Matt Carthy (Cavan-Monaghan, Sinn Fein)
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125. To ask the Minister for Finance the taxation policies of his Department which are intended to encourage farmers to adopt rooftop solar PV. [55713/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Accelerated Capital Allowance (ACA) scheme for Energy Efficient Equipment (EEE) encourages taxpayers to adopt equipment which is highly energy efficient. The scheme allows taxpayers to deduct the full cost of expenditure on eligible equipment from taxable profits for the year in which the equipment is first used for the purposes of the trade. This differs from the standard treatment applicable to capital assets, whereby wear and tear allowances are deducted at a rate of 12.5% annually, over a period of eight years. Eligible equipment is new equipment included in the list of energy-efficient equipment maintained and published by the Sustainable Energy Authority of Ireland (SEAI).

There are currently 10 classes of technology which qualify for the ACA scheme, specified in Schedule 4A of the TCA. Solar panels are included under the class of technology ‘Heating and Electricity Provision’.

A minimum amount of expenditure must be incurred on providing the equipment and this varies with the particular category to which the product belongs. Farmers that incur expenditure on eligible energy-efficient equipment for use in their trade are entitled to claim the ACA in the same manner as any other companies and unincorporated businesses. Equipment that is leased, let or hired will not qualify for the allowance.

ACAs on EEE are claimed through the normal self-assessment provisions through the return of income (Corporation Tax Return (Form CT1) or Income Tax Return (Form 11)). There is no requirement to obtain prior approval for capital expenditure on the equipment.

More broadly there is also an initiative in place which is intended to encourage farmers to adopt solar PV on their lands.

Prior to Finance Act 2017 agricultural land leased for solar panels was not classified as qualifying agricultural property for the purposes of Capital Gains Tax retirement relief or agricultural relief from Capital Acquisitions Tax. Following Budget 2018, a revised approach was introduced whereby land leased for the installation of solar panels can be classified as qualifying agricultural property. A key condition is that the total area of land under lease and on which solar panels are installed does not exceed 50% of the total area of agricultural land.