Children's charity Barnardos has launched a campaign to make people aware that giving to charity can be tax-efficient.
Donors who contribute more than €250 in any one year can significantly increase the value of their donation to the charity - at no extra cost to themselves.
The organisation has written to 900 of its regular supporters who donated more than €250 to the charity in 2006, asking them to fill out the enclosed Revenue Commissioners' CHY 2 certificate.
This form allows the charity to claim the tax relief on the donation from the Revenue, which they cannot do without the co-operation of the taxpayer.
Barnardos hopes to raise an extra €50,000 in funds from the campaign for its work with vulnerable children and their families, according to Ruth Guy, Barnardos' director of fundraising and marketing.
This is "a conservative target", Barnardos says. A similar exercise carried out last year with a far smaller group of donors raised €40,000 in unclaimed tax.
But a lack of public awareness about the tax relief on annual cash donations of €250 or more means that significant amounts of money remains with the Revenue, rather than going to the donor's preferred charity.
"It is money that would otherwise stay with the Government. But it does make a difference to us in terms of certain projects getting done or not," says Guy.
Tax relief on cash donations above an annual threshold of €250 to eligible charities was introduced in 2001.However, the tax relief works in different ways depending on the way in which the donor is taxed on their income.
In the case of workers whose incomes are subject to PAYE, the benefit goes to the charity.
Taxpayers fill in their PPS number, provide their contact details and indicate whether they pay tax at the standard or higher rate of tax. They then return this form to the charity.
For example, a PAYE worker who contributed €250 to Barnardos last year fills in the CHY 2 form, which the charity then uses to claim back the income tax that the worker has already paid on their donation.
The charity treats the contribution as an after-tax sum and applies for the difference between this and the grossed-up sum from the Revenue.
On a donation of €250, the tax relief claimed by the charity will be €181 if the donor paid tax at the 42 per cent rate in 2006 or €62.50 if the donor paid tax at the standard rate of 20 per cent.
The result is that a €250 donation is actually worth either €431 or €312.50 to the charity.
The top rate of tax has now fallen to 41 per cent, so a €250 donation made this year will be worth €423.73 to the charity if the relief is claimed.
Self-assessed taxpayers and corporations receive the tax relief into their own pockets and can offset charitable donations against their income or corporation tax bill.
So a donation of €1,000 to an eligible charity will only effectively cost a self-assessed higher-rate taxpayer €580 if the donation was made in 2006 and €590 if it is made this year.
Tax relief is available even if the donation is made on a cumulative basis throughout the year. The monthly amount required for tax relief to kick in is €20.84.
The Irish Charities Tax Reform Group has lobbied the Government to reduce the donation threshold on which tax relief is available.
According to Guy, donors who find out about the value of the tax relief do try to reach the €250 mark. "If we tell people who have given us €190 or €200 over the course of a year about the tax relief, they will often give us that extra amount, because they understand that it means their donation is worth so much more to us."
