CHARITABLE STATUS - TAX Shauna Blanchfield Dublin Biennial 2014

WHAT IS CHARITABLE STATUS If an organisation has charitable status it means “that it is recognised as charitable by the Revenue Commissioners for tax purposes” (The Wheel, 2002)

TYPES OF CHARITIES There are three types of recognized Charities in Ireland 1. An unincorporated association with a Constitution or Rules; 2. A charitable trust established by Trust Deed; 3. A company governed by a Memorandum and Articles of Association (Charities Act, 2009)

QUALIFYING AS A CHARITY To qualify as a charity your organisation must engage in one of the following actions 1.The relief of poverty; 2.The advancement of education; 3.The advancement of religion; or 4.Other purposes beneficial to the community – This includes ‘The advancement of the arts, culture, heritage or sciences’ (Revenue, 2013),(Huegel, 2010)

REQUIREMENTS AS A CHARITY 1. Be legally established in Ireland 2. Have a minimum of three directors/trustees 3. Be bound by a Governing Instrument 4. The Government instrument must contain certain clauses (Doherty, 2009)

CLAUSES IN THE GOVERNING INSTRUMENT 1. Non-distribution of profits to its members; 2. Keeping transparent auditable accounts 3. Non-payment of fees or salaries to the directors 4. Measures for transferring of assets to another charitable body if the Charity ceases to exist 5. Changes to the instrument must be approved by the Revenue Commissioner (Doherty, 2009)

REGISTERING AS A CHARITY To register an organisation has to complete a CHY1 application and submit it to the Charities Section of the Revenue Commissioners This should be accompanied by: Copy of the governing instrument Statement of activities to date Statement of planned activities for the next year Annual reports Latest financial statements Details of Officers/Trustees/Directors (Ryan, 2013)

WHAT TAX RELIEFS ARE AVAILABLE Income Tax - Sections 207 and 208, Taxes Consolidation Act, Corporation Tax- Sections 76 and 78 Taxes Consolidation Act, Capital Gains Tax - Section 609, Taxes Consolidation Act, Deposit Interest Retention Tax (DIRT) - Section 266 Taxes Consolidation Act, Stamp Duty - Section 82, Stamp Duties Consolidation Act Dividend Withholding Tax - Chapter 8A, Part 6, Taxes Consolidation Act, Capital Acquisitions Tax - Sections 17, 22 and 76 of the Capital Acquisitions Taxes Consolidation Act (Revenue, 2013)

WHAT ABOUT VAT? Charities do not supply goods or services as a business. They cannot register for VAT. Therefore they are not entitled to a repayment of VAT. If a charity carries on a trade with an income of over €37,500 for goods or €75,000 for services they are obliged to register for VAT (Revenue, 1999)

PAYMENT OF EMPLOYEES A Charity can have paid employees Employees have to pay P.A.Y.E. Officers/Directors cannot be employed by the charity (Revenue, 2013)

RECOMMENDATIONS FOR DUBLIN BIENNIAL 2014 Should we register as a charity?

REFERENCES Charities Act, (2009) Retrieved from irishstatutebook.ie/pdf/2009/en.act pdf Doherty, S., (2009) Applying for Charitable Status for your Business. Small Business Advice Ireland. Retrieved from smallbusinesssadviceireland.blogspot.ie/2009/06/applying-for-charitable-status-for-your-html Hugel, H., (2010) Demystifying the Process of Applying for Charitable Status. Creativity and Social Entrepreneurship (via Wordpress). Retrieved from helenehugel.wordpress.com/2010/03/29/demystifying-the-process-of-applying-for charitable-status Revenue, (2013). Frequently Asked Questions – Charities. Revenue. Retrieved from revenue.ie/en/business/faqs charities.html Revenue, (2009). Explanatory Leaflet on Value Added Tax in the Case of Charities. Dochas. Retireved from dochas.ie/pages/resources/documents/charity_vat.pdf Ryan, S., (2013) Steps That Need to be Taken, and Condition to be met to Obtain Charitable Status. Carmichael Centre. Retrieved from knowledgenet.carmichaelcentre.ie/articles/steps-need-be-taken-and-conditions-be-met-obtain-charitable-status The Wheel, (June 2002). Useful information for setting up a voluntary organisation. The Wheel. Retrieved from wheel.ie/sites/default/files/Forming%20a%20charity%20(2).pdf