Dáil Éireann debate -
Tuesday, 1 May 2001

Vol. 535 No. 1

Written Answers - Charitable Donations.

David Stanton

Question:

270 Mr. Stanton asked the Minister for Finance the benefits from a taxation point of view applying to those who leave money to bodies which have charitable status; the cost to the State in this regard; and if he will make a statement on the matter. [12343/01]

Minister for Finance (Mr. McCreevy)

I understand that the Deputy is referring to the tax reliefs available in respect of moneys donated to charities. In this year's Finance Act I introduced a new scheme of tax relief on donations by either individuals or corporate bodies to eligible charities and certain other approved bodies. The minimum qualifying donation for relief purposes that must be made in any year to any one eligible charity or approved body is £200, which is equivalent to £148 for the short tax year 6 April 2001 to 31 December 2001. There is no upper limit on the amount which can be donated.

An eligible charity is any charity in the State that has been granted exemption from tax for a period of not less than three years and which is authorised by the Revenue Commissioners for the purposes of the new scheme. For the first time, this will allow tax relief for personal donations to domestic charities and all first and second level schools, as well as third level colleges and certain other bodies that had already been approved under other tax reliefs.

The arrangements for allowing tax relief on donations will depend on whether the donor is a PAYE taxpayer or an individual on self-assessment or a company. In the case of donations from individuals, relief will be given at the donor's marginal rate of income tax. For a PAYE taxpayer, the relief will be given on a grossed-up basis to the charity or approved body, rather than by way of a separate claim to tax relief by the donor. If an individual who pays income tax at the higher rate of 42% wants to make a donation of £1,000 to an eligible charity, that person gives the charity £580. The charity will be able to claim a refund of £420 from the Revenue Commissioners at the end of the tax year. Similarly, if a standard rate taxpayer makes a donation of £800 to an approved body, it will be able to claim a refund of £200 from the Revenue Commissioners at the end of the tax year.

In the case of a donation made by an individual who pays tax on a self-assessment basis, the individual will claim the relief and there is no grossing-up arrangement. Similarly, can claim deductions for donations as if they were a trading expense. The Revenue Commissioners have informed me that they will shortly be publishing a comprehensive explanatory leaflet on the operation of this new scheme and that copies will be circulated to all charities. I have also arranged that a copy will be sent to the Deputy. The cost of this new relief will depend on the number of donations and the amount involved. It has been tentatively estimated that the cost of this relief to the Exchequer will be £8 million in 2001 and £23 million in a full year.