Revenue Note for Guidance

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Revenue Note for Guidance

Chapter 12

Mid-Shannon Corridor Tourism Infrastructure Investment Scheme

Overview

This Chapter provides for a targeted tax-based scheme for tourism facilities in the mid-Shannon corridor. The scheme is aimed at encouraging the development of new tourism infrastructure and the refurbishment of existing tourism infrastructure in that area which is relatively underdeveloped from the point of view of tourism.

The individual areas which qualify under the scheme are listed in Schedule 8B to the Taxes Consolidation Act 1997 and include various District Electoral Divisions in the counties of Clare, Galway, Offaly, Roscommon, Tipperary and Westmeath.

The scheme is time-limited to the period commencing on 1 June 2008 and ending on 31 May 2015, within which period qualifying capital expenditure may be incurred. Projects wishing to avail of relief must get approval in advance (for which an application must be made within 4 years of the commencement of the scheme) and also must get formal certification after completion. This approval and certification will be given by a special board established for the purposes of the scheme and will be carried out in accordance with guidelines issued by the Minister for Arts, Sport and Tourism in consultation with the Department of Finance.

Capital allowances are available in relation to certain registered holiday camps and other tourism infrastructure facilities. The nature of the tourism infrastructure buildings and structures that may qualify under the scheme are set out in the guidelines. Certain buildings such as those that facilitate gaming or gambling are specifically excluded from the scheme, as are licensed premises (but not restaurants). Also, tourism facilities, other than qualifying holiday camps that already qualify for capital allowances such as hotels, guesthouses, holiday hostels and caravan and camping sites registered under the Tourist Traffic Acts are excluded. However, other accommodation facilities that are provided as part of a qualifying tourism project may qualify for relief but qualifying expenditure on such accommodation facilities cannot be more than 50 per cent of the overall expenditure on the project or cannot be more than the expenditure on the non-accommodation facilities in the project.

Relief is available over 7 years for qualifying construction and refurbishment expenditure incurred in the qualifying period at the rate of 15 per cent per annum in years 1 to 6 and at the rate of 10 per cent in year 7. In the case of refurbishment, the qualifying expenditure must exceed 20 per cent of the market value of the property before work commences. In areas that are not in the BMW region (i.e. areas in Clare and Tipperary) only 80 per cent of construction and refurbishment expenditure may qualify for relief.

There is a 15-year holding period in order to avoid a clawback of allowances given. Existing restrictions on the sideways set-off of excess capital allowances against non-rental income for passive investors apply as does the restriction on the use of specified reliefs by high-income individuals which is effective from 1 January 2007.

The scheme commenced by way of order of the Minister for Finance with effect from 1 June 2008 (S.I. No. 159 of 2008).

The termination date of 31 May 2015 and the period of 4 years (see section 372AW) were introduced in the Finance Act 2010 (section 27) and are subject to a commencement order of the Minister for Finance. Until such commencement order is made the termination date and period are 31 May 2013 and 2 years, respectively.

372AW Interpretation, applications for approval and certification

Summary

This section is an interpretation section. It also provides for the approval and certification of projects by the mid-Shannon Tourism Infrastructure Board and for the issue of relevant guidelines by the Minister for Arts, Sport and Tourism in consultation with the Minister for Finance. The section also sets limits in relation to the levels of expenditure on accommodation buildings which may qualify for certification.

Details

Definitions

(1) Definitions of the various terms used in Chapter 12 are provided. Most of these are self-explanatory but the following are highlighted:

“mid-Shannon Tourism Infrastructure Board” means a board selected for the purposes of the Chapter by the Minister for Arts, Sport and Tourism in consultation with the Minister for Finance. The board may not exceed 5 persons. [This board is responsible for granting advance approval in relation to projects and formal certification after building work has taken place].

“qualifying period” is the period commencing on 1 June 2008 and ending on 31 May 2015.

“qualifying tourism infrastructure facilities” means a class or classes of facilities (but confined to buildings and structures) that are approved by the Minister for Arts, Sport and Tourism in consultation with the Minister for Finance and which are published in the relevant guidelines.

“relevant guidelines” means guidelines issued in accordance with subsection (3), including any amending or replacement guidelines.

Approval and certification by mid-Shannon Tourism Infrastructure Board

(2)(a) Subsection (2)(a) (which is subject to the subsequent provisions of this section and to section 372AZ) provides that no relief from income tax or corporation tax may be granted by virtue of this Chapter in respect of construction or refurbishment expenditure unless the mid-Shannon Tourism Infrastructure Board has:

  • in advance, granted approval in principle in relation to the construction or refurbishment of the building or structure involved, and
  • after the expenditure is incurred, certifies in writing that the work carried out is in accordance with the criteria specified in the relevant guidelines. Any relevant conditions imposed by the Board in the advance approval must also have been satisfied.

(2)(b) Approval in principle cannot be granted unless the Board receives an application within four years of the commencement of the qualifying period, i.e. by 31 May 2012. Such an application must also contain whatever information and details are specified in the relevant guidelines in accordance with subsection (3)(h).

Relevant guidelines to be issued by Minister for Arts, Sport and Tourism

(3) This provision, which is subject to subsection (4), provides that the Minister for Arts, Sport and Tourism in consultation with the Minister for Finance shall issue guidelines for the purposes of approval and certification under subsection (2) and also for the purposes of certification under section 372AX(1)(d) or 372AY(1)(g). The mid-Shannon Tourism Infrastructure Board must have regard to these guidelines in deciding whether to grant approval in principle or to issue a certificate in relation to a building or structure. The guidelines may include criteria in relation to some or all of the following matters:

  1. the contribution which the project, in which the building or structure is comprised, would make to tourism development in the mid-Shannon corridor or the qualifying mid-Shannon area,
  2. coherence with national tourism strategy,
  3. environmental sensitivity, having particular regard to any area which is a European site (e.g. special area of conservation or special protection area), a natural heritage area, a nature reserve or a refuge for fauna,
  4. the amenities and facilities required to be provided in each type of project,
  5. the nature of, and maximum extent to which, accommodation buildings (if any) are allowable in each type of project, (see subsection (4) also for maximum expenditure limits),
  6. specific standards of design and construction in relation to buildings and structures which may qualify for relief under this Chapter,
  7. relevant planning matters, including the need for consistency with the requirements of a development plan or a local area plan,
  8. the details and information required to be provided in applications for approval and certification in accordance with the relevant sections of Chapter 12, and
  9. matters relating to the provision of information in accordance with sections 372AX(1)(c) and 372AY(1)(f),

together with any other matters the relevant Ministers consider are required to be included.

Limits in relation to expenditure on accommodation facilities

(4) A maximum limit applies in relation to the extent to which expenditure on accommodation facilities may be certified as a qualifying part of a project.

(4)(a) This provision, which is subject to paragraphs (b) and (c), provides that the mid-Shannon Tourism Infrastructure Board may not grant approval or issue certification in relation to accommodation facilities to the extent that expenditure on such facilities exceeds a “limit amount” which is the lesser of:

  • 50 per cent (or any lower percentage specified in the guidelines in relation to a type of project) of the overall expenditure on the project, or
  • the expenditure on non-accommodation buildings.

(4)(b) Where there are a number of accommodation buildings in a project and the aggregate of the capital expenditure incurred on their construction or refurbishment exceeds the “limit amount”, then the aggregate expenditure is to be reduced to an amount equivalent to the limit amount and apportioned on a just and reasonable basis over all the accommodation buildings.

(4)(c) Where the criteria in the relevant guidelines have been satisfied, the mid-Shannon Tourism Infrastructure Board may grant approval or issue certification in relation to an accommodation building:

  • up to the limit amount where there is only one such building, and
  • where they are satisfied with the apportionment made under paragraph (b), in relation to so much of the expenditure which is attributable to each accommodation building following such apportionment.

Relevant Date: Finance Act 2019