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Tax Tips April 2017

Cut your energy costs and save tax

The Accelerated Capital Allowances (ACA) scheme is a tax incentive scheme for energy efficient equipment.  The scheme offers businesses investing in such equipment a double benefit: recurring energy savings and an up-front tax incentive.

Under the ACA scheme, when you spend money on eligible energy efficient capital equipment, you can deduct the full cost of this equipment from your profits in the year of purchase (rather than over the normal 8 years).  The taxable profit in year one is thus reduced by the full cost of the equipment.

The ACA benefits all businesses including sole traders and non-corporates by:

  • Reducing tax liabilities.
  • Improving cash flow.
  • Reducing energy costs on an ongoing basis.

A benchmark for energy efficient equipment

As well as reducing corporation tax liability by investing in energy efficient equipment you will gain from ongoing reduced energy use and cost savings over the lifetime of the equipment.

To be eligible for the ACA, equipment must be registered on the Triple E Product Register.  This vetted list of proven, exemplar energy efficient equipment is a valuable resource for specification and procurement of equipment.

As the benefits of energy efficiency to an organisation’s bottom line are increasingly recognised, the Triple Register is also a means of distinguishing products that have been independently verified and are demonstrably best in class in terms of energy efficiency.

The list of eligible equipment now includes over 8,000 products, which are among the most energy efficient equipment available.  You can find a fully searchable list of products at www.seai.ie/aca.

How do you claim ACA?

Claiming the ACA is simple, since the standard annual tax returns procedure used to claim standard capital allowances is also the method used to claim the ACA.  Essentially all that is required is that you:

  • Ensure the product you wish to purchase is on the Triple E/ACA list.
  • When purchasing the product, ensure that the product details on your purchase records are the same as on the Triple E/ACA list.
  • Claim the ACA allowance on your tax return form in the same section as for Standard Capital Allowances.

To find out if the equipment you bought, or plan to buy, is eligible for the ACA just go to www.seai.ie/triplee where SEAI maintains the up to date ACA eligible list.  For more detailed and definitive information on how to claim the ACA please contact your professional advisor.