charities

Murdoch's Term of the Week: Charities

With the release of Law of Charities in Ireland by Oonagh Breen and Philip Smith drawing closer, perhaps it is time to re-acquaint ourselves with this often misunderstood area of legal practice. This week's TOTW provides a detailed introduction to charities law.

 

Charities:

Trusts (qv) in favour of legally charitable objects. Such trusts, unlike private trusts, are not subject to the rule against PERPETUITIES (qv) and they do not fail for uncertainty.

Until recent times, charities were governed by the Charities Act 1961 and 1973 as well as by common law. The Charities Act 2009 aims to codify the pre-existing law relating to charities. The 2009 Act attributes a statutory definition to a range of key concepts in charity law and it also provides for the establishment of the Charities Regulatory Authority (qv) which will regulate the sector and will also assume the powers of the Attorney General relating to charities. The 2009 Act also provides for the establishment of the Charity Appeals Tribunal (qv). In respect of the commencement of aspects of the 2009 Act, see SI No 284 of 2010 and SI No 315 of 2010.

The functions of the Commissioners of Charitable Donations and Bequests for Ireland (qv), have been transferred to the Charities Regulatory Authority (ibid s.82).

A charity must confer a benefit on the public or on a sufficiently wide section of the public. Charitable objects are classified into four main divisions: Income Tax Special Purposes Commissioners v Pemsel [1891] AC 531; Barrington’s Hospital v Commissioner of Valuations [1957] IR 299. These are

(a) relief of poverty - a public element is essential;

(b) advancement of education - contrast University College Cork v Commissioner of Valuations [1911] 2 IR 593 and Wesley College v Commissioner of Valuations [1984] ILRM 17;

(c) advancement of religion - religion includes all religions tolerated by law; a gift for Masses is a charitable purpose: O’Hanlon v Cardinal Logue [1906] 1 IR 247; Halpin v Hannon [1948] ILTR 75; In re Greene [1914] 1 IR 242;

(d) other charitable purposes - the gift must not only be for the benefit of the community but must be beneficial in a way the law regards as charitable eg National Anti-vivisection Society v IRC [1948] AC 31; In re MacCarthy’s Will Trust [1958] IR 311.

Any body of persons or trust, established for charitable purposes only, is exempted from income tax: Income Tax Act 1967 ss.333-334 (now Taxes Consolidation Act 1997 ss.207-208). Established means established in the State: Revenue Commissioners v Sisters of Charity of the Incarnate Word [1998 HC] 2 IR 552.

Charities are also exempt from tax on capital gains applied for charitable purposes (s. 609); they are exempt from deposit interest retention tax (ss.256 and 266); corporate donations to charities are a trading or management expense of the company making the donation (s.486A); and charities concerned with aid to third world countries may claim repayment of tax in respect of donations received (s.848): Taxes Consolidation Act 1997 as amended by Finance Act 1998 s.61. An upper limit is placed on the tax relief which may be claimed by an individual in respect of a donation to a charity with which the individual is associated: Finance Act 2003 s.21. A gift or inheritance which is taken for public or charitable purposes is exempt from tax: Capital Acquisitions Tax Consolidation Act 2003 s.76.

See Courts and Court Officers Act 1995 s.52 amending 1961 Act s.29. See Stamp Duties Consolidation Act 1999 s.82

See also Consultation Paper on “Establishing a Modern Statutory Framework for Charities” (Feb 2004), available on website: www.pobail.ie. See Law Reform Commission “Consultation Paper on Legal Structures for Charities” - LRC CP 38 - 2005. See Law Reform Commission Consultation Paper on “Charitable Trust Law General Proposals” - LRC CP 36 - 2005; and Report entitled “Charitable Trusts and Legal Structures for Charities” - LRC 80 - 2006.

See Law Society Gazette (Jan / Feb 2004) 7. [Bibliography: Delany; Keane (2); Kiely; O’Callaghan J M (2); O’Halloran (2); O’Halloran & Cormacain; Snell UK]. See CHARITABLE PURPOSE; CHARITIES REGULATORY AUTHORITY; CHARITY APPEALS TRIBUNAL; CHARITY TRUSTEE; COLLECTION; COMMUNITY BENEFIT; CY-PRES; FUNDRAISING; PUBLIC BENEFIT; RELIGION, ADVANCEMENT OF.

 

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