Revenue Tax Briefing

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Revenue Tax Briefing Issue 47, April 2002

Finance Act 2002 Donations to Certain Sports Bodies

Section 41 inserts a new Section 847A into the TCA 1997 to provide 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. The estimated aggregate cost of the project must not be greater than €40m. The sports body must hold a certificate from the Revenue Commissioners that the body is, in the opinion of the Commissioners, a body of persons to which Section 235 TCA 1997 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 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 - 42% - makes a qualifying donation of €580 to an approved sports body, that body will be deemed to have received €1,000 less tax of €420. The body will then be able to claim a refund of €420 from Revenue at the end of the year.

Individual taxpayers 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 will come into effect from 1 May 2002.