Richard Bruton (Dublin North Central, Fine Gael)
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Question 375: To ask the Minister for Finance if he has considered the desirability of extending tax relief for charitable donations to include other than cash contributions, such as share securities or property; and his policy towards extending relief in this way. [1589/05]

Brian Cowen (Laois-Offaly, Fianna Fail)
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As the Deputy is aware, the Finance Act 2001 introduced a new uniform scheme of tax relief on donations made by either individuals or corporate bodies to eligible charities and other approved bodies, including first and second level schools and third level institutions, including universities. The minimum qualifying donation for relief purposes to any one eligible charity or approved body is €250 per annum. Generally speaking, there is no upper limit on the amount which can be donated and qualify for relief. Donations must be in the form of money and can be on a cumulative basis for any one year. Thus, a weekly donation of €5 per week can qualify for the relief. The relief on the donation is at the individual's marginal rate of tax.

It should be noted that while the tax relief on donations scheme does not apply to the donation of non-cash assets, relief from capital gains tax is available where an asset is donated to an eligible charity. Essentially, where a donation of a non-cash asset is made to an eligible charity, the disposal is deemed for capital gains tax purposes to be made for such an amount as to ensure that neither a gain nor a loss accrues on the disposal. Thus, no charge to capital gains tax arises to either the donor or the receiving charity on subsequent disposal of the asset. Income tax relief on the value of an asset donated together with the current capital gains tax exemption would amount to a double relief. Such a concession could result in tax relief which was significantly higher than marginal rate income tax relief being granted.

The income tax for donations of cash presupposes that the individual is making the donation from income on which he or she has paid income tax to the value of the relief being claimed. Such a link may be broken where non-cash items are involved. In addition, the inclusion of non-cash gifts would also give rise to valuation issues. Extending the scheme to non-cash items would give rise to significant additional cost to the Exchequer in regard to a scheme which is already very generous.

The existing scheme of tax relief on donations is effective in encouraging greater donations. I understand that the Irish Charities Tax Reform Group has informed my officials that they have found the relief very useful in obtaining donations.