Business leaders urged to donate to charities to benefit from tax claim

BUSINESS leaders have been advised to consider philanthropy, or charitable donation, as a means to reduce their income tax liability, and save thousands of euro annually.

About €500 million is currently donated by private investors to the Irish not-for-profit sector but the Community Foundation for Ireland (CFI), an organisation which provides advice to philanthropists, said business people and other self-assessed taxpayers can take advantage of the Government’s tax rebate scheme for charitable donations.

By doing this they could maximise the benefits to social and charitable organisations, while at the same time reducing their overall tax burden, it said.

For example, a PAYE worker wanting to create a €20,000 donation fund, would make a donation of €11,800 and the CFI will ask them to complete a CHY2 form so they can then claim €8,200 from the Revenue which will be added to the endowment fund.

For self-assessed individuals, they can claim back 41% of the donation in their annual return, meaning the net “investment” is €11,800.

The CFI said that monies given through them can be managed in a permanent endowment for months or years while the donor decides how to disburse it.

Chief executive of the CFI Tina Roche said: “As tax relief options reduce, Ireland’s wealthy are looking to philanthropy as one of the more appealing options for offsetting against their income and as the size of the donation increases, so does the impact of tax incentives.”

The CFI is working to establish county funds to aid local community development: “With more than a decade of wealth accumulation behind us Ireland has a unique opportunity to address the scale of poverty and inequality in our society at a time of spectacular wealth.

“If our wealthiest citizens contributed at the same level as Britain we would more than double our rate of giving to over €1 billion annually.”