Dáil Éireann - Volume 587 - 15 June, 2004

Written Answers. - Tax Code.

  181. Mr. O’Shea asked the Minister for Finance his proposals to make provision in the Finance Act to stipulate the supply of quality child care places through the introduction of capital allowances to investors; and if he will make a statement on the matter. [17424/04]

  Mr. McCreevy: In budget 1999, I introduced a scheme of capital allowances in respect of qualifying capital expenditure incurred on the construction, refurbishment or extension of a building, or part of a building, used as a child care facility. The allowances are also available in respect of qualifying capital expenditure incurred on the conversion of an existing building, or part of a building, for use as such a facility. The allowances apply in respect of expenditure incurred on or after 2 December 1998 and provide for a seven year write off period at the rate of 15% in the first six years and 10% in the seventh year.

In budget 2000 I provided for accelerated capital allowances for owner operators of such facilities in relation to qualifying expenditure incurred on or after 1 December 1999. Accordingly, an owner-operator can opt to increase the 15% allowance for any year up to a maximum of 100% of the qualifying expenditure. At the same time, I provided for an initial allowance of 100% for both owner-operators and lessors of qualifying premises. A lessor — investor — can only opt to claim the full 100% in year one instead of the annual allowances over seven years. Unlike the owner-operator who can avail of accelerated allowances, they have no choice regarding the percentage of allowances drawn down each year.

An owner operator can set off the capital allowances against their taxable income from all sources. An investor can offset the 100% initial allowances against rental income from all sources in year one. If there is insufficient rental income in that year, the maximum that an investor can offset against non-rental income is €31,750. Thereafter, the balance of the unused capital allowances can only be off-set against rental income in the following years.