The Charitable Donation Scheme allows tax relief on qualifying donations made to eligible charities and approved bodies.
Revenue publish a list of bodies with charitable tax exemption – find out if your chosen charity is authorised by clicking here
A donation will qualify under the Charitable Donation Scheme if it is a payment of at least €250 and less than €1m made in a single year in the form of money or designated securities, or a combination of both.
There is a four-year time limit for making a claim under this scheme. Payments by standing order or direct debit will also qualify, as long as the above conditions are met.
If donations are made to multiple organisations, each payment to each organisation will qualify for the scheme as long as the same conditions are met by each donation.
Donations from individuals
- Where an individual makes a donation of €250 or more in a year, the charity or approved body can claim a refund of tax paid on that donation by the donor
- To allow the charity to claim the relief the donor must complete either an Enduring Certificate – CHY3 Cert or an Annual Certificate – CHY4 Cert and give it to the organisation
- The relief is calculated by grossing up the donation at the specified rate. The specified rate is currently 31%
- The amount of the refund to the charity cannot exceed the amount of tax you have paid during the year
- Individual donates €250 to a charity, this sum is deemed to be 69% of the donation with a further 31% deemed to be the tax element of the total sum donated
- €250/69 x 100 = €362 (this is deemed to be the full amount of the donation)
- €362 – €250 = €112 (this is the tax element of the donation)
- The donor pays €250 to the charity and the charity claims a €112 refund from Revenue
Donations from companies
- Where a company makes a donation of at €250 or more in the year, the donation is treated as a trading expenses and the company is entitled to claim a tax deduction in respect of the amount donated
- In these circumstances, the company claims the relief as opposed to the charity. There is no grossing up arrangement and no paper work to complete. However, the company must ensure that the charity is a Qualifying Charity authorised by Revenue under the Charitable Donation Scheme
- Company donates €250 to a charity; this sum is deducted from the companies (Case 1) trading income which is taxable at 12.5%
- The value of the donation to the charity is €250
- The cost to the company is €250 – (€250 x 12.5%) = €218.75
It’s definitely worth planning your giving. Avail of the tax relief, document the gift and mostly enjoy the feel good factor of helping someone or a deserving cause.
To find out how you can avail of the small gift tax exemption this Christmas click here.