Guernsey Income Tax Amendments To Favor Charities

by Jason Gorringe, Tax-News.com, London

16 September 2009

Guernsey’s Treasury and Resources Department is proposing changes to the way that tax relief is granted in respect of charitable giving in the island as part of a number of amendments to the Income Tax Law.

Currently, tax relief is limited to people making donations through a deed of covenant and at certain limits.

To encourage charitable giving, Treasury and Resources believes that relief should be extended to non-covenanted donations, subject to certain limits, but now targeted at the charity rather than the individual.

From next year, Guernsey-registered charities which receive donations from taxed income of local residents can reclaim a repayment of the relevant tax from the Income Tax Office. For each qualifying GBP100 the charity receives, the Director of Income Tax will pay the charity GBP25.

Relief will still be offered to individuals paying under existing covenants as long as the terms of the deed remain unchanged.

The Association of Guernsey Charities has been consulted in the formulation of these proposals. A number of matters related to the introduction of zero/10 legislation are also included in the Department’s report to the States of Guernsey, such as anti-avoidance measures.

Other changes not associated with the zero/10 regime have also been proposed, including alterations to the tax cap regime.

Further, the Department is proposing that the Income Tax Law, as a whole, should be consolidated following the large number of amendments made since 1975, and particularly recently.

Minister Deputy Charles Parkinson said: “Consolidation of the Income Tax Law would make a lot of sense, but we are aware of the heavy workload of the legal draftsmen and so although we would wish the States to agree to the proposal, we are not proposing that it should be considered a priority for the draftsmen.”

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