Want to reduce your tax bill and your energy costs? Accelerated Capital Allowance is a tax incentive encouraging investment in energy saving technology.
ACA and Triple E
The Accelerated Capital Allowance (ACA) is only applicable to energy efficient equipment on the Triple E Product Register. ACA is based on the existing capital allowances tax structure, or wear and tear allowance, for plants and machinery. Claiming the ACA is carried out the same way as for the standard capital allowances.
Organisations who invest in eligible energy efficient capital equipment can deduct the full cost of the equipment from their profits in the year of purchase. This reduces the taxable profit in year one by the full cost of the equipment.Search the register
Eligibility for ACA
Companies, sole traders, and farmers that operate and pay corporation tax in Ireland can avail of the ACA scheme.
The equipment purchased must be new and bought for use in a trade. It cannot be leased, let or hired to any person.
ACA can be claimed for the accounting period in which the equipment was first provided, as long as the equipment is included on the published list at some stage during that accounting period.
Eligible costs and minimum expenditure
ACA is available for costs directly related to providing the equipment. Expenditure on the technology must be equal to or exceed the minimum amounts for the relevant class of technology. Find the minimum amounts on the categories and criteria for Triple E page.
How to claim the ACA
- Decide on the equipment you require.
- Ensure the equipment model is eligible for ACA by checking the Triple E product register before making purchase.
- Claim the ACA through your company’s return of income form (CT1). There is now a field for ACA on the form alongside the standard capital allowances entry field.
Rules and qualifications
The ACA is subject to the same rules as the standard plant & machinery wear and tear allowance. The difference is the acceleration to 100% of capital expenditure during the first year of its purchase. You don't need approval for expenditure on energy efficient equipment, normal self-assessment tax provisions apply.
Still unclear on whether you qualify for the ACA? Get assistance from your taxation advisor or by visiting revenue.ie.
An ACA example
Consider an example where a company has €100,000 profit at the end of their accounting period. They must pay 12.5% corporation tax on this profit. The company has also purchased equipment that cost €20,000 during the same period.
|The first year the equipment was purchased:||Without Capital Allowance||1. Standard Capital Allowance||2. ACA Scheme|
|Proportion of deductible Capital Equipment costs||N/A||1/8
|Deductible Capital Equipment costs||N/A||€2,500||€20,000|
|Taxable profit (minus deductions)||€100,000||€97,500||€80,000|
|Tax payable on profit @12.5%||€12,500||€12,188||€10,000|
|Tax saved with deductions||N/A||€313||€2,500|
Under the ACA scheme, the company would have €2,187 extra cash over the standard capital allowance to spend on eligible energy efficient equipment. They will also enjoy immediate savings in energy costs from the running of the equipment.