If you pay tax and donate €250 or more to a registered charity in any year, it can claim 45% in tax relief from Revenue at no extra cost to you.
TAX RELIEF ON YOUR DONATIONS
This information relates to charities authorised by the Revenue Commissioners as an approved body under the Scheme of Tax Relief for Donations to eligible Charities and other Approved Bodies under the terms of Section 848A Taxes Consolidation Act 1997. If you pay tax and donate €250 or more to an authorised charity in any year, it can claim 45% in tax relief from Revenue at no extra cost to you. For example, if you pay 12 monthly payments of €21 = €252, that could be worth €365 to the charity with tax relief. To enable the charity to claim this relief, all you need do is complete a simple form CHY 3, also known as The Good Form, that covers any year in which you donate €250+.
Changes effective from 1 Jan 2013 greatly simplified charity tax relief, particularly in treating all individual taxpayers the same, whether PAYE or self-assessed, higher or standard rate, with a blended rate of relief that equates to nearly 45% of donations paid. Revenue now pay all the relief to the charity, irrespective of the status of the taxpayer (previously self-assessed taxpayers could use the relief to reduce their own tax). Tax relief can now be enabled by the donor signing The Good Form that covers 5 years and can be renewed without the need for further paperwork.
Your donations can be worth nearly 45% more to the charity if:
- Your donation(s) to that charity totals €250 or more in any calendar year
- Your donation(s) is in the form of money and/or securities (shares or debentures).
- You were resident in Republic of Ireland during the years in question.
- You pay income tax or capital gains tax in respect of the years in question.
- You or anyone connected with you obtained no benefit from the charity for making the donation(s).
- Your donation(s) are not subject to repayment or conditional on acquisition of property from you or anyone connected with you.
YOUR QUESTIONS ANSWERED
Can the charity getting tax rebates on my donations affect the tax I pay?
Not at all. It won’t cost you a penny in tax or affect your tax status in any way.
How much is the tax rebate worth?
44.93%, i.e. approx. 45% of your donations of €250+.
e.g. If you donate €250, the charity can claim €112.33, making your donations worth €362.33 to the charity.
If you donate €1,000 the charity can claim €449.30 making your donations worth €1,449.30 to the charity.
But I pay 20%/41% tax – how can the charity get 45%?
The rate of tax relief for charities is no longer related to the actual rate of tax the donor pays. It is a blended rate of 45% for all donors.
I thought the charity tax rebate rate was 31%?
Yes, the notional rate is 31% of before-tax income but, because the donations you make come out of your after-tax income, Revenue “grosses-up” to take account of you paying a notional income tax rate of 31%. The gross donation is 100%/(100%-31%) = 144.93% of the net donation, so the tax relief works out as 44.93% of the net donation.
How does the charity obtain the tax rebate?
After the end of any year in which your donations total
€250+, the charity will send you The Good Form (CHY 3) to complete unless you already completed one for that period. The charity will then claim the rebate and, when Revenue is satisfied you paid at least that amount in tax, they will pay the charity. Please send the completed form to the charity, not Revenue.
How much tax do I have to pay for the charity to benefit?
The amount of tax you pay should at least equal the tax rebates that the charity claims in respect of your donations. E.g. if you donated €1,000 to the charity, your tax paid for that year should be at least €449. If not, Revenue will not give a full rebate to the charity.
What if I support more than one charity?
There’s no limit to the number of eligible charities that can claim tax relief when you give each of them €250+. However, what charities are paid by Revenue cannot exceed the tax you actually paid – if the tax you paid is less than the total being claimed by charities, Revenue will pay them on a first-come-first-served basis.
What if I am an employee or member of the charity?
The total donations to approved bodies with which you are formally associated which may qualify for tax relief is limited to 10% of your total income for that year – any excess of donations above that to bodies with which you are associated will not qualify for tax relief.
What payments qualify as donations for tax purposes?
Any donations which you paid yourself (not on behalf of or refunded by another party) from which you and people connected with you obtained no tangible benefit (e.g. If you bought raffle tickets, raised sponsorship yourself or sponsored someone to go on an overseas trek, they would not qualify).
I’m not a taxpayer but my spouse is – can my donations still be tax-effective?
No, tax relief is confined to where an individual who makes the donation pays tax. It is tax-effective if the spouse who pays tax pays the donations.
What if I’m not employed or have a pension?
If you have a pension, investments or any other means on which you pay either income tax or capital gains tax, that’s eligible for tax relief.
I’m self-employed/self-assessed – don’t I get the tax relief myself?
Since 1 Jan 2013, self-assessed and PAYE taxpayers are treated the same – all tax relief goes to the charity, not the taxpayer. So, while you don’t get the relief yourself, your donations to the charity can be worth 45% more at no extra cost to you.
I live outside Republic of Ireland – can the charity get the tax rebate?
For the charity to obtain the tax rebate from the Revenue Commissioners, you must reside in Republic of Ireland in the year in question and pay income tax and/or capital gains tax.
I don’t like revealing my tax details
You don’t need to. You don’t need to tell the charity how much tax you pay – under the new system, they don’t even need to know whether you are PAYE or self-assessed or what tax rate you pay. All they need is your signature and PPS number, which you can find on most tax/social welfare documents addressed to you – the charity will retain this number securely and only for the purposes of obtaining tax rebates on your donations.
Does signing an Enduring Certificate commit me to pay anything to the charity?
No, the enduring certificate is not a commitment on your part to pay anything – it simply enables the charity to claim tax relief if you donate €250+ in any of the five years covered by the form.
What if I haven’t paid tax for the year in question yet but will do?
You can still complete a CHY 3 form anyhow – when you do pay enough tax, Revenue’s system will trigger the addition of the tax relief on your donations to its next scheduled payment to the charity.
What if I do not want to complete an Enduring Certificate?
If you prefer to provide a certificate on an annual basis, the charity can send you an Annual Certificate (CHY 4 form). However, it is more effective if you complete an Enduring Certificate (CHY 3 form) because it could make your donations over a five-year period tax-effective without the need for any further paperwork.
Can I renew an Enduring Certificate after 5 years?
Yes, and you will be able to do so without further paperwork. It would be helpful if you supplied your phone number and/or email on the CHY 3 form so the charity can contact you about renewal in due course.
Can I cancel an Enduring Certificate?
If you decide later that you do not want the charity to obtain the tax relief, you can cancel an enduring certificate at any stage by contacting the charity.
What about donations I made before 2013?
The scheme was different then. If you were a PAYE taxpayer and gave €250+ to the charity in any of the years 2010-2012, please complete the old annual form (CHY 2) for each year if you have not already done so.
If you were self-assessed in any of the years 2010-2012, you can, if you have not already done so, claim tax relief on donations of €250+ per charity at your marginal rate of tax. Claims should be made in your self-assessment tax return by 31 December of the 4th year after you paid the relevant donations – e.g. 31 Dec 2014 is the latest date to claim tax relief on donations made in 2010.
REMEMBER – COMPLETING THE GOOD FORM MAKES YOUR DONATIONS WORTH 45% MORE AT NO EXTRA COST TO YOU
If you have any further questions please contact us.