Jimmy Deenihan
Question:37 Mr. Deenihan asked the Minister for Finance if he will review the legislation regarding tax relief on personal donations to domestic charities; and if he will make a statement on the matter. [26898/99]
Written Answers. - Tax Relief.
As the Deputy will be aware, there are already a number of existing significant tax provisions which provide relief for charities. Under the tax code a body of persons or a trust which is established for charitable purposes only may be exempt from income tax, corporation tax, where the body is incorporated, deposit interest retention tax, capital gains tax, capital acquisitions tax, stamp duty and probate tax. To qualify for the relief the body or trust must fall within four categories of charitable purpose. These are the advancement of religion, the advancement of education, the relief of poverty and other purposes beneficial to the community and not falling within the other three categories. I understand from the Revenue Commissioners that there are about 5,000 active charitably exempt bodies.
Tax relief for personal donations to designated third world charities was introduced in the Finance Act, 1995. The relief is available on personal donations of between £200 and £750 per annum. The relief is available at the standard rate of tax and goes to the designated charity rather than the donor. The relief was introduced to mark the 150th anniversary of the Famine and in recognition of the particular type and scale of the human tragedy that is encountered in the Third World. To date 19 charities have been designated for the relief.
The Finance Act, 1998, introduced a relief for companies who donate between £250 and £10,000
to any one charity in any accounting period, subject to an annual limit of £50,000 or 10 per cent of a companies taxable income, whichever is the lesser amount.
To qualify for the relief, the charity must satisfy a number of conditions, the most significant of which is that bodies should have been charitably exempt for at least three years. This was done to ensure the bodies applying for the relief had a proven track record.
This relief was introduced along the lines suggested by the Irish Charities Tax Relief Group. I would like to make the point that when the tax relief for corporate donations to charities was originally sought it was on the strict understanding that it would not be extended to include personal donations. To date 374 bodies have been approved for the relief. I have no plans to extend the relief beyond its current scope.
As the Deputy will appreciate, as Minister for Finance I receive numerous requests, many from very worthwhile causes, for the introduction of new or the extension of existing tax reliefs. Tax reliefs, no matter how worthwhile in themselves, reduce the tax base and make general reform of the tax system that much more difficult.