Cautious Welcome for Charity Donation Proposals

The Irish Charities Tax Reform Group (ICTRG) has given a cautious welcome to the package of proposals contained in the Report of the Commission on Taxation regarding donations to approved bodies. Read the proposals...

In a statment the ICTRG applauded the proposed reducting in the tax relief threshold from €250 to €100. But the group, whose members include Concern, Trócaire, Goal, Amnesty International and the Society of St Vincent de Paul, expressed “significant disappointment” over the proposal to standardise the reliefs. ICTRG said that this was likely to effectively cut the benefit to charities.

The ICTRG added the proposal to replace the existing “complicated upper limit on donations” with “a straight-forward ceiling of €500,000” was to be welcomed.

Some of the key recommendations of the report (as referred to above) include:

  • A reduction of the donation threshold from €250 to €100 which is good news but unfortunately they are also proposing to standardise the tax relief i.e the relief to be given at the taxpayer’s standard rate (currently 20%) rather than the marginal rate (41%) which currently applies. 
  • That donations from PAYE workers and the self-assessed should be treated the same i.e. the benefit in both cases should go to the charity – this is very good news as it would both simplify the system and would result in increased benefits to charity which should go some way to compensating for standardising the relief.
  • That the tax relief scheme on donations is removed from the scope of the measure to restrict the annual tax relief available to high earners (i.e S485C).  They suggest that the complicated upper limits imposed on donations to charities (introduced under the Finance Act 2006, Ch.2A, Section 485C) should be replaced with a straightforward ceiling of €500,000 under the existinfg scheme.  It takes on board our point that private philanthropy is about public good while private investment is primarily about private gain.  The Commission recommends the upper limit on the tax relief scheme on donations on the basis that the State’s exposure to costs in this area should not be unlimited.
  • That the same lower threshold and upper limits should apply to corporate donations with relief at the corporation tax rate.
  • That all existing tax exemptions for charities remain unchanged with one exception in the case of Capital Gains Tax where the recommendation is that the exemption should be discontinued where development land is disposed of.

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