Brian Cowen (Laois-Offaly, Fianna Fail)

Deputy Burton and others tabled similar amendments on Committee Stage and I am glad to reiterate the response I gave then. As Deputies are aware, section 848A provides for the scheme of income tax and corporation tax relief for donations to approved bodies, which include eligible charities, first and second level schools, as Deputy Paul McGrath noted, third level institutions, including universities, as well as other named bodies. Slightly more than 6,400 bodies currently hold the tax exemption as charitable bodies, of which 1,660 qualify as eligible charities for the purposes of the donations relief.

With regard to charities, the Revenue Commissioners impose a strict set of conditions on bodies duly granted tax exemption as charities. These include keeping a satisfactory financial record which must be available for inspection by Revenue, establishing proper controls where funds are raised by public subscription and submitting to Revenue the first year's financial accounts within 18 months of exemption being granted. A clear and transparent regulatory system is, therefore, in place to ensure the financial records are in keeping with proper methods and donations are being used for the purposes for which they are raised. In addition, given that failure to satisfy these conditions can and does result in the exemption being withdrawn, the regulatory framework is not pro forma but has teeth.

More than three quarters of charities and most approved bodies, apart from schools, are established as companies and, consequently, already have a statutory obligation under company law to lodge annual accounts with the Companies Office.

Under donations relief approved bodies receive a substantial tax benefit from the Exchequer. For this reason, it is necessary to have public confidence in the way such bodies operate, in particular in how their funds are applied. There is no divergence of opinion among Deputies on this principle, although we disagree on how public confidence can be best achieved. As I explained, however, the current framework is in large measure effective.

Deputies will be aware that the Department of Community, Rural and Gaeltacht Affairs recently concluded a public consultation process on the establishment of a modern statutory framework for charities. Unfortunately, a lengthy incubation is part of the nature of the legislative process. Nevertheless, the process is under way and the Minister for Community, Rural and Gaeltacht Affairs, Deputy Ó Cuív, will shortly bring to Cabinet a series of legislative proposals regarding a charities regulatory regime. I fully expect that these proposals will set out a framework of accountability and transparency in terms of the activities of charities and compliance and governance generally. Modernising charities legislation, providing for greater accountability and transparency and ensuring compliance and governance will be at the forefront of the Government's policy response.

Legislation is the proper forum in which to establish an appropriate system of public accountability. Rather than using the Finance Bill in an ad hoc fashion, let the modern charities legislation due for imminent consideration by the Cabinet be the means by which we address some of the issues raised in the amendment.

On Committee Stage last week I provided for a reduction from three to two years in the waiting period for obtaining tax exemption for donations. This Bill assists this by reducing the time for which new charities can seek relief exemption on donations. The wider policy issues raised will be dealt with in the context of the modern charities legislation. Further changes would be premature given the work done by the Minister for Community, Rural and Gaeltacht Affairs, Deputy Ó Cuív, and his Department and the current stage of those legislative proposals. For this reason, I will not accept the amendment.

Deputy Burton referred to the scheme of donations introduced in the Finance Act 1995 by the then Minister for Finance, Deputy Quinn. The scheme only related to the activities of charities in the Third World. Relief for personal donations to such charities was at the standard rate of income tax. There was a de minimis qualifying amount of £200, or €254, and an annual upper limit of £750, or €952, by any individual donor under the scheme.

The scheme for donations introduced by my immediate predecessor, Mr. McCreevy, in the Finance Act 2001 merged nearly all of the existing donation schemes into a single, simplified and extended one. For the first time, personal donations to domestic charities qualified for relief under the scheme. The relief, which is generous, is granted at the taxpayer's marginal rate of income tax. While there is a de minimis qualifying amount of €250, there is no upper limit on the amount that can be donated. As Deputy Paul McGrath pointed out, the relief is also available to second level schools, universities and other third level educational establishments.

I do not have the details the Deputy seeks but I will speak to the Revenue Commissioners about obtaining it. The figure of €21 million I gave is in respect of this extended scheme, incorporating the many other schemes from the past and its wider application to educational institutions. I would be only speculating on the figure without further information. On a previous amendment, Members spoke about keeping tax forms simple to ensure people know their entitlements. If a question in respect of everything was put on tax forms for the purposes of collating figures, it would be very long and may not serve its purpose. We will do what we can——

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