Tax Benefits

Giving Tax Efficiently:

The Community Foundation for Ireland is a not for profit organisation with charitable status and is an approved body for the purposes of section 848A, Taxes Consolidation Act, which relates to tax relief for donations to approved bodies.

Donating Cash:

There are tax benefits for setting up a Fund with cash. You want to create for example a €20,000 endowment fund. If you are PAYE, you will make a donation of €11,800 and The Foundation will ask you to complete a CHY2 form. The Foundation can then claim €8,200 from Revenue which will be added to the endowment fund.

If you are self-assessed you will make a donation of €20,000 and you can claim back 41% of this in your annual return, i.e. €8,200. Therefore the net ‘cost’ / ‘investment’ is also €11,800.

Please note that many people who think of themselves as PAYE, may in Revenue’s eyes, for the purpose of this scheme, be deemed to be self-assessed. If you have e.g. rental or dividend income, it is very likely you will be considered self-assessed and you will need to make your donation accordingly. If in doubt consult your tax advisor or Revenue.

Please also note that from the 1^st January 2007 under the 2006 Finance Bill, individuals with income in excess of €250,000 who have specified tax reliefs available to them have been restricted in the amount of tax relief they can claim each year. The specified reliefs that a person will be able to apply against their taxable income will be restricted to 50% of their gross income in any one tax year. Any excess reliefs will however be available for “carry-forward” to the following and subsequent years, subject to the 50% income cap.

The tax relief scheme on donations as originally conceived placed no upper limit on the amount that a donor could give to charity tax effectively in any year. The reason for this was to use taxation policy to actively promote the development of philanthropy in Ireland. The 2006 provision effectively introduced a cap on the scheme for high income individuals. The Community Foundation for Ireland is campaigning to have this provision amended and we are hopeful of success.

Donating Shares:

In 2005 income tax relief was introduced to the donation of publicly-quoted shares to eligible charities. This means that gifts of shares to The Community Foundation for Ireland of €250 or above in a tax year are now eligible for tax relief. Those giving gifts of publicly quoted shares have to choose between an income tax relief OR Capital Gains Tax relief as outlined below.

If you choose income tax relief, The Foundation will give you a receipt for the market value of the shares on the day the donation was made. You can use this to reduce your taxable income (if you are self-assessed for tax). If you are ‘taxed at source’ (i.e. a PAYE worker), The Foundation will claim the tax back. These procedures are the same as for cash donations.

If you do not wish to claim income tax relief, you can claim capital gains tax relief instead. If you choose to claim CGT relief, the sale of your shares will be treated as a ‘no profit, no loss’ sale, i.e. it is treated as if you sold shares for exactly the same price as you paid for them. It is important to remember that there is no ‘double tax relief’ – you cannot claim both income tax and capital gains tax relief. The Charities section of the Revenue Commissioners has indicated that it will be up to the local tax offices to deal with CGT claims.

Donating Property:

There is no specific relief for donations of property or land. Instead of donating property or land, it is often more tax efficient to sell the asset and make a tax efficient donation from the proceeds. Please consult The Community Foundation for Ireland and your advisor to discuss further.

Donating Overseas

The Community Foundation for Ireland has since 2006, been the Irish representative of Trans Giving Europe which facilitates tax effective giving across European borders. You will benefit from this service by being able to gain ‘on the ground’ knowledge of a local charity or organisation from our overseas partner.

The Foundation can also facilitate your direct international tax effective giving. If you want to donate to e.g. a UK charity, by doing so through the Community Foundation for Ireland, you can significantly increase the size of your gift as a result of the tax benefits which are applied as outlined above for cash donations. By way of example, if you would like to donate €500,000 to the UK organisation, by doing so through The Foundation, you can make a tax reclaim for €205,000 and your net cost is €295,000. A small fee will also apply.

For more information about Trans Giving Europe, please click here

Revenue Commissioners:

See the Revenue Commissioners website for further details and certificates to be completed by donors who are PAYE taxpayers: http://www.revenue.ie

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