Revenue Note for Guidance

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Revenue Note for Guidance

847A Donations to certain sports bodies

Summary

This section provides for a scheme of tax relief for donations to certain sports bodies for the funding of capital projects. To be eligible for this relief, the project must be approved by the Minister for Tourism, Sport and Recreation (currently the Minister for Arts, Sport and Tourism). The estimated aggregate cost of the project must not be greater than €40m. The sports body must hold a certificate from the Revenue Commissioners stating that the body is, in their opinion, a body of persons to which section 235 applies, i.e. its income is exempt from tax because it is a body established for and existing for the sole purpose of promoting athletic or amateur games or sports and such income is applied solely for those purposes. The body must also possess a valid tax clearance certificate.

The relief for donations will apply at the taxpayer’s marginal rate. It will be paid by the Revenue Commissioners to the beneficiary of the donation (i.e. the sports body) in the case where the donations are made by PAYE taxpayers. For example, if an individual who pays income tax at the higher rate – 41% – makes a qualifying donation of €590 to an approved sports body, that body will be deemed to have received €1,000 less tax of €410. The body will then be able to claim a refund of €410 from Revenue at the end of the year.

Taxpayers, who are individuals taxed on the self-assessment system, will be able to claim the relief on their annual tax returns as a deduction from total income. A similar arrangement will apply in the case of companies who will claim a deduction for the donation as if it were either a deductible trading expense or an expense of management deductible from total profits.

The minimum qualifying donation in any year to any sports body will be €250. The provision has effect from 1 May 2002.

Details

Section 847A provides for a scheme of tax relief for donations to certain sports bodies for the funding of capital projects to be approved by the Minister for Tourism, Sport and Recreation (currently the Minister for Arts, Sport and Tourism).

The section applies from 1 May 2002 and contains 20 subsections:

(1) The definitions used in the section are as follows:

The word “Acts” is defined as the Tax Acts (i.e. the Income Tax Acts and the Corporation Tax Acts), the Capital Gains Tax Acts and the Value-Added Tax Consolidation Act 2010 and the enactments amending or extending that Act, and any instrument made under any of those Acts.

The definition of “appropriate certificate”, which is applicable in relation to relevant donations made by individuals who are not within the self assessment system, largely mirrors the definition of the similar term in section 848A which deals with tax relief for donations to approved charities.

An “approved project” is a project for which the Minister for Tourism, Sport and Recreation (Arts, Sport and Tourism) has given a certificate under subsection (4), which certificate has not been revoked.

An “approved sports body” is a body which holds —

  • a certificate from the Revenue Commissioners certifying that the body is, in the opinion of the Commissioners, a body of persons to which section 235 applies, i.e. it is a body established for the sole purpose of promoting athletic or amateur games or sports whose income is exempt from tax where it is applied solely for those purposes, and
  • a valid tax clearance certificate.

However, excluded from the ambit of the definition is any body to whom the Revenue Commissioners have given a notice under subsection (1) of section 235. The effect of such a notice is to withdraw the tax exemption from the body.

The word “Minister” means the Minister for Tourism, Sport and Recreation (currently the Minister for Arts, Sport and Tourism).

The word “project” sets out the type of capital projects of an approved sports body in respect of which donations may attract tax relief, namely —

  • purchasing, constructing or refurbishing a building or structure or part thereof for use for sporting or recreation activities provided by the approved sports body,
  • purchasing land for use by the approved sports body in providing sporting or recreation facilities,
  • purchasing permanently based equipment (excluding personal equipment) for use by the approved sports body in providing such facilities,
  • improving the playing pitches, surfaces or facilities of the approved sports body, and
  • repaying money borrowed (and paying interest on such money) by the approved sports body on or after 1 May 2002 for any of the above-mentioned purposes.

A “relevant accounting period” is the accounting period in which a relevant donation is made by a company.

The definition of “relevant donation” is based on the definition of the similar term in section 848A. It is provided that the de minimis limit of €250 on qualifying donations will be proportionately reduced in the case of a company which has an accounting period of less than 12 months in length.

A “relevant year of assessment” is the year of assessment in which a relevant donation is made by an individual.

The term “tax clearance certificate” refers to the certificate to be issued by the Collector-General under subsection (3).

(2) In the case of donations by individuals who are not within the self assessment system, the grossed up amount (of a donation) is the amount, which after deducting income tax at the standard rate or the higher rate or partly at the standard rate and partly at the higher rate leaves the amount of the donation. The subsection largely mirrors subsection (1)(a) of section 848A.

(3)(a) On application by a body, the Collector-General is to issue a tax clearance certificate for the purposes of the section provided the body is in compliance with certain obligations imposed on that body by the Acts. The obligations concerned are the payment or remittance of any taxes, interest or penalties required to be paid under the Acts to the Revenue Commissioners, and the making of all returns required by the Acts. The subsection is modelled on section 1095(2) which relates to tax clearance certificates for public sector contracts.

(3)(b) The provisions of subsections (5) to (9) of section 1094, which deal with tax clearance certificates for certain licences, will apply to an application for a tax clearance certificate under subsection (3)(a). The provisions in question relate to the prescribing of application forms for tax clearance certificates, the period for which the certificate is valid and appeals against refusal by the Collector-General to issue a tax clearance certificate.

(4)(a) For a project to be considered an approved project, the approved sports body concerned must apply to the Minister for Tourism, Sport and Recreation (Arts, Sport and Tourism) for approval in respect of the project. That Minister gives an approval certificate.

(4)(b) The application must be in such form and contain such information as the Minister directs.

(4)(c) The Minister may revoke a certificate previously given by notice in writing and the project will cease to be an approved project for the purposes of the relief from the date of the Minister’s notice.

(4)(d) No approval certificate shall be given in respect of a project which will cost in excess of €40,000,000.

A donation will satisfy the requirements of this subsection if —

  • (5) it is made to the approved sports body for the sole purposes of funding an approved project,
  • it is or will be applied by that body for that purpose,
  • it is not otherwise deductible in computing the profits or gains of a trade or profession or deductible as an expense of management in computing the profits of a company,
  • it is not a relevant donation relievable under section 848A which deals with relief for donations to approved charities,
  • it is not liable to be repaid,
  • neither the donor nor any person connected (defined for the purposes of the Tax Acts and the Capital Gains Tax Acts in section 10) with the donor receives a benefit, whether directly or indirectly, as a result of making the donation,
  • the donation is not conditional on or related to the acquisition of property by the approved sports body (otherwise than by way of gift) from the donor or any person connected with the donor, and
  • (in the case of a donation made by an individual) the individual is resident in the State for the year of assessment in which the donation is made, and in the case of a taxpayer who is not within the self assessment system, the individual has given an appropriate certificate to the approved sports body in relation to the donation and has paid the tax referred to in such certificate and is not entitled to a repayment of that tax or any part of that tax.

(6) Where it is proved to the Revenue Commissioners’ satisfaction that a person has made a relevant donation, the provisions of subsection (7), (9) or (11) will apply.

(7) Where a relevant donation is made by a company, it is treated for corporation tax purposes as a deductible trading expense of a trade carried on by the company, or an expense of management deductible from the total profits of the company, for the accounting period in which it is made.

(8) A claim by a company under the section is to be made along with the company’s corporation tax return under self assessment for the accounting period in which the relevant donation is made.

(9) Where an individual who pays tax under the self assessment system makes a relevant donation, the amount of the donation is to be deducted from the total income of the individual chargeable to income tax. The amount of the donation is not however to be taken into account in reducing the income of the individual or the individual’s spouse or civil partner for the purposes of quantifying the relief for qualifying premiums for a retirement annuity.

(10) A claim for relief by an individual within the self assessment system must be made with the individual’s income tax return for the year of assessment in which the relevant donation is made.

(11) Where a donation is made by an individual who is not within the self assessment system (viz. a PAYE taxpayer), the approved sports body will be able to claim back from the Revenue Commissioners the tax of the individual donor associated with the relevant donation on a grossed-up basis.

(12) The approved sports body must give to the Revenue Commissioners the certificate seeking the repayment of tax of such an individual donor in an electronic format.

(13) Where an approved body does not have the facilities to send the claim for repayment of the tax in an electronic format, then the claim for repayment must be made on a form approved by the Revenue Commissioners for this purpose.

(14) The Minister may request in writing a return of the aggregate of relevant donations received by any approved sports body.

(15) The Revenue Commissioners may consult with the Minister concerning certain matters arising under the section.

(16) Approved sports bodies are required to issue receipts to persons making relevant donations which must contain specified details.

(17) An approved sports body is not obliged to issue such a receipt to an individual donor who is not within the self assessment system. As such an individual will not be the beneficiary of the tax relief (rather the approved sports body will be claiming back the tax of that individual associated with the donation), he or she will not need any receipt for tax purposes. Neither is a receipt necessary in the case of a relevant donation to which subsection (18) applies.

(18) Relief under this section will not be given in respect of a relevant donation to an approved sports body where that sports body had already received relevant donations of €40,000,000 in respect of the approved project.

(19) Where relief has been granted under this section and the donation concerned has not been used for the purpose of the approved project or where the relief was otherwise found not to have been due, the relevant donation in respect of which the relief was granted will be regarded as taxable income in the hands of the sports body concerned.

(20) The Revenue Commissioners may delegate their powers and functions under this section to nominated officers.

Relevant Date: Finance Act 2020