Capital Alowances - grants
18/11/1997
Query
Capital allowances for Industrial Buildings and Plant and Machinery are computed on a net of grant basis.In the event of a grant being repaid, may the grant be treated as expenditure incurred and qualifying for capital allowances.
Decision
The grant repaid may be treated as expenditure incurred for the purposes of claiming capital allowances on industrial buildings, machinery and plant. The date on which the expenditure is incurred may be taken as the date when the grants are repaid.
Income Tax
Section 317, Taxes Consolidation Act, 1997
Origin: RLS Division
File ref:IT973003
16/11/2000
Query
Prior to 1973 a person could claim initial allowances and wear and tear allowances amounting to more than the cost of the plant and machinery. Section 11 Finance Act 1973 provided for the charging of the excess of the allowances over the actual cost. The question that arises in whether the actual cost is the cost as reduced by grants. At the time grants were not deducted in arriving at the qualifying expenditure for wear and tear purposes but were deducted for the purpose of a balancing charge.
Decision
A strict application of the section could have had the effect of imposing a balancing charge on the excess of the allowances made over the expenditure incurred as reduced by grants. The Revenue Commissioners are prepared to accept that the provisions of Section 11 Finance Act 1973 (now Section 288(5) Taxes Consolidation Act 1997) will not apply to this excess. The provision is only applied where the capital allowances granted exceed the gross cost.
Income Tax
Section 288(5), Taxes Consolidation Act, 1997
Origin: Office of the Chief Inspector of Taxes
File ref:00gm120