Finian McGrath (Dublin North Central, Independent)
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Question 130: To ask the Minister for Finance the position regarding a matter (details supplied). [24455/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I understand the Deputy is referring to the decision announced in the Supplementary Budget 2009 to terminate the property-related accelerated capital allowance schemes in the health sector, among which is a scheme for registered nursing homes. I should explain that the rationale behind the decision to terminate these schemes is to broaden the tax base so that, in conjunction with other measures announced in the Supplementary Budget, everyone would make a contribution to resolving our fiscal difficulties, including those availing of tax relief under these schemes.

A scheme of capital allowances in respect of expenditure incurred on the refurbishment or construction of a nursing home that is registered under section 4 of the Health (Nursing Homes) Act 1990, has been in place since December 1997. Under the scheme, qualifying expenditure can be written off against a person's tax liability at the rate of 15% per annum for the first six years with the remaining 10% in year seven.

However, as announced in the Supplementary Budget on 7 April last and as reflected in section 8 of the Finance Act 2009, this scheme is to terminate on 31 December 2009 along with certain other health-related capital allowances schemes, subject to transitional arrangements for pipeline projects. Under the transitional arrangements, if certain qualifying criteria are met, the termination date for qualifying expenditure is extended.

The qualifying conditions depend on the type of work to be carried out and whether or not the work requires planning permission. Where the work to be carried out does not require planning permission, the termination date is 30 June 2010 so long as at least 30% of the construction or refurbishment costs have been incurred on or before 31 December 2009.

Where planning permission is required in relation to the work to be carried out, the qualifying condition for a termination date beyond 31 December 2009 is that a valid application for full planning permission be submitted on or before that date and be acknowledged by the relevant planning authority. In such cases, the termination date for qualifying expenditure is 30 June 2011. Thus, where planning permission for a nursing home has already been obtained, Finance Act 2009 provides for qualifying expenditure to be incurred up to 30 June 2011. I consider that the transitional arrangements now in place for pipeline projects will minimise the impact of the termination of the scheme of capital allowances on planned nursing home developments.