Dáil Éireann Debate, Thursday - 13 July 2017
129. Deputy Michael McGrath asked the Minister for Finance if he has considered the introduction of a large philanthropic and charitable donations scheme whereby the donor receives the tax relief directly; the estimated cost of such a scheme; and if he will make a statement on the matter. [33764/17]
View answerI assume the Deputy is referring to a tax relief that would be similar in scope as that provided for donations to approved bodies under Section 848A of the Taxes Consolidation Act 1997 (TCA).
As the Deputy may be aware, changes were made to that scheme of tax relief 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.
1. A blended rate of relief of 31% applies to all taxpayers regardless of their marginal tax rate. All donations are now grossed up. Previously only donations from individuals within the PAYE collection system were grossed up.
1. The charitable donations scheme was removed from the scope of the high earners' restriction in recognition of the fact that donors no longer benefit from the tax relief associated with their donations.
1. 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 and the completion of a public consultation. The objectives of that process were threefold: (i) to simplify the operation of the existing 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 would not be in favour of the introduction of an additional regime, which would effectively reverse the changes set out above for wealthy donors, such that they could claim the tax relief on any qualifying large donations. In my view, real philanthropy should not be dependant on the receipt, by an individual, of a tax advantage. In fact the existing regime, whereby the approved body receives the benefit of grossed up tax relief, as well as the sum donated, should encourage real philanthropic donations, in recognition of the additional resources that are provided to such bodies.
As regards the costing of the scheme suggested by the Deputy, for every €1 million donated under such a scheme, the cost would be expected to be in the region of €400,000. However, it is not possible to estimate whether donors would simply transfer donations made under the existing scheme to the one proposed. In addition, it is not possible to estimate the level of additional donations, if any, that might be made under such a scheme. Furthermore, consideration would need to be given as whether such a scheme would be subject to the high earners' restriction.
