Tsunami Disaster Collection -TAX?

A

Asimov

Guest
Hi All,
I'm setting up a collection at work for disaster relief. We have a friend working in one of the affected areas and we want to send money directly to him so it will all get straight to those who need it most.

I've been told that such a collection may be illegal, and that monies going into our fund bank account will create problems later with the Revenue (the account is in our friends name).

Any idea if this is correct? Will the Revenue take a dim view of this? It seems wrong if we can't help because of tax rules and restrictions!
 
I presume this is because Revenue will have no way of differentiating between a transfer of €10K to your friend as a taxable payment for services and as donation meant for distribution to worthy causes.

I presume they would take a reasonable view, especially where your friend has an address and bank account in that region, but I presume the legislation wouldn't have been drafted with charity donations to individuals in mind.

It might be worth giving them a ring to see if there is any upfront way this can be done - some form of declaration or something.

At the end of the day, many people would feel it was more legitimate or efficient to give the money direct (to people on the ground, like your friend) than to pass it through 3rd parties and subjecting it to taxation.

z
 
i know this might complicate things ever further but if the collection was 'donated' by an individual to one of the recognised charities then they will also get back tax from the revenue which might add up to 42% to the collection. probably illegal.
 
Just to clarify Setanta's point, the tax relief is claimable by the charity, not by the individuals concerned. The simplest (and imho only proper) way to do this is for each donor to make an individual contribution to the charity and complete the necessary documentation to allow the charity claim the tax relief.

Other than that, I can't see any other tax implications. The question of deemed payments for services only comes into the picture is there is a business relationship between the donor and donee. Otherwise it is irrelevant. If sums are being given from one individual to another technically there could be gift tax implications but for small amounts this is not going to be an issue.

There may be legal and other governance implications for the donee is accepting money from friends and/or the public at large on the basis that it is to be used for charitable purposes.
 
Thanks for those responses.
I wrote an email to the revenue and a reply arrived this morning...fast response. We would need to be a registered charity to receive the 'tax back' and yes, that would go straight to the fund to help victims, not back to the donors.
However it looks difficult to get recognised charity status for tax purposes. We may have to forget that possibility.

Tommy, thanks for the comments on the personal tax issues around donations. I've sent another email to Revenue to clarify things on that score. Our friend in Sri Lanka says not to worry about tax issues at his end, he has it sorted. Don't know how, but he understands the issues for himself and is happy to run with it.

I'll let you know how this pans out.
 
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