Source: https://www.revenue.ie/en/companies-and-charities/corporation-tax-for-companies/corporation-tax/capital-allowances-and-deductions.aspx
Timestamp: 2020-07-13 06:25:30
Document Index: 477492306

Matched Legal Cases: ['art 9', 'art 09', 'art 11', 'art 11', 'art 11', 'art 08', 'art 10', 'art 9', 'art 10']

Company residency rules
A company may claim capital allowances on capital expenditure it incurs on certain types of business assets and business premises.
Capital allowances are generally calculated on the net cost of the business asset or premises. There are different rates available depending on the type of asset. A company can claim capital allowances on:
transmission capacity rights
specified intangible assets.
A company can claim capital allowances at a rate of:
12.5% over eight years for plant and machinery
4% over 25 years for most industrial buildings.
A company can claim an Accelerated Capital Allowance (ACA) of 100% for the following:
Energy efficient equipment including electric and alternative fuel vehicles
Gas vehicles and refuelling equipment
Equipment in a creche or gym provided by the company to its employees.
The ACA can be claimed in the first year the asset is used in the business.
A company can also claim capital allowances at a rate of 15% over 7 years on the cost of a building used as a creche or gym by its employees.
A company carries on a trade of manufacturing furniture and makes up its accounts to 31 December each year. In May 2016 the company bought a new machine which cost €25,000 excluding Value-Added Tax (VAT). The machine was in use in the trade at 31 December 2016.
The company can claim an allowance, known as a wear and tear allowance, at a rate of 12.5% of the net cost of the machine for the 12 month accounting period ending 31 December 2016. The allowance of €3,125 (€25,0000 @ 12.5%) is treated as a trading expense of the company in the same way as other trading expenses (for example, wages) in calculating the company’s profit for tax purposes.
The company can claim a wear and tear allowance of €3,125 for the following seven accounting periods, provided the machine is in use for the trade at the end of the accounting period in question.
The allowance may not be given in full if the accounting period is less than 12 months, or if the machine is used for a purpose other than the trade.
For further guidance on capital allowances please refer to the Tax and Duty Manuals in Part 9.
A company may incur certain expenses in the three year period before they start trading. A company can include these expenses as a deduction when calculating profits.
Interest and other annual payments
A company may deduct interest payments, royalties and other payments it makes when calculating the CT amount due. A company's Dividend Withholding Tax (DWT) on patent royalty payments must be deducted and included in the CT calculation. This does not apply to:
payments covered by the Interest and Royalties Directive
payments covered by Taxes Consolidation Act 1997 (TCA 1997), s242A
payments covered in Corporation Tax - Treatment of certain patent royalties paid to companies resident outside the State.
A company may make a charitable donation to a Revenue approved charity or organisation. If it does, it may be able to reduce the CT amount due. The minimum single donation is €250 per year.
Published: 06 February 2020 Please rate how useful this page was to you Print this page
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Part 09 - Notes for Guidance – Taxes Consolidation Act 1997Principal Provisions Relating to Relief for Capital Expenditure
Part 11-00-01Cars Capital Allowances and Lease-Hire Payments
Part 11-00-03Certain Commercial Vehicles Capital Allowances and Leasing Expenses
Part 11-00-04Capital Allowances for Taxis
Part 08-01-04Treatment of Certain Royalties Paid to Companies Resident Outside the State
Part 10-00-01Cross-Reference to Part 9
Part 10-00-02Property-Based Incentive Schemes