Tom Hayes (Tipperary South, Fine Gael)
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Question 87: To ask the Minister for Finance if the flat rate farmers VAT reclaim applies to wind turbines. [35192/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I am advised by the Revenue Commissioners that flat-rate farmers are not in the normal course entitled to credit for, or repayment of, VAT incurred by them on business inputs. The Value-Added Tax (Refund of Tax) (No 25) Order 1993 provides for refunds to flat-rate farmers for VAT borne on the "construction, extension, alteration or reconstruction of any building or structure which is designed for use solely or mainly for the purposes of a farming business". However, while the installation of a wind turbine may be the construction of a structure, such a structure is not "designed for use solely or mainly for the purposes of a farming business". It is designed rather to generate electricity for wherever required. Consequently, the installation of wind turbines does not come within the scope of the refund order.

Darragh O'Brien (Dublin North, Fianna Fail)
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Question 88: To ask the Minister for Finance if the manufacturing and retailing of grave headstones is deemed a charitable purpose; and if this activity is allowed charitable status for tax and VAT exemptions. [35193/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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An income tax exemption for charities is available under section 207 of the Taxes Consolidation Act (TCA) 1997 and the exemption is extended to cover Corporation Tax by section 76 of the same Act. No such exemption is available for VAT. To avail of the charitable tax exemption a body must be established for charitable purposes only and must apply all of its income for charitable purposes only. A body established for the primary purpose of manufacturing and retailing grave headstones would not be considered as established for charitable purposes only. Therefore such a body could not avail of the tax exemption and would be treated as a taxable entity by the Revenue Commissioners.

Bodies holding charitable tax exemptions can carry on trading activities that are ancillary to their wholly and exclusively charitable objects. Charities may also set up subsidiary trading companies to carry on trading activities. These subsidiary trading companies are not entitled to a charitable tax exemption and are fully taxable on their profits. Where a charity sets up a trading taxable subsidiary, it must ensure that the arrangement does not put at undue risk any assets of the charity. The interests of the charity must be protected and investment of the charity's resources must ultimately be for the benefit of the charity. Bodies that are granted charitable tax exemption are subject to periodic risk-focused reviews by Revenue towards ensuring that the terms of the exemption continue to be fulfilled.