Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

The section makes a number of changes to the scheme of accelerated industrial building allowances for certain specialist aviation service facilities which I introduced in Finance Act 2013. The scheme focuses on the construction and refurbishment of buildings and structures to be used for the maintenance, repair and overhaul of commercial aircraft and the dismantling of such aircraft for the purposes of salvaging or recycling parts or materials. The relief, which provides for a seven year write-off of this capital expenditure, will operate for five years and is subject to all the normal rules for capital allowances.

The first amendment is to section 268 of the Taxes Consolidation Act and is to restrict the amount of tax relief available so that the aid granted per project does not reach the de minimislimits set by the European Commission. The de minimisguidelines stipulate that the aid granted must not exceed the €200,000 limit over any three consecutive financial years. In order to ensure this level of aid is not breached, I have imposed a cap on the amount of expenditure that can qualify for tax relief at the accelerated rate provided for under the scheme. In the case of a company, this equates to overall construction expenditure of €5 million. In the case of an individual, the limit is €1.25 million of relevant expenditure. Restrictions regarding the location of qualifying airports that were inherent in the regional aid guidelines are also removed. All airports in the State will now be in a position to avail of the scheme.

The second amendment is to section 272 of the Taxes Consolidation Act. Subsection (3)(k) is amended to reflect that during the first five years of the qualifying period capital expenditure that is subject to the de minimislimits, known as special capital expenditure in the amendment, will qualify for capital allowances at the accelerated rate, which is 15% over six years and 10% in the final year. All capital expenditure in excess of that limit will qualify for capital allowances at the normal rate of 4% over 25 years as will capital expenditure incurred after the five year qualifying period. Subsection (4)(k) is also amended and outlines the period within which the allowances can be transferred to a subsequent purchaser.

The third amendment is a technical amendment to section 274 of the Taxes Consolidation Act which outlines the period within which a balancing adjustment can apply.

The fourth amendment includes the relief in the high earners' restriction under Schedule 25B of the Taxes Consolidation Act.

The final two amendments relate to section 31 of the Finance Act 2013 and section 33 of the Finance Act 2014. Section 31 of the Finance Act 2013 introduced the scheme of accelerated capital allowances and section 33 of the Finance Act 2014 subsequently amended the scheme. These sections have now taken effect as and from 13 October 2015 by means of the financial resolution taken on budget night.

The sections were initially sought by the Shannon enablers group to assist with the development of Shannon Airport as a commercial centre for operations such as those described in the sections. Subsequently it was extended to all airports. There is a potential for significant job creation in the aviation sector in Ireland. By providing for this targeted incentive I hope to encourage the establishment of the necessary infrastructure to allow us to attract significant maintenance, repair, overhaul and dismantling activities to Ireland. This would foster the development of centres of excellence within this engineering sector which we can build on from the perspective of job creation in the future.