Dáil Éireann Debate, Tuesday - 19 July 2016
193. Deputy Michael McGrath asked the Minister for Finance the number of charitable donations subject for which tax relief was claimed in 2015; the total amount of relief granted; if he is satisfied that the system is working adequately to ensure charities are able to fully avail of the relief to which they are entitled; and if he will make a statement on the matter. [22435/16]
View answerSection 848A of the Taxes Consolidation Act 1997 provides tax relief at a blended rate of 31% on donations made by individuals to eligible charities and other approved bodies. As the Deputy may be 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.
I am informed by Revenue that in respect of 2014, the latest year for which returns are available in respect of both individual and corporate donations, €31 million was refunded to approved bodies in respect of 127,000 donors. The Deputy should note that these figures are provisional and may be revised.
ICTR has indicated to my officials that the sector has welcomed the changes and the operation of the new regime has been a success.
