Tax regulation mechanism (Accelerated Capital Allowance scheme)
Updated: 08.01.2019
Author: Georgios Maroulis
Section 46 of the Finance Act 2008 introduced section 285A to the Taxes Consolidation Act 1997, which refers to the Accelerated Capital Allowance (ACA) scheme. The ACA scheme allows companies to depreciate 100% of the purchase value of certain energy efficient equipment against their profit in the year of purchase. Eligible criteria and eligible products are regularly updated through Statutory Instruments (S.I. 587/ 2015). Eligible equipment are listed in the Triple E Products Register at the Sustainable Energy Authority of Ireland (http://www.seai.ie/Your_Business/Accelerated_Capital_Allowance/ACA_Categories_and_Criteria/). The costs covered include acquisition, transport and installation of the equipment if they are directly related to the provision of the equipment. The scheme aims to encourage investments in energy efficient equipment and has been extended until 31 December 2020 by section 38 of the Finance Act 2017.
Eligible technologies
A list of the eligible equipment can be found at the Triple E Products Register at the Sustainable Energy Authority of Ireland (SEAI). The ACA currently covers 10 different equipment categories and 52 associated technologies (Schedule 4A TCA 1997).
| Aerothermal energy | Eligible (Heat Pumps) |
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| Hydrothermal energy | Eligible (Heat Pumps) |
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| Geothermal energy | Eligible (Heat Pumps) |
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| Solar thermal energy | Eligible (Solar Thermal Collectors) |
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Amount
The ACA allows companies to claim for the entire allowance (100% of the purchase value of specified energy efficient equipments) in the first year, instead of claiming for the standard capital allowance, which is generally given over an 8-year period and at an annual rate of 12.5% of the capital expenditure (section 285A(2) TCA 1997). There is a minimum expenditure to qualify for the ACA, which is € 1,000 for heating equipment (section 285A(6) TCA 1997).
Addressees
Entitled Party: Companies paying corporation tax in Ireland.
Obligated Party: The Irish Revenue Commissioners.
Procedure
Process flow | The procedure to claim the ACA is similar to that for claiming the standard annual tax return. The steps can be summarised as follows: - First, the company decides on the equipment to be purchased and ensures that the equipment is listed on the Triple E Products Register.
- Afterwards, the company claims the ACA for the purchased equipment on its tax return of income (form CT1) along with other wear and tear allowances for plant and machinery.
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Competent authority | The Irish Revenue Commissioners receive the claim for the ACA and the Sustainable Energy Authority of Ireland maintains the list of qualifying equipment (section 285A(1),b TCA 1997). |
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Distribution of costs
| State | The costs of the scheme are borne by the State. |
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Ireland
