Ireland's Accelerated Capital Allowance Scheme - Background, Challenges and Opportunities - eceee

Ireland’s Accelerated Capital
          Allowance Scheme
Background, Challenges and Opportunities

Dr. Brendan Cahill
brendan.cahill@seai.ie
@bgcahill
                                www.seai.ie

Overview

    Introduction to ACA

    ACA Benefits

    Product Eligibility and Registration

    Challenges

    Opportunities

    Questions

2     www.seai.ie

ACA Policy Context
• National Energy Efficiency Action Plan
  (NEEAP)
      – 20% reduction in overall energy demand
        by 2020 through a range of energy
        efficiency measures.
      – 33% reduction in public sector energy
        use as a standard bearer for this
• National Mitigation Plan (NMP)
      – A whole-of-Government Plan to
        decarbonise Ireland’s economy.
      – Over 100 individual actions for various
        Ministers and public bodies to take
        forward.
      – ACA scheme is identified in the Plan as
        one of the existing measures for
        decarbonising the build environment
        (BE8).
  3    www.seai.ie

ACA Background

• ACA was introduced in the
  Finance Act, 2008, for a trial
  period of three years.
• ACA is based on the existing
  Capital Allowances tax
  structure (Wear and Tear
  Allowance) for eligible energy
  efficient plant and machinery.
• Extended until 2020 after mid-
  term review in 2017.

ACA Benefits

• The ACA is a tax incentive for
  companies paying corporation
  tax and aims to encourage
  investment in energy efficient
  equipment.
• The ACA allows companies to
  write off 100% of the purchase
  value of qualifying energy
  efficient equipment against their
  profit in the year of purchase.
• Benefits
   – Increasing your cash flow
   – Reducing your energy costs
   – Increased Consumer Confidence

ACA Example

• A company must
  pay 12.5%
  corporation tax
  on a €100k profit
• The company
  has purchased
  €20k of ACA
  eligible
  equipment in the
  same period

Eligible Products

52 technologies across 10 categories:
https://www.seai.ie/energy-ratings/triple-e-register-
for-business/categories-and-criteria/

Eligible Products

• Product eligible criteria designed to capture the
  top 10-20% of energy efficient products within
  technology group
• Developed in conjunction with technology
  experts and industry organisations
• Compliance demonstrated by way of supporting
  documentation, e.g. Test reports, etc.
• Updated regularly to reflect changes in the
  market

Product Registration

   Supplier                                                             Approved
                   SEAI verifies      Supplier
submits basic                                        SEAI checks      products are
                   submission is      provides
product details                                     documentation      signed into
                    correct and      supporting
     for                                            and approves     legislation by
                     requests      documentation
consideration                                         or rejects    the Minister for
                    supporting     through Triple
through Triple                                         product       Finance twice
                  documentation      E account
  E account                                                             annually

ACA Challenges
• Data on claims is not readily available
• Update of registered list by Statutory Instrument
• Best in class for some technology areas
  advances very quickly
• Companies can find the product submission time-
  consuming

ACA Opportunities
• Positive policy environment
  for adapting ACA
  legislation to become more
  user-friendly
• Targeting of a broader
  range of stakeholders
  (Accountants, Tax
  Advisors etc.)
• Underpinning SEAI Grant
  Programmes

Questions?

The Sustainable Energy Authority of Ireland is partly financed by Ireland’s EU Structural Funds Programme co-funded by the Irish Government and the European
Union.