We are an independent registered charity and as such contributions may be eligible for a tax deduction or eligible income tax relief may be claimed by the recipient charity depending on the circumstances of the donor. The Revenue Commissioners have summarised the Scheme of Tax Relief for Donations to eligible charities and other approved bodies, under section 848A, Taxes Consolidation Act 1997. Note: The Minister for Finance introduced changes to the Donation scheme operated in accordance with s848A in Budget 2013. These changes are applicable to donations from January 1, 2013, and are reflected as appropriately below.
Below is a summary of the main tax relief on donations to charity which is given for indicative purposes as The Community Foundation for Ireland does not provide legal, financial, or tax advice. For advice in relation to tax, we recommend you consult a professional adviser.
Tax relief on donations to charity
Key features of the revised scheme in relation to tax relief on donations to charity:
- Tax relief in respect of donations made on or after 1 January 2013 by individuals (whether self-assessed or PAYE-only taxpayers) to an approved body is allowed to the approved body rather than to the donor at a blended rate of 31%.
- An annual limit of €1 million per individual can be relieved under the revised scheme and donations under the scheme are no longer subject to the higher earner restriction.
- In the case of a donor who is “associated” with the charity (employee, board member, member etc.) the limit for tax relief on donations to a maximum of 10% of annual income continues to apply.
- In the case of a Donor Advised Fund at The Community Foundation for Ireland, the donor makes an irrevocable donation to us. Any eligible income tax relief will be claimed by The Community Foundation for Ireland. For example, a donor makes a donation of €10,000 to The Community Foundation for Ireland. If eligible, the tax relief, grossed up at 31% on that donation will be allocated directly to the Donor Advised Fund fund (once it has been claimed back from the Revenue Commissioners) resulting in a revised balance of €14,493 in that fund to disperse to charitable causes.
If a company donates to an approved charity, the donation can be treated as a trading expense (subject to a minimum donation per charity of €250), and so will be deductible for corporation tax.
Donating shares (plc)
In 2005, income tax relief was introduced for the donation of publicly-quoted shares to eligible charities. Those giving gifts of publicly quoted shares (of €250 or more) have to choose between an Income Tax relief and Capital Gains Tax (CGT) relief. If income tax is chosen, the procedures are the same as for cash donations. If the donor opts for CGT relief, the sale of the shares will be treated as a ‘no profit no loss’ sale i.e. it is treated as if the shares were sold for exactly the same price as was paid for them.
Donating shares (private company)
A donor may still decide to donate shares in a private company to a charity. However, unlike in the case of publicly quoted shares, the charity (for example, The Community Foundation for Ireland) would arrange for the sale of the shares in order to realise their value. Similar to donating any other asset to charity or to a philanthropic organisation, the donor will be treated as if he/she did not make a profit or loss on the transfer of the asset. As long as the proceeds are used for charitable purposes, the recipient charity will not have to pay either CGT when it sells the asset or any form of Capital Acquisition Tax (i.e. Gift or Inheritance Tax) on the original gift of the set.
Please contact your professional adviser or any of our team to discuss other gifts you may wish to donate.