By Chris Murray
RECENTLY I was approached by a client with a query which I thought may be of interest to many readers.
He has been making donations to a local charity over the last number of years,. He wondered at what rate tax relief is available and whether or not the claims can be backdated.
Since 1 January 2013, all donations from individuals (both PAYE workers and Self-Assessed) has been treated the same and tax relief in all cases is being repaid to the charity at a blended marginal rate of 31% which will be regularly reviewed.
Essentially this means that tax relief, as a deduction, is no longer available to self-employed individuals in respect of donations made to an Authorised Charity from 1 January 2013 onwards.
The minimum threshold of €250 for cumulative annual donations remains and an annual limit of €1 million per individual will apply for which tax relief will be granted.
Donors will still need to provide the charity with their PPS number but an option to provide “enduring declaration” for up to five years will help reduce the administrative burden of having to complete annual forms; however, the option to make an annual declaration must still be made available to a donor.
Tax refunds will only be issued to charities after relevant annual tax returns have been filed to Revenue by or on behalf of donors; this essentially means an Employer P35 return in respect of PAYE donors and a Self Assessment Tax Return in respect of self-employed donors.
Where an individual has made a donation to an Authorised Charity that exceeded €250 during the course of a calendar year, tax relief can be claimed subject to a four year time limit.
The method by which tax relief is granted on donations up to 31 December 2012 depends upon whether you are either a PAYE worker or a self-employed individual.
PAYE workers
If you were a PAYE worker resident in Ireland who paid tax, the value of your donation can be increased by completing a simple form called CHY2 CERT and sending it to your nominated Charity.
This will enable the Revenue Commissioners to pay an additional amount to the Charity depending upon the rate at which you paid tax.
Claim for the last 4 years
If you have previously made donations to a Registered Charity but have not submitted a claim, we recommend a review be completed of the last four years as it could be extremely valuable to you and/or your nominated Charity.
Authorised Charities
There is a list of Authorised Charities on the Revenue Commissioners website that are eligible for the donation scheme.
• Chris Murray is Practice Manager at Casey & Co Accountants & Auditors. Casey & Co. strive to add real value to your business by providing specialist services in the areas of personal taxation, business start up, restructuring, bank negotiations and succession.