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TAX EFFICIENT GIVING
Anyone making a donation to The Children's Medical & Research Foundation, Our Lady's Hospital for Sick Children, Crumlin, who is a taxpayer and who donated €250 or more in a year will be able to either
i) allow the charity to reclaim that tax
or
ii) if you are self employed or a corporate donor - you will be able to claim back the tax yourself
From 6th April 2001 tax relief was made available on donation of €250 or more in any one-tax year to eligible charities from both individual and corporate donors. Tax relief is applied to these donations at the donor’s marginal rate of tax.
A.) In the case of PAYE taxpayers, the tax relief is applied at the marginal rate and is paid directly by the Revenue Commissioners to the Eligible Charity or Approved Body on receipt of the relevant “ appropriate certificate” (an official form that is supplied by the charity, completed by the donor and returned to the charity receiving the donation).
EXAMPLE
PAYE Donor ( Higher Rate)
Joe is a PAYE taxpayer who donated €254 to The Children's Medical & Research Foundation. His marginal rate of tax is 42%. As Joe has already paid tax, his donation is made from his net income. Joe completes the “appropriate certificate” supplied to him by The Children's Medical & Research Foundation giving details of his donation and PPS number and returns it to us. The Children's Medical & Research Foundation when uses the form to claim back the tax which Tom has already paid on the €254 from the Revenue.
Therefore €254 is 58% of what Joe earned. €254 x 100/58 = €437 (Gross earnings). €437 - €254 = €183 (already paid in tax to the revenue)
€183 is what The Children's Medical & Research Foundation can reclaim back from the revenue. The value of Joe’s donation then increase to €437.00 ( €254 + €183)
B.) Individual taxpayers on self-assessment benefit directly from relief at the marginal rate by claiming the donation as a tax-deductible expense.
EXAMPLE:
Anne is self-employed and makes her returns on a self assessment basis. Her marginal rate of tax is 42%. Anne donates €254 to The Children's Medical & Research Foundation. Anne receives a receipt from the charity and when she completes her tax return she deducts the donation of €254 from her taxable income thus reducing her tax bill by €106.
C.) Corporate donors simply claim a deduction for the donation as if it were a trading expense.
POINTS TO NOTE:
to qualify for the tax relief a donation must satisfy a number of conditions:
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It must be in the form of money
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It must not be repayable
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It must not confer any benefit on the donor or any person connected with the donor.
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It must not be conditional on, or associated with, any arrangement involving the acquisition of property by the charity or approved body.
An Eligible Charity is defined by the legislation as any charity within the State, which is authorised in writing by the Revenue Commissioners for the purpose of this scheme. In order to qualify for eligible charity state, the charitable organisation;
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Must have a charitable tax exemption number or CHY number and
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Must be in operation for at least three years since being granted the CHY number.
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Must make a formal application to the Revenue on the form provided “Form of application to Revenue for Authorisation as an Eligible Charity for the purposes of Section 45, Finance Act, 2001 (donations to eligible charities)”.
For further information or to download relevant forms please visit www.revenue.ie
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