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Sunday 21 April 2019

How to cut your taxes while saving on energy bills

A 100pc tax write-off is available for farmers investing in energy efficient equipment, writes Martin O'Sullivan

The Dairy Farm Grant provides financial support for the installation of variable speed-drive vacuum and milk pump technology
The Dairy Farm Grant provides financial support for the installation of variable speed-drive vacuum and milk pump technology

Martin O'Sullivan

For many of us, our exposure and, indeed, our contribution towards efficient energy use extends to light bulbs and little else.

This is all about to change in the coming years as the war on global warming heats up, if you'll pardon the pun.

I don't think I'm being unfair to Government if I accuse them of being somewhat lethargic about launching their particular offensive on global warming, but there are a number of worthwhile measures in place under the stewardship of the Sustainability Energy Authority of Ireland (SEAI).

These measures come in the form of grant assistance and the availability of a 100pc tax write-off scheme on energy efficient equipment for sole traders, partnerships and companies which covers most farmers.

DAIRY FARM GRANT

The Dairy Farm Grant is currently open for applications. The grant will provide financial support for the installation of variable speed-drive vacuum and milk pump technology. Energy efficiency can help cut costs, which frees up resources that can be invested in more productive activities.

Grant assistance of 40pc is available, which can be up to a maximum of €5,000 in the case of vacuum systems or €1,000 in the case of milk pumps. The grant is only available for the replacement or retro-fitting of existing vacuum and milk pumps and does not apply to new start-ups.

TAX RELIEF SCHEME

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Investment in plant and equipment is currently allowable against tax over an eight-year period, whereas investment in approved energy efficient equipment can be written off in one year. This could mean a saving of up to 54pc for a top-rate taxpayer in the year of purchase. The rules of the scheme are relatively straight forward:

* the machinery or plant must belong to the person claiming the relief;

* the energy-efficient equipment must be new;

* it must meet certain energy-efficient criteria;

* the machinery or plant must be in use at the end of the chargeable period for which the allowances are claimed;

* the machinery or plant must be used exclusively for the purposes of the trade;

* equipment that is leased, let or hired will not qualify for the allowance.

ELIGIBLE EQUIPMENT

Qualifying equipment must be included in the list of energy-efficient equipment maintained and published by the Sustainable Energy Authority of Ireland (SEAI) in order to qualify under the scheme.

A full list of qualifying equipment can be viewed on the SEAI website. There is a minimum amount of expenditure required, ranging from €1,000 to €5,000 depending on which of the 10 categories set down by SEAI the product belongs. The 10 categories are as follows:

* Lighting;

* Motors and Drives;

* Information and Communications Technology;

* Heating and Electricity Provision;

* Process and Heating, Ventilation and Air-conditioning (HVAC) Control Systems;

* Electric and Alternative Fuel Vehicles;

* Catering and Hospitality;

* Electromechanical Systems;

* Refrigeration and Cooling;

* Building Energy Management Systems.

Many of the categories as set out above could be relevant to a typical farming operation. Practically every farmer will have a lighting cost, particularly in the current climate of rural crime where the necessity for external farmyard lighting is common place.

All dairy farms will have water heating and milk-cooling demands. Many tillage farms may have grain-drying demands and vegetable growers may have refrigeration demands. Wind turbines for on-farm use are becoming an ever increasing feature of the rural landscape. While there are no grants currently available for wind turbines, this scheme may render the financing of such installations far more feasible for top-rate taxpayers. The scheme runs until December 31, 2020.

HOME ENERGY GRANTS

SEAI offers homeowners a range of grants, such as:

* Deep Retrofit Grant;

* Insulation Grants;

* Heating Controls Grant;

* Solar Electricity Grant;

* Solar Water Heating Grant and Heat Pump Systems.

Table (left) sets out the maximum amount of grant available.

MOTOR VEHICLES

The general perception of battery cars is that they are small and won't take you very far without running out of charge. This is rapidly changing and many car manufacturers now have battery models that can travel substantial distances without a charge.

Hybrids and plug-in hybrids are commonplace among the larger car ranges and it is only a matter of time until battery technology will consign the internal combustion engine to history along with its predecessor the steam engine.

In order to encourage the uptake of battery or certain hybrid vehicles, there is grant assistance of up to €5,000 available as well as the accelerated capital allowance scheme as referred to above. If one considers the low running cost, low road tax (€120), the SEAI grant and the accelerated tax relief, the case for a battery car is beginning to emerge on to the radar.

The technology is racing ahead and it is highly likely that many readers will give some consideration to the battery option when next considering a change of family car.

Martin O'Sullivan is the author of the ACA Farmers Handbook. He is a partner in O'Sullivan Malone and Company, accountants and registered auditors: som.ie.

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