. In any such case, the Minister may serve a notice in writing on the company by registered post requiring the company to desist from such activity with effect from a date to be specified in the notice. If the Minister is not satisfied that the company has complied with the requirements of the notice, the Minister may, by a further notice in writing served by registered post on the company, revoke the certificate given to the company. The revocation will take effect from such date as is specified in that further notice.
(7)(a) Subject to the modifications set out in subsections (8), (9) and (11), the provisions of the Tax Acts relating to capital allowances for industrial buildings or structures apply to qualifying buildings, despite anything to the contrary in those provisions. Those provisions are so applied as if a qualifying building were, at all times it is a qualifying building, an industrial building or structure within section 268(1)(a) (for example, a mill, factory or other similar premises). The reference to the qualifying building being so treated “at all times at which it is a qualifying building” ensures that the allowances continue to be available only as long as the building or structure remains a qualifying building.
(7)(b) Allowances are available only in respect of capital expenditure incurred on the construction or refurbishment of a qualifying building during the qualifying period (see subsection (10)).
The effect of subsection (7)(a) is to make annual writing-down allowances of 4 per cent available under section 272 in respect of qualifying expenditure. The writing-down allowances are available to both owner-occupiers and lessors of qualifying buildings.
(8)(a) An industrial building (initial) allowance of 25 per cent of qualifying expenditure is made available under section 271 (In the case of an enterprise area adjacent to a regional airport, the rate is 50 per cent with effect from 1 January, 1998.) The initial allowance is available to both owner-occupiers and lessors of qualifying buildings.
(8)(b) Free depreciation (an acceleration of the annual writing-down allowances) of up to 50 per cent of qualifying expenditure is made available under section 273. Free depreciation is available only to owner-occupiers of qualifying buildings.
(9) Where a sale or other event which normally might give rise to a balancing charge under section 274 occurs in relation to a qualifying building, a balancing charge is not to be made if that event occurs more than 13 years after the qualifying building was first used or, in the case where refurbishment expenditure on the qualifying building qualified for capital allowances, more than 13 years after that expenditure was incurred.
(10) The capital expenditure which is to be relieved under this section must be expenditure incurred on work carried out during the qualifying period. Where work commences, but is not completed, in the qualifying period, only the part of the expenditure referable to the work carried out in that period qualifies for relief.
This provision negates, for the purposes only of determining the amount of expenditure to be relieved under this section, other provisions of the Tax Acts which, by treating expenditure as incurred later than the carrying out of the work, might otherwise deprive a person of relief under this section. The provisions so negated are —
(11) Capital allowances may not be availed of by a property developer who holds the relevant interest (within the meaning of section 269) in expenditure incurred on the construction or refurbishment of a qualifying building in an airport enterprise area, in circumstances where that expenditure was incurred by the property developer or by a person connected (within the meaning of section 10) with the property developer.
Relevant Date: Finance Act 2019