Michael McCarthy (Cork South West, Labour)
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43. To ask the Minister for Finance his views on lowering the limit to claim back tax on charitable donations, particularly with respect to encouraging persons to donate to voluntary and community initiatives; and if he will make a statement on the matter. [6201/15]

Michael Noonan (Limerick City, Fine Gael)
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Section 848A of the Taxes Consolidation Act 1997 provides tax relief at a blended rate of 31% on donations made by individuals to eligible charities and other approved bodies. In order to qualify for the tax relief currently, a minimum donation of €250 per annum must be made to the body concerned. 

As the Deputy may be aware, changes were made to the scheme of tax relief for donations to approved bodies in Finance Act 2013 as follows:

- Donations from all individual donors under the scheme are treated in the same manner, with the tax relief in all cases being repaid to the charity.

- A blended rate of relief of 31% applies to all taxpayers regardless of their marginal tax rate. All donations are grossed up as was previously done for donations from individuals within the PAYE collection system.

- The charitable donations scheme has been removed from the scope of the high earners' restriction in recognition of the fact that donors will no longer benefit from the tax relief associated with their donations.

- An annual donation limit of €1 million per individual, for which a refund of income tax can be claimed by approved bodies, has been applied.

These changes were made following a process of engagement between officials at the Department of Finance and the Revenue Commissioners with representatives of the charities sector from the Irish Charities Tax Reform Group (ICTR).

The objectives of that process were threefold: (i) to simplify the operation of the regime, (ii) to reduce the administrative overheads on charities and on the Revenue Commissioners incurred in the operation of the scheme, and (iii) to ensure that any change would be Revenue neutral from the Exchequer perspective. The proposals for the changes were also recommended in the Report of the Forum on Philanthropy and Fundraising.

The €250 threshold has not changed since it was introduced in 2002. Normal inflation levels effectively have reduced the value of the threshold over time. In addition, the donations scheme was introduced to encourage the donation of large sums of money to charities and certain other bodies. It was never envisaged that the scheme should subsidise smaller donations, which in all likelihood, would be made in any event.

The tax relief available for donations is already very generous and donations can be cumulative, such that a donation of just €5 per week over the course of a year would qualify. However, tax relief is no longer provided to individual donors and is refunded directly to the approved bodies. It is therefore questionable as to whether reducing the €250 limit would result in additional donations.