Charities' body calls for lower tax threshold for donations
Howard Lake | 16 November 2005 | News
The Irish Charity Tax Reform Group in a pre-budget submission has called for the minimum threshold for donations qualifying for tax relief to be reduced from ‚€250 to ‚€100, and to extend the current tax relief to cover non-cash gifts, such as shares. According to the ICTRG, only 13 per cent of charities benefit from donations of ‚€250 or more, and these tend to be the longer-established and larger charities.
The ICTRG claim that the ‚€250 threshold did not benefit smaller, regionally-based charities. The charity group told Finance minister Brian Cowen that if the threshold were reduced to ‚€100, one-third more charities could potentially benefit.
It said the cost of reducing the threshold from ‚€250 to ‚€100 would be around ‚€31 million, which it described as very good value for money on the basis of the pound-for-pound cost of services provided by the NGO sector”.
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The ITRG have also called for the introduction of a Vat refund scheme that would save Irish charities an estimated ‚€18 million a year.
Currently, most charitable activity is treated as Vat-exempt under EU law.
As charities don’t charge Vat on output, such as services, they cannot reclaim Vat paid on input, such as building costs, phone bills, recruitment or the cost of fund-raising.
This means that they pay up to 21 per cent more for goods and services than the commercial sector.
Such a situation differs from that in most other countries.
Charities in Australia, Canada and New Zealand can reclaim government sales tax (similar to Vat) paid on supplies.
In the US, charities are not charged the tax to begin with.
Former finance minister Charlie McCreevy argued that there was no provision in EU Vat law for any refund of Vat to exempt bodies, such as those represented by the Irish Charities Tax Reform Group”.
However, this argument was dismissed at EU level. The ICTRG maintained that refunds were possible by ministerial order and did not require changes to the law.
About Howard Lake
Howard Lake is consultant editor of UK Fundraising. He founded the site in 1994 and successfully sold it in 2022. As director of Giving X Ltd he is exploring growing giving on a massive scale.
He is the founder of Fundraising Camp and co-founder of GoodJobs.