Payments received by entities:
The Minister for Finance confirmed that Revenue will treat the taxation of these grants differently depending on the purposes for which the grant was used.
Where the grant is used to defray expenditure which is revenue in nature like utility bills or insurance costs then it will be taken into account when calculating the amounts chargeable to income tax or corporation tax.
In essence such grants are taxable income and for accounting purposes the grant receipts will be credited against the expenses incurred thereby leaving the net expense reflected in the accounts which is then allowable as a deduction for income tax or corporation tax purposes.
For example – Insurance premium annual cost paid by company A in the sum of €5,000. Company A uses the proceeds of the grant of €2,500 to part finance the premium payment. A net cost of €2,500 will be reflected in the accounts and allowable as a deduction against profits for tax purposes which reflects the economic reality that the company had a net cash outflow in relation to the premium of €2,500.
Entities should keep a log of the expenditure which they have discharged from the grant receipts which can then be used by the agents to make the appropriate credit entries against the expenditure to arrive at the tax deductible net figures.
Where the grant is used to defray capital expenditure like acquiring plant and machinery for use in the business, then the entity will be entitled to claim capital allowances on the expenditure incurred net of the grant received.
For example – Machine A acquired for €5,000 and proceeds of the grant of €2,500 were used to part finance same.
Capital allowances can be claimed on the net cost of €2,500 at 12.5% per annum.
Revenue have confirmed the above treatment will apply for both the restart grant and restart grant plus