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Recent changes to the Charities Act make it easier and more beneficial for individuals and companies to donate to charities. The SBC Foundation is a registered charity and is able to assist those wishing to make a donation.

In summary these changes are

•  Removal of the $1890.00 rebate threshold on donations made by individuals.

•  Removal of the 5% deduction limit on donations made by companies

•  Company deductions for donations will be extended to include unlisted companies with five or fewer shareholders.

Individual benefits

Individuals will be able to claim a 33% or one third tax rebate for donations up to a maximum claim equal to their annual taxable income. For example Brendan donates $3000 to various charities and other non-profit groups, including her church. His taxable income for the 2009 year (01 April 2008 to 31 March 2009) is $35,000. In the past Brendan could only claim a maximum of $630 now, under the new regime, he will receive $1000.

Company benefits

Companies will be entitled to a deduction for donations to charities limited only by the amount of the company’s net income. For example Company XYZ is a publicly listed company. In the 2009 tax year this company supported local charities by donating $20,000. The company’s net income before taking into account its donations was $200,000. Previously it could claim a tax deduction of $10,000 however under the new rules the full $20,000 can be deducted.

Payroll Giving

In July 2008 the Taxation Bill was tabled in Parliament. An important aspect of this legislation was a section entitled “Payroll Giving: providing real-time benefit for charitable giving”. The key features of the Payroll Giving System are as follows

1. Participation will be voluntary.

2. It will be available only to employees whose monthly schedules are filed electronically.

3. Donating employees will receive a tax credit on their donations, calculated at a set rate of 331/3% of the donation made, each pay day.

4. The tax credit is off set against the employees PAYE, reducing the PAYE payable for that period. The maximum tax credit permitted is limited to the amount of the employee’s PAYE each period.

5. Payroll donations must be made to a society, association, organisation, trust or fund as described in the Income Act 2007.

6. Employees are responsible for ensuring that payroll donations are transferred to those organisations.

7. Employees who donate through Payroll giving are not eligible for the end-of-year tax credit on those donations.

For further information please contact:

SBC Development Office, Main North road, Phone 03 375 0647, Email