Revenue Note for Guidance

The content shown on this page is a Note for Guidance produced by the Irish Revenue Commissioners. To view the section of legislation to which the Note for Guidance applies, click the link below:

Revenue Note for Guidance

372V Capital allowances in relation to construction or refurbishment of certain park and ride facilities

Summary

A scheme of capital allowances is made available in respect of capital expenditure incurred in the qualifying period on the construction or refurbishment of qualifying park and ride facilities.

The allowances available are —

  • annual writing-down allowances of 4 per cent of qualifying expenditure (available to both owner-occupiers and lessors),
  • an industrial building (initial) allowance of 50 per cent of qualifying expenditure (available to both owner-occupiers and lessors), and
  • accelerated writing-down allowances (free depreciation) of 100 per cent of qualifying expenditure (available only to owner-occupiers).

These capital allowances are not available to property developers in certain circumstances.

By virtue of the provisions of sections 270(4) to (6) and 316, the amount of capital expenditure incurred in the year 2007 and in the period 1 January 2008 to 31 July 2008 must be reduced to 75 per cent and 50 per cent respectively of the amount attributable to the period involved.

Where the public transport element of a park and ride facility is delayed, and certification by a local authority in accordance with the guidelines of the Minister for the Environment and Local Government is not possible, provision is made so as to apply provisions of the law governing capital allowances in such a way as to suspend the availability of capital allowances until the public transport element of the park and ride facility is in place and the development can be certified.

Details

Application of law relating to industrial buildings or structures

(1)(a) Subject to the modifications set out in subsections (2) to (4A), the provisions of the Tax Acts relating to capital allowances for industrial buildings or structures apply to qualifying park and ride facilities, despite anything to the contrary in those provisions. Those provisions, which specifically relate to the use of buildings or structures for a trade, are so applied as if a qualifying park and ride facility were, at all times it is such a qualifying facility, an industrial building or structure within section 268(1)(a) (for example, a mill, factory or other similar premises).

Restrictions on expenditure incurred in 2007 and 2008

(1)(a) The relieving provision of this section (subsection (1)(a)) is also subject to sections 270(4) to (6) and section 316(2B). Under those sections, any capital expenditure incurred in the year 2007 and the period 1 January 2008 to 31 July 2008 is subject to the respective reductions to 75 per cent and 50 per cent of the relevant amount attributable for the period involved (see notes on sections 270).

Capital expenditure is regarded as incurred in a period only if it is attributable to work carried out in that period (see notes on section 316(2B)).

Refurbishment – additional condition for entitlement to allowances

(2) In a case where capital expenditure is incurred in the qualifying period on the refurbishment of a qualifying park and ride facility, the special scheme of capital allowances applies only if the amount of the capital expenditure so incurred at least equals 10 per cent of the market value of the qualifying facility immediately before that expenditure was incurred.

Non-availability of capital allowances to property developers

(2A) A property developer may not claim capital allowances in respect of expenditure incurred on the construction or refurbishment of a qualifying park and ride facility where the property developer holds the relevant interest in that expenditure and either the property developer or a person connected with the property developer incurred the expenditure. Thus, where a property developer constructs or refurbishes a park and ride facility or buys one from a connected person who constructed or refurbished it, there will be no relief available to the property developer.

Allowances available and rates

(1)(b) Allowances are available only in respect of capital expenditure incurred on the construction or refurbishment of a qualifying park and ride facility during the qualifying period (see subsection (5)).

The effect of subsection (1)(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 premises.

(3)(a) An industrial building (initial) allowance of 50 per cent of qualifying expenditure is made available under section 271. The initial allowance is available to both owner-occupiers and lessors of qualifying park and ride facilities.

(3)(b) Free depreciation (an acceleration of the annual writing-down allowances) of up to 100 per cent of qualifying expenditure is made available under section 273. Free depreciation is available only to owner-occupiers of qualifying park and ride facilities.

Balancing charge

(4) Where a sale or other event which normally might give rise to a balancing charge under section 274 occurs in relation to a qualifying park and ride facility, a balancing charge is not to be made if that event occurs more than 13 years after the qualifying facility was first used or, in the case where refurbishment expenditure on the qualifying facility qualified for capital allowances, more than 13 years after that expenditure was incurred. Where the public transport element of a park and ride facility is delayed, the 13-year limit applies from the date the facility is first used as a qualifying park and ride facility.

Delay with public transport element

(4A) Where it is shown that the public transport element of a park and ride facility is delayed, and certification by a local authority (in accordance with the guidelines of the Minister for the Environment and Local Government) that a facility is a qualifying park and ride facility is not possible, then:

  • (4A)(a) the 50 per cent initial allowance available under section 271 is deferred to the chargeable period in which the facility becomes a qualifying park and ride facility, provided that this happens within 5 years of the facility being first used,
  • (4A)(b) the writing down period under section 272 for annual allowances will commence when the facility is first used as a qualifying park and ride facility and not from the time of its first use,
  • (4A)(c) the 25 year tax life of the facility under section 274 will run from the time the facility is first used as a qualifying park and ride facility and not from the time of its first use,
  • (4A)(d) under section 277, the initial allowance is treated as written off at the time the facility is first used as a qualifying park and ride facility and not at the time of its first use. Also the application of deemed industrial building annual allowances for periods of non-use as an industrial building or structure will only arise from the time the facility is a qualifying park and ride facility and not from the time of its first use for any purpose,
  • (4A)(e) under section 278, except in the case of income chargeable under Case V of Schedule D, an initial allowance in respect of a qualifying park and ride facility will be given by way of discharge or repayment of tax if the taxpayer’s interest in the facility is subject to any lease before the facility is first used as a qualifying park and ride facility (and not before it is first used for any purpose),
  • (4A)(f) the rules of section 279 in relation to the purchase of certain industrial buildings or structures will apply, in the case of a qualifying park and ride facility, where such a facility is bought unused or within one year of commencing to be used as a qualifying park and ride facility (and not within one year of commencing to be used for any purpose).

Qualifying expenditure

(5) The capital expenditure which is to be relieved 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 —

  • section 279 which deals with a case where an industrial building or structure is bought before it is used or within one year of it commencing to be used and provides for certain expenditure to be treated as having been incurred when the purchase price becomes payable,
  • section 316(2) which for the purposes of capital allowances for industrial buildings or structures treats expenditure as incurred when the sum in question becomes payable, and
  • section 316(3) which for the purposes of industrial building (initial) allowances treats expenditure incurred before a trade commences as incurred when the trade commences.

Bar on double claims

(6) Where an allowance is given under the section in respect of capital expenditure incurred on a qualifying park and ride facility, an allowance cannot be given under any other provision of the Tax Acts in respect of that expenditure.

Relevant Date: Finance Act 2018