Revenue Note for Guidance

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Revenue Note for Guidance

848A Donations to approved bodies

Summary

This section provides for a uniform scheme of tax relief for donations to approved bodies. The list of approved bodies is set out in Schedule 26A and includes eligible charities, schools, colleges and universities, bodies approved for education in the arts as well as a number of other specified organisations. The donation must be in the form of cash or quoted securities. Where such securities are donated and relief under this section is claimed, the capital gains tax relief for donations of assets to charities provided for in section 611, does not apply.

Donations from all individuals are treated in the same manner, with tax relief in all cases being repaid directly to the approved body*. Relief is given at the “specified rate” of 31 per cent regardless of the donor’s marginal tax rate. For example, if an individual makes a donation of €690 to an approved body, this equates in all cases to a grossed up amount of €1,000 when it is regrossed at the specified rate, i.e. (€690 + €310). The donor completes an annual certificate or an enduring certificate containing the necessary details – amount of donation, Personal Public Service Number (PPSN) etc. and gives it to the approved body to allow the body to make their repayment claim to Revenue. An enduring certificate, which lasts for 5 years, allows an approved body claim tax relief in respect of donations made by the donor during the lifetime of the certificate without the need to obtain an annual certificate.

*For donations made prior to 1 January 2013, the relief was granted to self-assessed individuals by way of a deduction from income in the tax year in which the donation was made.

In the case of corporate donations, the company claims a deduction for donations to an approved body as if it were a trading expense. There is no grossing up arrangement in this case.

In order to qualify for the relief, the minimum donation in any year to any one approved body is €250.

There is a limit on the amount of tax relief which is given in respect of donations by individuals, where the individual is either a member or employee of the approved body or of an associated approved body. The limit ensures that no tax relief is given on the excess of donations above 10 per cent of the individual’s income for that year. The limit is based on the aggregate of such donations so that it will not be possible to donate say a proportion of income to a number of associated approved bodies and get relief on all of it. Approved bodies are associated with each other if the same person or a similar group of persons has control over or can direct the activities of the bodies.

There is also an overarching upper limit of €1,000,000 which applies to the amount of donations made by individuals in a year of assessment which can be tax-relieved under this section.

Details

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

annual certificate”, means a certificate, in a form prescribed by the Revenue Commissioners, which may be used by a donor who does not wish to provide an enduring certificate to an approved body. It contains the donor’s personal public service number and the following statements –

  1. that the donation satisfies the requirements of subsection (3),
  2. that the donor has or will pay the proper amount of tax referable to the donation, and
  3. an acknowledgement that the donor is aware that the provisions of subsection (9B) apply to a repayment of tax to an approved body.

Included in this definition is an annual certificate which has been renewed by the donor with the approved body in a manner approved by the Revenue Commissioners.

The list of “approved bodies” is set out in Part 1 of Schedule 26A.

designated securities” means quoted shares and debentures.

enduring certificate”, which lasts for 5 years, means a certificate, in a form prescribed by the Revenue Commissioners, containing the year of assessment from which the certificate applies, the donor’s personal public service number and the following statements —

  1. that the donor is aware that a donation made during the “specified period”, i.e. the period covering the year of assessment from which the certificate applies and the 4 immediately succeeding years of assessment, must satisfy the requirements of subsection (3),
  2. that the donor has paid or will pay the proper amount of tax referable to donations made during the specified period, and
  3. an acknowledgement that the donor is aware that the provisions of subsection (9B) apply to a repayment of tax to an approved body.

Included in this definition is an enduring certificate which has been renewed by the donor with the approved body in a manner approved by the Revenue Commissioners.

personal public service number’ has the same meaning as in section 262 of the Social Welfare Consolidation Act 2005.

relevant accounting period” means the accounting period in which the donation is made.

relevant donation” means, subject to subsection (3A), a donation which satisfies the conditions of subsection (3), in the form of either or both a sum of money and designated securities amounting in aggregate to at least 250 in a tax year which is made by an individual or a company.

relevant year of assessment” means the year of assessment in which the donation is made.

specified period”, in relation to an enduring certificate means, a period covering the year of assessment from which the certificate applies and the 4 immediately succeeding years of assessment.

specified rate” means 31 per cent, and is the rate of relief to be given regardless of the donor’s marginal tax rate.

(1)(b) The reference to the grossed up amount of a donation in relation to a donor, who is an individual, means an amount which after deducting tax at the specified rate of 31 per cent leaves the amount of the donation. For example, a donation of 690 by an individual becomes a grossed up amount of 1,000 when it is regrossed at the specified rate, i.e. (€690 / 69 x100 = €1,000 (the grossed-up amount) – €690 (the donation) = €310 (the amount of the refund claim).

(1)(ba) & (1)(bb) (1)(c) Renewed annual and enduring certificates are deemed to contain the statements referred to in paragraphs (i) and (ii) respectively of the definitions of those certificates.

(1)(c) Section 848A is to be construed together with Schedule 26A.

(2) Where it is proved to the Revenue Commissioners that a person has made a relevant donation, subsection (4) or (9) will apply. These subsections provide the mechanism for giving relief in respect of donations made by a company or an individual.

(3) A donation is a relevant donation if it satisfies all of the following requirements:

  1. it is not repayable,
  2. no benefit accrues to the donor or a connected person by virtue of the donation,
  3. the donation is not linked to the transfer of property to the approved body other than by way of gift,
  4. it is not otherwise tax deductible, and
  5. in the case of an individual, the person
    1. is resident in the State in the year the donation is made,
    2. has given an annual certificate, or, as the case may be, an enduring certificate in relation to the donation to the approved body, and
    3. has, for the relevant year of assessment, paid the tax referred to in the annual certificate or enduring certificate and is not entitled to have it refunded.

(3A)(a)(i) An overarching upper limit of €1,000,000 applies to the aggregate amount of donations made by individuals in any year of assessment which can be tax-relieved under this section.

(3A)(a)(ii) Where the aggregate amount of all donations made by an individual in any year of assessment to approved bodies with which he/she is associated exceeds 10 per cent of his/her total income for that year, the excess of the donation above 10 per cent will not be a relevant donation for tax relief purposes.

(3A)(b)(i) An individual is associated with an approved body if at the time the donation is made he/she is an employee or member of the approved body, or of another approved body which is associated with the first approved body.

(3A)(b)(ii) One approved body is associated with another approved body if it could reasonably be considered that —

  1. the activities carried on by both approved bodies, are or can be directed by the same person or by broadly the same group or groups of persons, or
  2. the same person or broadly the same group or groups of persons exercise or can exercise control over both approved bodies.

(3B) Where the Revenue Commissioners withdraw the authorisation of an approved body (which is an “eligible charity”) by notice in writing in accordance with paragraph 7 of Part 3 of Schedule 26A, a donation made in good faith to the body by a company, or a self-assessed individual (entitled to a deduction from their income in respect of donations made prior to 1 January 2013), in the period from the date from which the withdrawal of the authorisation becomes effective to the date of the notice of withdrawal, is treated as a relevant donation made to an approved body. This is notwithstanding that the donation may have been made after the effective date of the withdrawal of the authorisation from the body in question.

(4) A company which makes a relevant donation claims the relief by treating the donation as a trading expense or a deductible expense of management for the accounting period in which the donation is made.

(5) The claim is to be made with the company’s tax return for the period in question (Chapter 3 of Part 41A).

(6) Where the accounting period is less than 12 months the de minimis amount of a donation shall be correspondingly reduced.

(9) In the case of a relevant donation by an individual it is the approved body which claims relief under this section. The approved body is deemed to have received income equal to the grossed up amount of the donation, from which tax has been deducted at the specified rate. Where the tax paid by a donor is less than the amount of the deemed tax attaching to a donation, the tax relief is limited to the amount of tax actually paid by the donor.

(9A) Where designated securities are donated to an approved body and claim to relief under this section is made, the capital gains tax relief which normally applies to donations of assets to charities, which is provided for in section 611, does not apply.

(9B) Where a repayment of tax has been made to an approved body under this section, the amount of tax repaid is not to be regarded as tax paid by the donor in the event of a repayment claim by the donor under section 865, or any other provision of the Income Tax Acts.

(10) The details contained in the annual certificate or, as the case may be, enduring certificate must be given to the Revenue Commissioners in an electronic format in the context of a claim for repayment of tax by that approved body. The approved body must also declare that the claim is correct and complete.

(11) Where the Revenue Commissioners are satisfied that the approved body does not have the facilities to send them the details referred to in subsection (10) in an electronic format they may be sent in a written form agreed by the Revenue Commissioners. Such details are also accompanied by a declaration that the claim is correct and complete.

(12) The elements of section 764 providing for tax relief for payments to Irish universities or other approved bodies carrying on scientific research are repealed as this section provides relief in respect of donations to these organisations.

(13) The following provisions were repealed by the Finance Act 2001.

Section

Subject

88

Deduction for gifts to Enterprise Trust Ltd

484

Relief for gifts to the arts

485

Relief for gifts to 3rd Level Institutions

485A

Relief for gifts to Designated Schools

485B

Relief for gifts to the Scientific and Technological Education (Investment) Fund

486

Relief for gifts to First Step

486A

Corporate Donations to Eligible Charities

767

Payments to Universities and other approved bodies for research in, or teaching of, approved subjects

792(1)(b)(ii) & (iii)

Income under dispositions for short periods of:

Universities or Colleges

Human Rights Organisations

792(3)

Income under dispositions for short periods of:
Funds for Schools, Colleges or Universities.
(Section 792 covers what are known as covenants.)

848

Designated Charities – Repayment of tax in respect of Donations.

(14) Any organisation which at the time of enactment of the Finance Act 2001 had a valid authorisation either as an approved body for education in the arts or an eligible charity continued to hold that authorisation for the purposes of this section.

Relevant Date: Finance Act 2018