Taxes Consolidation Act, 1997 (Number 39 of 1997)
274 Balancing allowances and balancing charges.
[ITA67 s265; FA69 s64(3) and (4); FA75 s34(2)(a)(iii); CTA76 s21(1) and Sch1 pars24 and 72; FA80 s58; FA88 s45 and s51(1)(d) and (5); FA90 s78; FA94 s22(1)(d) and (2); FA95 s24; FA96 s28(2); FA97 s23(1)(a) and (2)]
(1) (a) Where any capital expenditure has been incurred on the construction of a building or structure in respect of which an allowance has been made under this Chapter, and any of the following events occurs—
(i) the relevant interest in the building or structure is sold,
(ii) that interest, being a leasehold interest, comes to an end otherwise than on the person entitled to the leasehold interest acquiring the interest which is reversionary on the leasehold interest,
(iii) the building or structure is demolished or destroyed or, without being demolished or destroyed, ceases altogether to be used, or
(iv) subject to subsection (2), where consideration (other than rent or an amount treated or, as respects consideration received on or after the 26th day of March, 1997, partly treated as rent under section 98) is received by the person entitled to the relevant interest in respect of an interest which is subject to that relevant interest,
an allowance or charge (in this Chapter referred to as a “balancing allowance” or a “balancing charge”) shall, in the circumstances mentioned in this section, be made to or on, as the case may be, the person entitled to the relevant interest immediately before that event occurs, for the chargeable period related to that event.
(b) [35]>Notwithstanding paragraph (a)<[35][35]>Notwithstanding paragraph (a) and subsection (2A)(b)<[35], no balancing allowance or balancing charge shall be made by reason of any event referred to in that paragraph occurring more than—
(i) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of paragraph (a) or (b) of section 268(1)—
(I) 50 years after the building or structure was first used, in the case where the capital expenditure on the construction of the building or structure was incurred before the 16th day of January, 1975, or
(II) 25 years after the building or structure was first used, in the case where the capital expenditure on the construction of the building or structure is incurred on or after the 16th day of January, 1975,
[4]>
(ii) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of paragraph (c) or (e) of section 268(1), 10 years after the building or structure was first used,
<[4]
[5]>
[4]>
(ii) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of paragraph (c), (e) or (g) of section 268(1), 10 years after the building or structure was first used,
<[4]
<[5]
[5]>
(ii) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of [33]>paragraph (c), (e), (g) or (i)<[33][33]>paragraph (c) or (e)<[33] of section 268(1), 10 years after the building or structure was first used,
<[5]
[34]>
(iia) [37]>subject to subparagraph (iib),<[37] in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of paragraph (g) or (i) of section 268(1)—
(I) 10 years after the building or structure was first used, or
(II) as respects a building or structure which is first used on or after 1 February 2007, 15 years after the building or structure was first used, or
(III) where capital expenditure on the refurbishment of the building or structure is incurred and, subsequent to the incurring of that expenditure, the building or structure is first used on or after 1 February 2007, 15 years after the building or structure was first used subsequent to the incurring of that expenditure,
<[34]
[38]>
(iib) where subsection (8) of section 270 applies in relation to a qualifying residential unit as is referred to in subsection (4)(i) of that section—
(I) 20 years after the unit was first used, or
(II) where capital expenditure on the refurbishment of the unit is incurred, 20 years after the unit was first used subsequent to the incurring of that expenditure,
<[38]
(iii) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of section 268(1)(d), other than a building or structure to which [21]>subparagraph (iv)<[21][46]>[21]>subparagraph (iv) or (iva)<[21]<[46][46]>subparagraph (iv), (iva) or (ivb)<[46] relates—
(I) 10 years after the building or structure was first used, in the case where the capital expenditure on the construction of the building or structure was incurred before the 27th day of January, 1994, [11]>or<[11]
(II) 7 years after the building or structure was first used, in the case where the capital expenditure on the construction of the building or structure is incurred on or after the 27th day of January, 1994, [12]>or<[12]
[13]>
(III) subject to [23]>subsection (1A)<[23][23]>subject to subsections (1A) and (1B)<[23], 25 years after the building or structure was first used, in the case where the capital expenditure on the construction (within the meaning of section 270) of the building or structure is incurred on or after 4 December 2002,
<[13]
(iv) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of section 268(1)(d) by reason of its use as a holiday cottage, 10 years after the building or structure was first used, [1]>and<[1]
[22]>
(iva) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of section 268(1)(d) by reason of its use as a guest house or a holiday hostel to which section 268(2C) applies, 25 years after the building or structure was first used, in the case where the capital expenditure on the construction (within the meaning of section 270) of the building or structure is incurred on or after 3 February 2005,
<[22]
[47]>
(ivb) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of section 268(1)(d) by reason of being comprised in, and in use as part of, premises which are registered in the register of caravan sites and camping sites kept under the Tourist Traffic Acts 1939 to 2003—
(i) 25 years after the building or structure was first used, or
(ii) where capital expenditure on the refurbishment of the building or structure is incurred, 25 years after the building or structure was first used subsequent to the incurring of that expenditure,
in the case where the capital expenditure on the construction (within the meaning of section 270) of the building or structure is incurred on or after 1 January 2008,
<[47]
[2]>
(v) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of section 268(1)(f), 25 years after the building or structure was first used.
<[2]
[2]>
(v) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of section 268(1)(f), 25 years after—
(I) the building or structure was first used, or
(II) in the case of a building or structure to which section 272(3B) applies, the vesting day, [7]>and<[7]
<[2]
[3]>
(vi) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of section 268(1)(h), 25 years after—
(I) the building or structure was first used, or
(II) as respects a building or structure to which section 272(3A) applies—
(A) in the case of [48]>Aer Rianta cuideachta phoiblí theoranta<[48][48]>Dublin Airport Authority<[48], the vesting day, and
(B) in the case of any other person, the date of the passing of the Finance Act, [8]>1998.<[8][8]>1998,<[8]
<[3]
[26]>
and
<[26]
[27]>
(via) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of paragraph (j) of section 268(1)—
(I) 10 years after the building or structure was first used, or
(II) as respects a building or structure which is first used on or after 1 February 2007, 15 years after the building or structure was first used, or
(III) where capital expenditure on the refurbishment of the building or structure is incurred and, subsequent to the incurring of that expenditure, the building or structure is first used on or after 1 February 2007, 15 years after the building or structure was first used subsequent to the incurring of that expenditure,
[30]>
and
<[30]
<[27]
[9]>
(vii) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of [10]>section 268(1)(j)<[10][10]>paragraph [28]>(j) or<[28] (k) of section 268(1)<[10], [29]>10 years beginning with the time when<[29][29]>10 years after<[29] the building or structure was first [31]>used.<[31][31]>used, [40]>and<[40]<[31]
<[9]
[32]>
(viii) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of paragraph (l) of section 268(1)—
(I) 15 years after the building or structure was first used, or
(II) where capital expenditure on the refurbishment of the building or structure is incurred, 15 years after the building or structure was first used subsequent to the incurring of that [39]>expenditure.<[39][39]>expenditure, [49]>and<[49]<[39]
<[32]
[41]>
(ix) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of paragraph (m) of section 268(1)—
(I) 15 years after the building or structure was first used, or
(II) where capital expenditure on the refurbishment of the building or structure is incurred, 15 years after the building or structure was first used subsequent to the incurring of [50]>that expenditure.<[50][50]>that expenditure, and<[50]
<[41]
[52]>
[51]>
(x) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of paragraph (n) of section 268(1)—
(I) 7 years after the building or structure was first used, or
(II) where capital expenditure on the refurbishment of the building or structure is incurred, 7 years after the building or structure was first used subsequent to the incurring of that expenditure.
<[51]
<[52]
[52]>
(x) in relation to a building or structure which is to be regarded as an industrial building or structure within the meaning of paragraph (n) of section 268(1)—
(I) where the expenditure is specified capital expenditure—
(A)7 years after the building or structure was first used, or
(B)where the expenditure is incurred on refurbishment of the building or structure, 7 years after the building or structure was first used subsequent to the incurring of that expenditure,
and
(II) where the expenditure is not specified capital expenditure—
(A)25 years after the building or structure was first used, or
(B)where the expenditure is incurred on refurbishment of the building or structure, 25 years after the building or structure was first used subsequent to the incurring of that expenditure.
<[52]
[14]>
(1A) Subsection (1)(b)(iii)(III) (as inserted by the Finance Act 2003) shall not apply as respects capital expenditure incurred on or before [15]>31 December 2004<[15][24]>[15]>31 July 2006<[15]<[24][24]>31 December 2006<[24] on the construction or refurbishment of a building or structure if—
(a) (i) a planning application (not being an application for outline permission within the meaning of section 36 of the Planning and Development Act 2000)[16]>, in so far as planning permission is required,<[16] in respect of the building or structure is made in accordance with the Planning and Development Regulations 2001 to 2002,
(ii) an acknowledgement of the application, which confirms that the application was received on or before [17]>31 May 2003<[17][17]>31 December 2004<[17], is issued by the planning authority in accordance with article 26(2) of the Planning and Development Regulations 2001 (S.I. No. 600 of 2001), and
(iii) the application is not an invalid application in respect of which a notice is issued by the planning authority in accordance with article 26(5) of those regulations,
(b) (i) [18]>a planning application<[18][18]>a planning application, in so far as planning permission was required,<[18] in respect of the building or structure was made in accordance with the Local Government (Planning and Development) Regulations 1994 (S.I. No. 86 of 1994), not being an application for outline permission within the meaning of article 3 of those regulations,
(ii) an acknowledgement of the application, which confirms that the application was received on or before 10 March 2002, was issued by the planning authority in accordance with article 29(2)(a) of the regulations referred to in subparagraph (i), and
(iii) the application was not an invalid application in respect of which a notice was issued by the planning authority in accordance with article 29(2)(b)(i) of those regulations,
[19]>
(ba) where the construction or refurbishment work on the building or structure represented by that expenditure is exempted development for the purposes of the Planning and Development Act 2000 by virtue of section 4 of that Act or by virtue of Part 2 of the Planning and Development Regulations 2001 (S.I. No. 600 of 2001) and—
(i) a detailed plan in relation to the development work is prepared,
(ii) a binding contract in writing, under which the expenditure on the development is incurred, is in existence, and
(iii) work to the value of 5 per cent of the development costs is carried out,
not later than 31 December 2004.
<[19]
or
(c) (i) the construction or refurbishment of the building or structure is a development in respect of which an application for a certificate under section 25(7)(a)(ii) of the Dublin Docklands Development Authority Act 1997 is made to the Authority (within the meaning of that Act),
(ii) an acknowledgement of the application, which confirms that the application was received on or before [20]>31 May 2003<[20][20]>31 December 2004<[20], is issued by that Authority, and
(iii) the application is not an invalid application.
<[14]
[25]>
(1B) Subsection (1)(b)(iii)(III) shall not apply as respects capital expenditure incurred on or before 31 July 2008 on the construction or refurbishment of a building or structure if—
(a) the conditions of paragraph (a), (b), (ba) or (c), as the case may be, of subsection (1A) have been satisfied,
(b) subject to paragraphs (a) and (b) of section 270(7)—
(i) the person who is constructing or refurbishing the building or structure has, on or before 31 December 2006, carried out work to the value of not less than 15 per cent of the actual construction or, as the case may be, refurbishment costs of the building or structure, and
(ii) the person referred to in subparagraph (i) or, where the building or structure is sold by that person, the person who is claiming a deduction under this Chapter in relation to the expenditure incurred, can show that the condition in subparagraph (i) was satisfied,
(c) a binding contract in writing under which expenditure on the construction or refurbishment of the building or structure is incurred was in existence on or before 31 July 2006, and
(d) such other conditions, as may be specified in regulations made for the purposes of this paragraph by the Minister for Finance, have been satisfied; but such conditions shall be limited to those necessary to ensure compliance with the laws of the European Communities governing State aid or with a decision of the Commission of the European Communities as to whether aid to which this subsection relates is compatible with the common market having regard to Article 87 of the European Communities Treaty.
<[25]
(2) Subsection (1)(a)(iv) shall not apply as respects the relevant interest in a building or structure in use for the purposes of a trade or part of a trade of hotel-keeping where a binding contract for the provision of the building or structure was entered into after the 27th day of January, 1988, and before the 1st day of June, 1988.
[36]>
(2A) (a) In this subsection “relevant facility” means a building or structure which—
(i) is in use for the purposes of a trade referred to in paragraph (g) of section 268(1),
(ii) is in use as a qualifying residential unit (within the meaning of section 268(3A)) which, by virtue of section 268(3B), is deemed to be a building or structure referred to in subparagraph (i),
(iii) is in use for the purposes of a trade referred to in paragraph (i) of section 268(1),
(iv) is in use for the purposes of a trade referred to in paragraph (j) of section 268(1),
(v) is in use for the purposes of a trade referred to in paragraph (l) (as inserted by the Finance Act 2006) of section 268(1), [43]>or<[43]
(vi) is a qualifying premises (within the meaning of section 843A(1)) which is in use for the purposes of providing the service or services referred to in paragraph (b) of the definition of “qualifying premises” in that [42]>section.<[42][42]>section, or<[42]
[44]>
(vii) is in use for the purposes of a trade referred to in paragraph (m) of section 268(1).
<[44]
(b) Where—
(i) a building or structure is a relevant facility to which subparagraph (i), (ii), (iii), (iv), [45]>(v) or (vi)<[45][45]>(v), (vi) or (vii)<[45] of paragraph (a) applies,
(ii) an allowance has been made under this Chapter in respect of capital expenditure incurred on the construction or refurbishment of the building or structure, and
(iii) the building or structure concerned ceases to be a relevant facility,
then, subject to paragraph (c), such cessation shall be treated as an event which gives rise to a balancing charge under this section and that balancing charge shall be made on the person entitled to the relevant interest in the building or structure concerned immediately before that event occurs, for the chargeable period related to that event.
(c) Paragraph (b) shall not apply if, within 6 months of the cessation referred to in subparagraph (iii) of that paragraph, the building or structure concerned is again a relevant facility by virtue of the application of any subparagraph of paragraph (a), other than the subparagraph by virtue of which the building or structure was previously treated as a relevant facility.
<[36]
(3) Where there are no sale, insurance, salvage or compensation moneys, or consideration of the type referred to in subsection (1)(a)(iv), or where the residue of the expenditure immediately before the event exceeds those moneys or that consideration, a balancing allowance shall be made, and the amount of that allowance shall be the amount of that residue or, as the case may be, of the excess of that residue over those moneys [6]>or that consideration.<[6][6]>or that consideration; but this subsection shall not apply in the case of consideration of the type referred to in subsection (1)(a)(iv) which is received on or after 5 March 2001.<[6]
(4) Where the sale, insurance, salvage or compensation moneys, or consideration of the type referred to in subsection (1)(a)(iv), exceed the residue, if any, of the expenditure immediately before the event, a balancing charge shall be made, and the amount on which it is made shall be an amount equal to the excess or, where the residue is nil, to those moneys or that consideration.
(5) (a) In this subsection, “the relevant period” means the period beginning when the building or structure was first used for any purpose and ending—
(i) if the event giving rise to the balancing allowance or balancing charge occurs on the last day of a chargeable period or its basis period, on that day, or
(ii) in any other case, on the latest date before that event which is the last day of a chargeable period or its basis period;
but where before that event the building or structure has been sold while an industrial building or structure, the relevant period shall begin on the day following that sale or, if there has been more than one such sale, the last such sale.
(b) Where a balancing allowance or a balancing charge is to be made to or on a person, and any part of the relevant period is not comprised in a chargeable period for which a writing-down allowance has been made to such person or is not comprised in the basis period for such chargeable period, the amount of the balancing allowance or, as the case may be, the amount on which the balancing charge is to be made shall be reduced in the proportion which the part or parts so comprised bears to the whole of the relevant period.
(c) Notwithstanding paragraph (b), where but for section 272(6) or 321(5) a writing-down allowance would have been made to a person for any chargeable period, the part of the relevant period comprised in that chargeable period or its basis period shall be deemed for the purposes of this subsection to be comprised in a chargeable period for which a writing-down allowance was made to the person.
(6) Where a building or structure which is to be regarded as an industrial building or structure within the meaning of section 268(1)(d) by reason of its use as a holiday cottage ceases to be comprised in premises registered in a register referred to in section 268 in such circumstances that apart from this subsection this section would not apply in relation to the building or structure, the relevant interest in the building or structure shall for the purposes of this Chapter (other than section 272(4)) be deemed on such cesser to have been sold while the building or structure was an industrial building or structure and the net proceeds of the sale shall be deemed for those purposes to be an amount equal to the capital expenditure incurred on the construction of the building or structure.
(7) Where a balancing charge is made under this section by virtue of subsection (6) and the relevant interest in the building or structure is not subsequently sold by the person on whom the charge is made while the building or structure is not an industrial building or structure, such person shall, if the building or structure again becomes comprised in a premises registered in a register referred to in section 268, be treated for the purposes of this Chapter as if, at the time of the cesser referred to in subsection (6), such person were the buyer of the relevant interest deemed under that subsection to have been sold.
(8) Notwithstanding any other provision of this section, in no case shall the amount on which a balancing charge is made on a person in respect of any expenditure on the construction of a building or structure exceed the amount of the industrial building allowance, if any, made to such person in respect of that expenditure together with the amount of any writing-down allowances made to such person in respect of that expenditure for chargeable periods which end on or before the date of the event giving rise to the charge or, as the case may be, for chargeable periods for which the basis periods end on or before that date.
[7]
Deleted by FA01 s64(1)(c)(i). This section shall come into operation on such day as the Minister for Finance may by order appoint.
[8]
Substituted by FA01 s64(1)(c)(ii). This section shall come into operation on such day as the Minister for Finance may by order appoint.
[9]
Inserted by FA01 s64(1)(c)(iii). This section shall come into operation on such day as the Minister for Finance may by order appoint.
[10]
Substituted by FA02 s34(1)(b). This section comes into operation on such day as the Minister for Finance may by order appoint.
[16]
Inserted by FA04 s25(1)(c)(ii). This section is deemed to have applied as on and from 4 December 2002.
[17]
Substituted by FA04 s25(1)(c)(iii). This section is deemed to have applied as on and from 4 December 2002.
[29]
Substituted by FA06 s35(1)(c)(iii)(II). This section is deemed to have applied as on and from 15 May 2002.
[30]
Deleted by FA06 s36(1)(c)(i). This section shall come into operation on such day or days as the Minister for Finance may by order appoint and different days may be appointed for different purposes or different provisions.
[31]
Substituted by FA06 s36(1)(c)(i). With effect from 23 January 2007 per SI No. 20 of 2007.
[35]
Substituted by FA06 s39(1)(a)(i). Applies in relation to a building or structure which is first used on or after 1 January 2006.
[36]
Inserted by FA06 s39(1)(a)(ii). Applies in relation to a building or structure which is first used on or after 1 January 2006.
[37]
Inserted by FA07 s28(1)(d)(i). Applies as respects capital expenditure incurred on or after 1 May 2007 under a contract or agreement for the construction, refurbishment or development of a qualifying residential unit which is entered into on or after that date.
[38]
Inserted by FA07 s28(1)(d)(ii). Applies as respects capital expenditure incurred on or after 1 May 2007 under a contract or agreement for the construction, refurbishment or development of a qualifying residential unit which is entered into on or after that date.
[39]
Substituted by FA08 s26(1)(c)(i)(I). This section comes into operation on such day or days as the Minister for Finance may by order or orders appoint and different days may be appointed for different purposes or different provisions.
[40]
Deleted by FA08 s26(1)(c)(i)(I). This section comes into operation on such day or days as the Minister for Finance may by order or orders appoint and different days may be appointed for different purposes or different provisions.
[41]
Inserted by FA08 s26(1)(c)(i)(II). This section comes into operation on such day or days as the Minister for Finance may by order or orders appoint and different days may be appointed for different purposes or different provisions.
[42]
Substitued by FA08 s26(1)(c)(ii)(I). This section comes into operation on such day or days as the Minister for Finance may by order or orders appoint and different days may be appointed for different purposes or different provisions.
[43]
Deleted by FA08 s26(1)(c)(ii)(I). This section comes into operation on such day or days as the Minister for Finance may by order or orders appoint and different days may be appointed for different purposes or different provisions.
[44]
Inserted by FA08 s26(1)(c)(ii)(II). This section comes into operation on such day or days as the Minister for Finance may by order or orders appoint and different days may be appointed for different purposes or different provisions.
[45]
Substituted by FA08 s26(1)(c)(iii). This section comes into operation on such day or days as the Minister for Finance may by order or orders appoint and different days may be appointed for different purposes or different provisions.
[50]
Substituted by FA13 s31(1)(j). Comes into operation on 13 October 2015 as per FA15 s27(2).