Key Post Tax relief on donations to charity

[Brendan Burgess]

Revenue Guide

If you make a cash donation of €250 or more to an approved charity, they can claim a tax refund of 45% of the amount you donate.

Say you donate €1,000 to a charity.

At the end of the year, they will claim €450 from Revenue.

So your donation of €1,000 is worth €1,450 to the charity.

(If you want to donate €30,000 or more to one of our national collections such as the National Gallery, check out this thread:
Tax relief on donations of Heritage Items)

 

[Brendan Burgess]

Conditions Full guide here

The Charity must be approved to received charitable donations. It is not enough to be a registered charity. The charity must be on the Revenue's List of charities approved for tax relief on donations.

The donation must be in money or shares. (If you want to donate property, you should probably sell it first and donate the cash)

The donation must be at least €250 and not more than €1m in any tax year.

The donor must have paid at least that amount in tax. In other words, if you donate €100,000, the charity would get €45,000 . However, if you have paid only €30,000 tax that year, then the refund is limited to €30,000.

The donor must fill in a form for the charity with their tax number, but the charity deals with the Revenue. After the end of the tax year, the charity will send you a simple form to fill in. Make sure to fill it in and return it to them, or else they won't be able to get the refund. If you are making regular donations to a specific charity, you can fill in a form to cover 5 years.

If there is a connection between you as the donor, and the charity or body you are donating to, the relief is restricted to 10% of your total income for the year.

You also must not receive any benefit, either directly or indirectly, from making the donation. This also counts for any person connected with you.

A donation cannot be conditional on the charity buying a property from a donor or a person connected with the donor.

 

[RedOnion]

I could be wrong, but I thought the percentage changed a few years ago to 31% (irrespective of the marginal tax rate of the donor).

 

[Brendan Burgess]

The scheme for a company is different

A company can claim the donation as a normal trading expense. The charity cannot make a claim for a refund.

If the company does not have a tax liability, then they get no benefit in making the donation(except to increase their tax losses forward.)

Brendan

 

[Brendan Burgess]

I could be wrong, but I thought the percentage changed a few years ago to 31% (irrespective of the marginal tax rate of the donor).

The 31% is the grossed up rate

It's easier for people to understand that if they give €1,000 - the charity gets €450 from Revenue.

Brendan

 

[RedOnion]

Ah, of course. Not thinking straight!
There used to be a much more complex calculation based on marginal rates.

 

[Brendan Burgess]

Frequently Asked Questions

Most of the answers are in the [broken link removed]
Do school fees qualify?
No

Does my membership subscription qualify?
Not usually as membership usually confers some benefit on a member e.g. Friends of the National Gallery can attend exhibitions free of charge.

 

[Brendan Burgess]

I have a company - should I donate through the company or personally?

Summary - Yes, it's better to donate through a company

If you donate €1,000 through a company, the charity will get €1,000.
If you pay yourself the €1,000 and then donate the net salary to charity, the charity will get only €696.


Detail
A donation through the company is treated the same as if it were a payment of salary.

If you donate €1,000 the charity gets €1,000 and the company gets tax relief on it.

If you pay yourself a salary of €1,000, the company gets the same tax relief.

You will pay 52% Income Tax, USC and PRSI, so you will receive a net pay of €480.

If you donate €480 to the charity, the charity can claim tax relief of 45%, so they will get €216.

So the total value to the charity is €696.

Brendan