May 2012 | Irish charitable donations and tax relief: Consultation period for submissions closing soon

The consultation period for the reform of the taxation regime on the making of donations to charities and receiving income tax relief is closing. More details of this can be found here.

There is likely to be reform whereby there will be one comprehensive rate of relief rather than, as currently legislation provides, relief at either the standard or the marginal rates. There is also likely to be a reform of the method of collecting the relief so that the relief will be collected by the charities (as arises now in the case of donors taxed on the PAYE basis). In this way donors who pay tax on a self assessment basis would no longer be able to claim relief as a reduction from their tax bill.

Charities will need to assess the level of impact this will have on their collection base. For instance if the donors do not change the amount donated (e.g. through inertia if the donations are on a direct debit basis) and if the majority of donors are at the marginal rate on a PAYE basis, the refund available to the charity will reduce. On the other hand in such a case the refund for a donation made by a self assessed donor will now pass to the charity where previously it passed to the donor thus increasing the charity's take. 

The Irish Tax Institute has made a submission on this: Read the Submission.

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Aileen Keogan | Solicitor & Tax Consultant | 21 The Avenue | Louisa Valley | Leixlip | Co. Kildare | Ireland

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