The Accelerated Capital Allowance (ACA) is a tax incentive which aims to encourage companies to invest in energy saving technology. The ACA is based on the existing Capital Allowances tax structure (also referred to as Wear and Tear Allowance) for plant and machinery and is only applicable to eligible energy efficient equipment.
With the existing Capital Allowances tax structure, when money is spent on capital equipment companies can deduct the cost of this equipment from their profits proportionally over a period of 8 years, i.e. the annual taxable profit is only reduced by 1/8 of the total equipment cost. With the new Accelerated Capital Allowance: When money is spent on eligible energy efficient capital equipment, the company can deduct the full cost of this equipment from their profits in the year of purchase, i.e. the taxable profit in year one is reduced by the full cost of the equipment. The ACA benefits you in year one by: Reducing your tax bill Increasing your cash flow.
The ACA is available to companies that operate and pay corporation tax in Ireland.
Claiming the ACA is very simple as the standard annual tax return procedure is the method used. The following are some simple guideline steps: Decide upon required piece of equipment Ensure product is on the Triple E Products Register during relevant accounting period before purchasing Claim the ACA for the purchased equipment on the company’s tax return form along with any other wear and tear allowances for machinery and plant To find out if the equipment you bought, or plan to buy, is eligible for the ACA just go www.seai.ie/aca where the up to date Triple E Products Register is maintained by the Sustainable Energy Authority of Ireland (SEAI). For more detailed and definitive information on how to claim the ACA please contact The Irish Revenue Commissioners (www.revenue.ie).