Willie O'Dea (Limerick East, Fianna Fail)

I understand where the Senator is coming from and I am aware of that apparent anomaly. It is a matter for the Revenue Commissioners to determine whether a body or organisation has been established for charitable purposes. I have been advised that the activities of Tidy Towns organisations, generally speaking, would be regarded as satisfying one of the categories of charitable purpose, which is that they are to be of benefit to the broader community. The other categories of charitable purpose are the advancement of religion, the relief of poverty and the advancement of education. Obviously, Tidy Towns groups do not have anything to do with these categories.

A number of Tidy Towns organisations enjoy charitable tax exempt status, the first of which was approved approximately 20 years ago. Two key requirements must be satisfied for a body to maintain charitable status under the Revenue rules. The first is that the body must be established solely for charitable purposes. That would normally be stated in the body's governing instrument. Second, and perhaps more importantly, the body must apply its funds solely for charitable purposes. This means that, on an ongoing basis, the body must conduct itself in accordance with its governing principles. Failure to do so will result in a removal of charitable tax exempt status.

If the Tánaiste and Minister for Finance simply designated all those bodies as charities for the purposes of the charitable donations scheme, as suggested by the amendment, the ongoing means of control would be absent. The bodies would retain charitable tax exempt status regardless of the function they ultimately carried out. There is a definition of what someone must do to qualify for charitable tax exempt status. Any organisation, such as a Tidy Towns organisation, can apply to the Revenue Commissioners to see if it comes within the rules. Sometimes, after looking at all the facts of the case, the Revenue Commissioners will say that it does, while in other cases it will say that it does not.

I assume that if one Tidy Towns group establishes a precedent of being designated as a charity under the legislation, there must be something materially different about what is being done by another Tidy Towns organisation such that it does not get that exemption. If we were automatically to designate all Tidy Towns groups as being tax exempt because they are charities, we would have the unusual situation where organisations which might be blatantly acting outside what the regulations provide in respect of charitable purposes would be exempt while others which are probably nearer the definition of charity would not.

The position at the moment is that a Tidy Towns organisation must apply for charitable tax exempt status and the Revenue Commissioners will decide case by case whether it is inside or outside the statutory definition.