The Accelerated Capital Allowance (ACA) is a tax incentive for companies paying Irish corporation tax who invest in new 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. This compares to just 12.5% for ineligible plant and machinery. This scheme runs until 31st December 2020.
The ACA is based on the existing Capital Allowances tax structure (also referred to as the Wear and Tear Allowance) for plant and machinery and is only applicable to eligible energy efficient equipment. Claiming the ACA is also carried out the same way as for the standard Capital Allowances. There is no requirement to obtain approval for expenditure on the energy-efficient equipment. The normal self-assessment tax provisions apply. The ACA is claimed on the company’s return of income (form CT1). Since 2009 there is a separate entry field for ACA alongside the standard capital allowances entry field.
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 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.
There are thousands of products on the ACA list of eligible equipment, known as the Triple E (Energy Efficient Equipment) register. The Triple E register currently includes 10 different equipment categories and 52 associated technologies, which enables the ACA to provide incentives to companies across the majority of energy using equipment in virtually all industry sectors.
The Sustainable Energy Authority of Ireland (SEAI) has responsibility for publishing and maintaining the ACA Triple E register. You can access the register HERE. SEAI aims to ensure that only the top 10-15% most energy efficient products in any technology are listed. The register includes biomass boilers, heat pumps and solar PV panels, all of which Clearpower are ready, willing and able to supply and install.