The Finance Act 2024 (the "Act") was passed by the Oireachtas on 6 November 2024 and is expected to be signed into law by the President in the coming days. It will take effect from 1 January 2025. Once effective, the Act will introduce a number of changes to the tax exemptions currently applicable to charities. In summary:
- the current two-year waiting period required for approved charities to obtain tax relief under the Charitable Donations Scheme has been removed under the Act. This is welcome news for newly approved charities as it will now allow for immediate tax relief on qualifying donations on obtaining charitable tax-exempt status;
- the cut–off point by which income must be applied by an organisation which qualifies for charitable exemption from income tax is prescribed by legislation for the first time and has been set at five years. To date the Revenue Commissioners required, by discretionary practice, that income must be applied within two years. The new five-year period can be extended should the Revenue Commissioners be satisfied a charity is in the process of applying the income to a charitable purpose. As many charities have used the Revenue approved template language, they will have included the two-year application period in their constitution. Charities will need to consider whether an extension should be sought for longer-term funding or maintenance of capital and may also need to consider updating their constitution to take advantage of the extension of the prior two-year practice; and
- the Act has introduced new tax exemption benefits for national governing bodies of sports and approved sport bodies, with the aim of facilitating long term investments made to support future capital projects.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.
