Written Answers - Charitable Organisations.
John Gormley
Question:
42
Mr. Gormley
asked the
Minister for Finance
if he has satisfied himself that appropriate attention is paid by the charities section of the Revenue Commissioners to monitoring the areas of activities of tax exempt organisations including distribution of assets upon winding up and DIRT exemption; and if he will make a statement on the matter.
[23553/98]
Trevor Sargent
Question:
56
Mr. Sargent
asked the
Minister for Finance
if he has satisfied himself that the records kept by the charities section of the Revenue Commissioners give an accurate and up to date indication as to whether exempt bodies are still in existence; and if he will make a statement on the matter.
[23552/98]
I propose to take Questions Nos. 42 and 56 together.
The current number of entities on the Revenue records as holding tax exemption as charities is 6,380. Many of the charities which are granted exemption are small voluntary organisations and some of them lapse over time. Where, over the years, Revenue became aware that an entity granted exemption had ceased activity, it withdrew the exemption. Early this year Revenue commenced a special project to identify all those charities granted exemption which are no longer in existence. This project is still ongoing and so far it has identified over 1,000 defunct charities. The number of active tax exempt charities is believed by Revenue to be less than 5,000.
I am sure Deputies will be pleased to learn that the Revenue Commissioners intend to make public a list of charitable exempt bodies shortly.
The role of the Revenue Commissioners in relation to charities is confined to consideration of applications from bodies of persons or trusts claiming exemption from certain taxes on the basis that they are established for charitable purposes only and to operating controls and monitoring, commensurate with the risk to the Exchequer, to ensure that the exemption is not abused.
In their approach to controls, the Revenue Commissioners have informed me of the following. Firstly, they recognise the important contribution which voluntary organisations make to Irish society and that monitoring controls should not unduly hinder the efforts of those involved. Secondly, the perceived Exchequer risk from entities granted tax exemption is generally low. The records maintained by the Revenue Commissioners indicate that the majority of these entities are small, many of them being local organisations operating on a voluntary basis. The Costello report found that 75 per cent of charities had an annual income of less than £50,000. The Revenue Commissioners have informed me that their records indicate that this is still the general picture.
The Revenue Commissioners have advised me that they operate controls and monitoring on entities granted exemption, which take account of the concerns expressed by the Comptroller and Auditor Genearal in his 1992 annual report as well as the concerns of the Committee of Public Accounts.
The Revenue Commissioners require each entity granted tax exemption as a charity to provide them with a copy of its first year's financial accounts, as well as details of activities actually carried out, within 18 months of the grant of exemption. Bodies with income in excess of £20,000 per annum must submit audited accounts. Unless these requirements are met, exemption is liable to be withdrawn.
A long-term monitoring procedure has also been operated by Revenue since 1988 under which entities granted exemption are selected for review on a risk analysis basis. In these reviews, Revenue addresses issues such as accumulated income and, where a charity is dissolved, the distribution of its assets. Where DIRT-free accounts are operated, the entity holding exemption is obliged by law to furnish a prescribed declaration form to the relevant financial institution confirming its tax-exempt status. The maintenance of such bank accounts, including details of accumulated income, are subject to examination by Revenue in the course of the review. Over the past three years, Revenue have completed more than 500 long-term reviews of entities granted exemption and they advise me that the reviews disclosed a high standard of compliance with the terms of the exemption. No cases of serious abuse or of Exchequer losses emerged from the reviews.
