Taxation of certain short-term leases of plant and machinery

Section 80A of the Taxes Consolidation Act 1997 deals with the taxation of short-term lease of plant and machinery. This section provides that a lessor may elect to have wear and tear allowances in respect such assets with a life expectancy of less than 8 years computed on the basis of the accounting depreciation of the assets.

For accounting periods ending on or prior to 31 December 2014 the amount of the wear and tear allowances that could be claimed, in respect of an operating lease in an accounting period was limited by reference to a "Threshold Amount". A "Threshold Amount" is the aggregate of such allowances claimed by the company in the period immediately preceding the period for which it first claims the relief.

Section 36 of the Finance Act 2014, removes this limitation in respect of accounting periods ending on or after the 1st January 2015.

A new Tax and Duty Manual, Part 04-05-05, sets out the tax treatment of short term leases of plant and machinery.

10 April 2015