Tuesday, 4 February 2014

Questions (165)

Nicky McFadden


165. Deputy Nicky McFadden asked the Minister for Finance his views on permitting PAYE workers to claim back tax on charitable donations, particularly with respect to encouraging persons to donate to community initiatives; and if he will make a statement on the matter. [5091/14]

View answer

Written answers (Question to Finance)

As the Deputy is aware, changes were made to the scheme of tax relief for donations to approved bodies in Finance Act 2013 as follows:

1. Donations from all individual donors under the scheme are treated in the same manner, with the tax relief in all cases being repaid to the charity.

2. A blended rate of relief of 31% applies to all taxpayers regardless of their marginal tax rate. All donations are grossed up as was previously done for donations from individuals within the PAYE collection system.

3. The charitable donations scheme has been removed from the scope of the high earners' restriction in recognition of the fact that donors will no longer benefit from the tax relief associated with their donations.

4. An annual donation limit of €1 million per individual, for which a refund of income tax can be claimed by approved bodies, has been applied.

These changes were made following a process of engagement between officials at the Department of Finance and the Revenue Commissioners with representatives of the charities sector from the Irish Charities Tax Reform Group (ICTR).

The objectives of that process were threefold: (i) to simplify the operation of the regime, (ii) to reduce the administrative overheads on charities and on the Revenue Commissioners incurred in the operation of the scheme, and (iii) to ensure that any change would be Revenue neutral from the Exchequer perspective. The proposals for the changes were also recommended in the Report of the Forum on Philanthropy and Fundraising. It is worth noting that PAYE-only taxpayers were never able to claim tax relief for donations made. I have no plans to reverse any of the changes made in the recent Finance Act in relation to the donations scheme.