Taxes Consolidation Act 1997 section 769E

Application of Chapter 4 of Part 9

Section 769E applies the general capital allowance rules in Chapter 4 of Part 9 to capacity rights, including modified provisions for sales between connected parties.

• Chapter 4 of Part 9 (general supplementary provisions on capital allowances) applies to capacity rights as if the capacity rights chapter were part of that Part, ensuring that excess allowances can be set against other income and carried forward.
• Where capacity rights are sold between parties under common control, a joint election may be made to treat the sale as taking place at the tax written down value rather than the open market price, provided the tax written down value is lower and the sale is not primarily to obtain a capital allowance.
• Where the election is made, the seller has no balancing charge; the buyer writes off a reduced amount over the remaining life of the asset, but any future balancing charge on the buyer takes account of allowances already given to both the seller and the buyer.
• The joint election is not available where any party to the sale is non-resident, unless the non-resident party trades in the State through a branch or agency and is therefore subject to Irish capital allowance and balancing charge rules.