Joan Burton (Dublin West, Labour)
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Question 167: To ask the Minister for Finance the way in which a company and a sub lessor, as explained in a recent court case, was able to avail of capital allowances in respect of the National Aquatic Centre of over €2 million per annum up to a total value of €34 million despite this being a public project 100% financed by the State at a cost of over €60 million; if his attention has been drawn to costs relating to this project, or companies associated with it, which would give rise to capital allowances; the tax provision under which this could arise; and if he will make a statement on the matter. [14156/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I am aware of the costs relating to the National Aquatic Centre and the companies associated with it. However, as I indicated in my reply to a similar question put down for answer by the Deputy last Wednesday, the Revenue Commissioners are precluded for reasons of confidentiality from disclosing any details of the affairs of an individual taxpayer and for this reason it is not possible to give a detailed reply to the Deputy's question.

I am informed by the Revenue Commissioners that the general position is that capital allowances can be claimed in respect of capital expenditure incurred on the provision of machinery or plant under section 284(1) of the Taxes Consolidation Act 1997. A claim for allowances under this provision will typically be made by an owner of machinery or plant who operates the machinery or plant in the course of his or her own business. There is also provision for allowances to be claimed where machinery or plant is leased. Under section 298 of the same Act, a lessor who has incurred capital expenditure on the provision of machinery or plant may claim capital allowances in respect of that expenditure provided that the burden of wear and tear falls on the lessor.

Alternatively, if the lessor chooses not to claim, the lessee of the machinery or plant may, under section 299 of the same Act, claim the allowances subject to a number of conditions. To qualify, the lessee must use the machinery or plant for the purposes of his or her trade. The machinery or plant must be let to the lessee on such terms that he or she is bound to maintain the machinery or plant and deliver it over in good condition at the end of the lease and the burden of wear and tear must in fact fall on the lessee. However, whether allowances are being claimed by an owner and operator of machinery or plant or by the lessor or lessee of that machinery or plant, allowances are only available in respect of expenditure incurred which is not met directly or indirectly by the State. Section 317 of the Consolidation Act provides specific provision for denying allowances in respect of any expenditure so met by the State. This section does not apply in respect of a company carrying on a food processing trade on the purchase of certain machinery or plant for use in that trade.

I am informed by the Revenue Commissioners that claims for capital allowances are generally made in the annual return of income submitted by taxpayers under the self-assessment system. All returns are subject to check and audit to ensure that, inter alia, any allowances are correctly claimed.