Eligible Charity Scheme

The following information is taken from the revenue leaflet CHY2, which you can download here from Revenue.ie.

Section 848A Taxes Consolidation Act 1997 (TCA 1997) provides for a scheme of tax relief for certain “eligible charities” and other “approved bodies” in respect of donations received on or after 6 April 2001.

What is an Eligible Charity

An “eligible charity” means any charity, which is authorised in writing by the Revenue Commissioners for the purposes of this Scheme. A list of eligible Charities is published on Revenue’s website at www.revenue.ie under Publications/Lists of bodies and organisations that qualify for reliefs.

An authorisation will not issue unless the applicant charity:

• is a body of persons or trust established for charitable purposes only, and
  applies its income for charitable purposes only, and
• has been granted exemption from tax (i.e. assigned a Charity (CHY) number) by the Revenue
  Commissioners for a period of not less than two years prior to the date of application for authorisation.

Where a charity wishes to apply for an authorisation under the Scheme it must submit a completed application form – see Appendix 1 ‘CHY2 AUTH’ – to the Office of the Revenue Commissioners, Collector-General’s Division, Charities Section, Government Offices, Nenagh, Co. Tipperary.

Authorisations issued under the Scheme will be valid for periods ranging up to five years and upon expiry may be renewed by making a fresh application.

Notes for Charities:

(i) It should be noted that such other information in addition to the application form for scheme
authorisation, as may be required, must also be furnished to the Revenue Commissioners on request,
(ii) The Revenue Commissioners can make available to any person the name and address of any charity
authorised for the purposes of the Scheme,
(iii) An eligible charity may be required to publish such information in such manner as the Minister for
Finance may reasonably require, including audited accounts.

What is An Approved Body?

In addition to eligible charities, the following is a list of other “approved bodies” for the purposes of the Scheme:

• Educational institutions or bodies including primary, second level or third level, if they meet certain
  conditions (e.g. their programmes are approved by the Minister for Education and Science or the
  institution provides courses which are validated by the Higher Education Training and Awards
  Council),
• A body approved for Education in the Arts by the Minister for Finance,
• A body to which Section 209 TCA 1997 applies, i.e. a body for the promotion of the observance of
  the Universal Declaration of Human Rights or the implementation of the European Convention for
  the protection of Human Rights and Fundamental Freedoms, or both.

What Donations Qualify for Relief

The minimum donation in any single year that must be made to any one eligible charity or approved body in the form of money or designated securities, or a combination of money and designated securities, must be of a value of £250. Cash donations made in instalments (e.g. Standing Order) also qualify. There is no maximum qualifying donation amount save that where there is an association between the donor and the eligible charity/approved body at the time the donation is made, e.g. where the donor is an employee or member of the eligible charity/approved body, the relief will be restricted to 10% of the total income of the individual for the relevant year of assessment. An overall restriction applies to tax relief schemes as introduced by Section 17 of the Finance Act 2006.

A donation must also satisfy the following conditions:

• It must be in the form of money or designated securities or a combination of money and
  designated securities,
• It must not be repayable,
• It must not confer any benefit on the donor or any person connected with the donor,
• It must not be conditional on, or associated with, any arrangement involving the acquisition of
  property by the eligible charity or the approved body.

NATURE OF RELIEF

The arrangements for allowing tax relief on donations will depend on whether the donor is (1) a PAYE-only taxpayer or (2) an individual on Self-assessment or (3) a company.

• For a PAYE-only taxpayer, the relief will be given on a “grossed up” basis to the eligible charity or
  approved body, as the case may be, rather than by way of a separate claim to tax relief by the
  donor. In other words, the donation will be treated as having been received by the eligible charity
  or approved body ‘net’ of income tax. If the donation comprises designated securities, the donor
  must account for any Capital Gains Tax liability to enable the eligible charity to claim the tax relief.
• In the case of a donation made by an individual who pays tax on a Self-Assessment basis, the
  individual will claim the relief and there is no grossing up arrangement. Similarly, in the case of a
  donation made by an individual who pays portion of his/her tax under the Self-assessment system
  but who also pays tax under the PAYE tax system, the individual will claim the relief and there is
  no grossing up arrangement unless he/she is not deemed a “chargeable person” for Self-assessment purposes.
• In the case of Corporate donations, the company will claim a deduction for the donation as if it
  were a trading expense; again there is no grossing up arrangement in this case.

For full information and relevant forms please download leaflet CHY2 from the Revenue.ie web site.