Energy Efficiency in Agriculture Tax Aspects Presented By: Declan - - PowerPoint PPT Presentation

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Energy Efficiency in Agriculture Tax Aspects Presented By: Declan - - PowerPoint PPT Presentation

May 28, 2023 436 likes •636 views

Energy Efficiency in Agriculture Tax Aspects Presented By: Declan McEvoy, Head of Tax Who are we? Top 10 Accountancy Practice Established in 1975 Head Office is in Bluebell, Dublin. 30 Locations Nationwide Over

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Energy Efficiency in Agriculture – Tax Aspects

Presented By:

Declan McEvoy, Head of Tax

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Who are we?

  • Top 10 Accountancy Practice
  • Established in 1975
  • Head Office is in Bluebell, Dublin.
  • 30 Locations Nationwide
  • Over 300 Employees

Ifac.ie 2

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Setting the Scene – Tax Wise

  • Low Tax Rate
  • 28.5%
  • High Tax Rate
  • 52% / 55%
  • VAT - 13.5%/23%
  • Therefore net expenditure will be the after tax effect

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Tax

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The tax system for once is ahead or in line with the various initiatives, however, improvements and certainty will be required

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VAT

  • Majority of farmers NOT VAT registered
  • VAT (refund of Tax) Flat Rate Farmer order 2012 allows mechanism

to reclaim VAT - VAT 58 on:

  • Farm Buildings/Structure
  • Construction, erection or installation of qualifying equipment for

purpose of micro generation of electricity for use solely or mainly for the purposes of a farm business

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VAT

Qualifying Equipment means:

  • Wind Turbines
  • Photo Voltaic
  • Ancillary equipment for storage or grid connection

Subject it to being named on Triple E Product register

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Recommendation

Revenue to be asked to update the VAT order to allow VAT reclaim on VSD’s etc.

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Income Tax/Corporation Tax

  • Depreciation not allowed in accounting sense for income or

corporation tax

  • Instead capital allowances allowed
  • Machinery/Plant

*

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Standard Rate of Capital Allowance

  • 12.5% straight line over 8 years
  • Eg.€24,000 investment
  • €3,000 PA for 8 years

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Tax Saving over 8 years

  • Low Rate: €855 pa net cost €17,160
  • High Rate: €1,560 pa net cost €11,520

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Accelerated Allowances

  • Amount of expenditure written off in 1 year
  • Benefit
  • Treated same as an expense

Accelerated:

  • Introduced in 2008
  • Extended to sole trader in 2017
  • Available to 31 December 2020
  • Must be on list of energy efficient equipment as approved

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Accelerated Allowances

  • Must be incurred for purpose of business
  • Must be owned by company/individual
  • Must be in use at end of accounting year
  • Wholly & exclusively

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Accelerated Allowances

  • If ceased to be in use with 8 year period
  • Potential clawback of allowances
  • If scrapped extra claim

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Critical for Accelerated Allowance

  • On schedule 4a of tax act /SEAI list
  • Minimum spend
  • Sole trade or company
  • Claimed on annual tax return
  • Must be new

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Example: No VAT reclaimable

Cost €12,000 Low High Tax relief Accelerated allowances 3,420 6,240 Net Cost 8,580 5,760

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If VAT reclaimable - say at 13.5.%

Cost €12,000 €12,000 VAT 1,427 1,427 €10,573 €10,573 Tax Relief 3,013 5,498 Tax Relief Net cost € 7,560 € 5,075

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Summary

ACA - Dramatic impact as upfront relief

  • Even better if can get approved for VAT

Tax system encourages this investment

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Presented by:

Declan McEvoy Head of Tax 01-4551036 declanmcevoy@ifac.ie