Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I move amendment No. 46:

In page 73, between lines 27 and 28, to insert the following:

“Farming: accelerated allowances for capital expenditure on slurry storage

25. (1) The Principal Act is amended—

(a) in Chapter 1 of Part 23, by the insertion of the following section after section 658:“Farming: accelerated allowances for capital expenditure on slurry storage658A. (1) In this section—‘qualifying capital items’ means the items specified in column (1) of the Table in Part 2 of Schedule 35A meeting the description specified in column (2) of that Table opposite the reference to those items in column (1);‘qualifying expenditure’ means capital expenditure incurred during the relevant period on the provision or construction, as the case may be, of qualifying capital items;‘relevant period’ means the period commencing on 1 January 2023 and ending on 30 June 2023;‘relevant regulation’ means Article 7 of the European Union (Good Agricultural Practice for Protection of Waters) Regulations 2022 (S.I. No. 113 of 2022);‘relevant tax’, in relation to a person, means—(a) where the person is a company, any corporation tax, and(b) where the person is not a company, any contributions paid under the Social Welfare Consolidation Act 2005, income tax or universal social charge;‘Rescuing and Restructuring Guidelines’ means the Communication from the Commission on Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty;‘undertaking in difficulty’ shall be construed in accordance with section 2.2 of the Rescuing and Restructuring Guidelines.(2) Where a person incurs qualifying expenditure for the purpose of a trade of farming land occupied by that person, then, where for any chargeable period—(a) a writing down allowance is to be made under section 658—(i) subsection (2) of that section shall apply as if—(I) the reference in paragraph (a) of that subsection to 7 years were a reference to 2 years, and(II) the following were substituted for paragraph (b) of that subsection:“(b) The farm buildings allowance to be made under this subsection shall be 50 per cent of the capital expenditure referred to in paragraph (a).”,and(ii) subsection (12) of that section shall apply as if “Chapter 1 or 2 of Part 9” were substituted for “Chapter 1 of Part 9”,or(b) a wear and tear allowance is to be made under section 284, subsection (2) of that section shall apply as if the reference in paragraph (ad) of that subsection to 12.5 per cent were a reference to 50 per cent.(3) For the purposes only of determining, in relation to a claim for an allowance under section 658 as applied by subsection (2)(a), whether and to what extent capital expenditure incurred on qualifying capital items is incurred in the relevant period, only such an amount of that capital expenditure as is properly attributable to work on the construction of the qualifying capital items concerned actually carried out during that period shall (notwithstanding any other provision of the Tax Acts as to the time when any capital expenditure is or is to be treated as incurred) be treated as having been incurred in that period.(4) Subsection (2) shall not apply where the person concerned—(a) is, or is part of, an undertaking in difficulty,(b) is subject to an outstanding recovery order following a previous decision of the Commission of the European Union that declared an aid illegal and incompatible with the internal market, or(c) is, or is part of, an undertaking that is not a micro, small or medium-sized enterprise within the meaning of Commission Regulation (EU) No. 702/2014 of 25 June 2014.(5) The aggregate amount of relief granted to a person under this section shall not exceed €500,000.(6) This subsection applies to a person in respect of a chargeable period where the aggregate of the amount of the relief granted under this section to the person in that chargeable period and in previous chargeable periods is greater than €60,000.(7) Notwithstanding section 851A, where subsection (6) applies to a person in respect of a chargeable period, the Revenue Commissioners may disclose the following information in respect of the year in which the chargeable period ends:(a) the name of the person;(b) the sector of activity at NACE group level, within the meaning of Regulation (EC) No. 1893/2006 of the European Parliament and of the Council of 20 December 2006, as amended by Regulation (EC) No. 295/2008 of the European Parliament and of the Council of 11 March 2008, Regulation (EU) No. 70/2012 of the European Parliament and of the Council of 18 January 2012 and Regulation (EU) 2019/1243 of the European Parliament and of the Council of 20 June 2019;(c) the territorial unit, within the meaning of the NUTS Level 2 classification specified in Annex 1 to Regulation (EC) No. 1059/2003 of the European Parliament and of the Council of 26 May 2003, as amended by Regulation (EC) No. 1888/2005 of the European Parliament and of the Council of 26 October 2005, Commission Regulation (EC) No. 105/2007 of 1 February 2007, Regulation (EC) No. 176/2008 of the European Parliament and of the Council of 20 February 2008, Regulation (EC) No. 1137/2008 of the European Parliament and of the Council of 22 October 2008, Commission Regulation (EU) No. 31/2011 of 17 January 2011, Council Regulation (EU) No. 517/2013 of 13 May 2013, Commission Regulation (EU) No. 1319/2013 of 9 December 2013, Commission Regulation (EU) No. 868/2014 of 8 August 2014, Commission Regulation (EU) No. 2016/2066 of 21 November 2016, Regulation (EU) 2017/2391 of the European Parliament and of the Council of 12 December 2017 and Commission Delegated Regulation (EU) 2019/1755 of 8 August 2019, in which the person is located;(d) the year in which the relief is granted.(8) For the purposes of subsections (5) and (6), the amount of relief granted to a person in a chargeable period shall be the amount determined by the formula—R = A – Bwhere –R is the amount of the relief granted to the person in the chargeable period,A is the amount of relevant tax that would be payable by the person for the chargeable period, but for subsection (2), andB is the amount of relevant tax payable by the person for that chargeable period.”,and(b) by the insertion of the following Schedule after Schedule 35:“SCHEDULE 35ATYPES AND DESCRIPTIONS OF SLURRY STORAGE ITEMS FOR THE PURPOSES OF SECTION 658APART 1DEFINITIONIn this Schedule, ‘slurry’ means—(a) excreta produced by livestock while in a building or yard, and(b) a mixture of such excreta with rainwater, washings, or such other extraneous material or any combination of these.PART 2

”.

(2) Subsection (1) shall come into operation on such day as the Minister for Finance may appoint by order.”.

The recent assignment of challenging carbon reduction targets to the farming sector underlines the importance of adopting measures that allow Ireland to meet its decarbonisation targets. This proposed amendment to the principal Act is to insert a new provision for the accelerated capital allowance scheme for slurry storage facilities. The amendment is designed to incentivise farmers to construct slurry storage facilities and to increase the volume of slurry storage at individual farm level. This is important as increased storage should help reduce reliance on imported chemical fertilisers, improve water and air quality and work towards our country's decarbonisation targets and efforts.

Capital allowances for farm buildings are usually deductible at a rate of 15% per annum over a period of six years, with the final 10% deductible in the seventh year. Plant and machinery are usually deductible at a rate of 12.5% per annum over a period of eight years. This scheme provides that 100% of the capital expenditure incurred on the construction of slurry storage facilities and associated equipment may qualify for an accelerated rate such that the allowances can be claimed over two years. This proposal is identified as having a budget impact of €1 million in 2023, €9 million in 2024, €18 million in 2025 and €9 million in 2026. However, it would be cash-neutral over a ten-year period.

To qualify for the scheme, an applicant farmer must incur qualifying expenditure and qualifying capital items. Qualifying expenditure is capital expenditure incurred during the period 1 January 2023 to 30 June 2023 on the provision of or construction of qualifying capital items. This is a permissible form of state aid and is granted in accordance with the ABER regulation, to which I referred a moment ago. As I have just explained to Deputy Doherty, the maximum possible period of effectiveness which can be provided for in the current circumstances is six months. Once clarity has been provided by the European Commission as to when the new ABER is to come into effect, further legislation will be required in early 2023 to extend this measure to the end of 2025, as originally intended. Qualifying capital items are the items specified in the table in Part 2 of Schedule 35A. All items must be listed in the table and meet the specifications in Article 7 of the Treaty on European Union.

Teagasc advises that proper slurry storage reduces overall carbon emissions by allowing farmers to make more efficient use of slurry by applying it only when maximum use can be made of the nitrogen it contains. Efficiency rates are at their highest when slurry is applied to growing grass and crops in the springtime. Additional storage capacity would allow farmers to make decisions about slurry application based on efficiency of use rather than the need to create more capacity in their tanks due to lack of storage. Teagasc advises that nutrient use efficiency has the potential to contribute to the saving of 112,000 tonnes of carbon emissions per year. The use of slurry as an organic fertiliser is more environmentally friendly and is a lower carbon emissions substitute for imported chemical fertilisers. The correct storage facilities for slurry will reduce the risk of seepage and runoff into water supplies and should also improve air quality, all of which is aligned with wider Government policy.