Jan O'Sullivan (Limerick East, Labour)
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Question 158: To ask the Minister for Finance in relation to tax incentives on nursing home developments, the number of applications which have been made under the scheme; the number of applications which have been approved; the number of nursing home beds to be supplied by the approved applications; the expected cost of the tax foregone on these developments; and if he will make a statement on the matter. [33106/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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There is no system of prior application and approval under the scheme of tax relief for the construction or refurbishment of registered nursing homes. When the relevant facilities have been completed, and provided they meet the necessary criteria, investors can then claim tax relief on the expenditure incurred under the scheme in their annual income tax returns as part of the self-assessment system. All returns are subject to check and possible audit to ensure that, among other things, the tax relief is correctly claimed.

The Revenue Commissioners do not therefore have information on the number of nursing home beds supplied or to be supplied as part of projects seeking tax relief under the scheme.

I am informed by the Revenue Commissioners that information on the scheme of tax relief for registered nursing homes was for the first time specified and separately included in personal income tax returns for the tax year 2004, the latest year available, and which were due for filing in October, 2005. No specific information on the cost of the scheme is available for the years prior to 2004. Based on the information that has been received and collated to date for the tax year 2004, a total of €16.6 million was included in 287 claims for capital allowances for the construction of nursing homes. This figure would correspond to a maximum Exchequer cost of the order of €7 million for these returns in terms of income tax forgone.

I should point out that the Revenue Commissioners are concerned at preliminary indications that in some instances the new, separately categorised data on exempt income and property incentives may not have been correctly entered on the 2004 Income Tax returns. Revenue is engaging with the tax practitioner bodies to draw attention to these deficiencies and to rectify them. Revenue has also increased awareness among its own staff involved in processing tax returns of the need to ensure, through closer examination of the returns, that they are correctly completed.

Data for the tax years 2005 and 2006 is not yet available as the income tax returns for those years are not due for filing until October 2006 and October 2007, respectively.

It should also be noted that the scheme of capital allowances for the construction of nursing homes was reviewed by Indecon Economic Consultants as part of the overall review of property tax incentives in 2005. The report of this review was published in February 2006 and is available on my Department's website. Among the main findings of the review of the scheme of tax relief for nursing homes is that the tax incentive has been effective in increasing the supply of nursing home places. It is likely that many projects would either not have proceeded in the absence of the tax incentive or would have taken longer to come on-line.