Finance Act, 1995

Capital allowances in relation to construction or refurbishment of certain commercial premises.

48.—(1) In this section—

“qualifying premises” means a building or structure the site of which is wholly within a qualifying resort area and which—

(a) apart from this section, is not an industrial building or structure within the meaning of section 255 of the Income Tax Act, 1967 , and

(b) is in use for the purposes of the operation of one or more qualifying tourism facilities,

but does not include any part of a building or structure in use as, or as part of, a dwelling-house, other than a tourist accommodation facility of the type referred to in the definition of “qualifying tourism facilities”;

“qualifying tourism facilities” means—

(a) tourist accommodation facilities registered by Bord Fáilte Éireann under Part III of the Tourist Traffic Act, 1939 , or listed under section 9 of the Tourist Traffic Act, 1957 , and

(b) such other classes of facilities as may be approved of for the purposes of this section by the Minister for Tourism and Trade, in consultation with the Minister for Finance.

(2) Subject to subsection (3) and the modifications provided for in subsections (4) to (6), all the provisions of the Tax Acts (other than section 40 of the Finance Act, 1994 ) relating to the making of allowances or charges in respect of capital expenditure which is incurred on the construction or refurbishment of an industrial building or structure shall, notwithstanding anything to the contrary therein, apply—

(a) as if a qualifying premises were, at all times at which it is a qualifying premises, a building or structure in respect of which an allowance falls to be made for the purposes of income tax or corporation tax, as the case may be, under Chapter II of Part XV, or Chapter I of Part XVI, of the Income Tax Act, 1967 , by reason of its use for a purpose specified in section 255 (1) (a) of that Act, and

(b) where any activity carried on in the qualifying premises is not a trade, as if it were a trade:

Provided that an allowance shall be given by reason of this subsection in respect of any capital expenditure which is incurred on the construction or refurbishment of a qualifying premises only in so far as that expenditure is incurred in the qualifying period.

(3) In the case where capital expenditure is incurred in the qualifying period on the refurbishment of a qualifying premises, subsection (2) shall apply only if the total amount of the capital expenditure so incurred is not less than an amount which is equal to 20 per cent, of the market value of the qualifying premises immediately before the said expenditure is incurred.

(4) For the purposes of the application by subsection (2) of section 254 and section 264 of the Income Tax Act, 1967 , and section 25 of the Finance Act, 1978 , in relation to capital expenditure which is incurred in the qualifying period on the construction or refurbishment of a qualifying premises—

(a) the said section 254 shall, notwithstanding section 22 of the Finance Act, 1991 , have effect—

(i) as if, in paragraph (a) of subsection (2A), the reference to the 1st day of April, 1991 (as provided for in section 50 of the Finance Act, 1988 ) were a reference to the 1st day of July, 1998,

(ii) as if paragraph (aa) (inserted by section 74 of the Finance Act, 1990 ) of subsection (2A) were deleted, and

(iii) as if subsection (2B) (inserted by the said section 74) were deleted,

(b) the said section 264 shall have effect—

(i) as if, in subsection (1) (apart from the proviso thereto), the reference to “one-fiftieth” were a reference to “one-twentieth”, and

(ii) as if the proviso to subsection (1) were deleted,

and

(c) the said section 25 shall have effect—

(i) as if, in paragraph (b) of subsection (2) (inserted by section 48 of the Finance Act, 1988 )—

(I) the reference in subparagraph (i) to “before the 1st day of April, 1989, 75 per cent., or” were a reference to “before the 1st day of July, 1998, 75 per cent.,”, and

(II) subparagraphs (ii) and (iii) (inserted by section 76 of the Finance Act, 1990 ) were deleted,

and

(ii) as if subsection (2A) (inserted by the said section 76) were deleted.

(5) In the case of a qualifying premises which is such a premises by virtue of being a tourist accommodation facility of a type referred to in paragraph (a) of the definition of “qualifying premises” in subsection (1)

(a) the event of the premises ceasing to be registered or listed in the manner referred to in the said paragraph of the said definition shall be treated as if it were an event specified in subsection (1) of section 265 of the Income Tax Act, 1967 , and

(b) for the purposes of the application of the said section 265 on the occurrence of any such event there shall, notwithstanding anything to the contrary in section 304 of the Income Tax Act, 1967 , be treated as arising in relation to that event sale, insurance, salvage or compensation moneys in an amount equal to the aggregate of—

(i) the residue of the expenditure (within the meaning of section 266 of the Income Tax Act, 1967 ) incurred on the construction or refurbishment of the premises immediately before that event, and

(ii) the allowances made under Chapter II of Part XV, or Chapter I of Part XVI, of the Income Tax Act, 1967 , by reason of subsection (2), in respect of the expenditure incurred on the construction or refurbishment of the premises.

(6) Notwithstanding section 265 (1) of the Income Tax Act, 1967 , no balancing charge shall be made in relation to any qualifying premises by reason of any of the events specified, or, by virtue of subsection (5), treated as specified, in the said section 265 (1) which occurs—

(a) more than 11 years after the qualifying premises were first used, or

(b) in the case where section 26 of the Finance Act, 1991 , applies and has effect, more than 11 years after the capital expenditure on refurbishment of the qualifying premises was incurred.

(7) For the purposes only of determining, in relation to a claim for an allowance by virtue of subsection (2), whether and to what extent capital expenditure incurred on the construction or refurbishment of a qualifying premises is incurred or not incurred in the qualifying period, only such an amount of that capital expenditure as is properly attributable to work on the construction or refurbishment of the premises which was actually carried out during the qualifying period shall (notwithstanding any other provision of the Tax Acts as to the time when any capital expenditure is, or is to be treated as, incurred) be treated as having been incurred in that period.

(8) Where, by reason of subsection (2), an allowance is given under Chapter II of Part XV of, or Chapter I of Part XVI of, the Income Tax Act, 1967 , in respect of any capital expenditure which is incurred on the construction or refurbishment of a qualifying premises, relief shall not be given in respect of that expenditure under any provision of the Tax Acts other than the said Chapter II or the said Chapter I.