Irish Red Cross Flood Cheques to be taxed by Revenue Authorities??

During the last week this Blog has received numerous calls asking whether the 400 or so Irish Red Cross Flood cheques issued in early March 2010 will be liable to income tax. This is obviously an extremely important question; one this Blog does not have a confirmed or definitive answer to, despite numerous attempts made to get the information. One can only hope that the Irish Red Cross senior management and Board members considered this many months ago and that a specific written tax exemption on floods relief money was sought by the Irish Red Cross and received from the Revenue Authorities. Failure to have done so would presumably amount to outright negligence and incompetence. The last ten days have been a torrid time for the Irish Red Cross. A hammering in the nation’s media has taken place over the unacceptable delays (nearly four months) in issuing the floods money. The Sunday Independent (28/02/10), the Pat Kenny RTE 1 Radio Show (02/03/10) and the Village Magazine (March Edition) have all been scathing in their criticism of the Irish Red Cross, not only on the Floods Relief delays but also on governance, management and exorbitant consultancy expenditures. This all comes on top of recent calls by Fine Gael and Labour for an independent investigation into the affairs of the organisation. The Irish Red Cross can ill afford any further damaging publicity or mistakes.

In the event that the Irish Red Cross has not received written tax exemption on the flood relief cheques and should the Revenue Authorities view the flood relief money as like any other income then those victims receiving Irish Red Cross cheques will be liable to pay income tax at their marginal rate, either 20% or 41%. In this scenario it would be possible that of the €1.2 million generously donated to the Irish Red Cross by the Irish public, somewhere between €240,000 and €492,000 could end up, not in the hands of flood victims but rather in the coffers of the Minister for Finance. If this were to be the case one could assume the Irish public would be furious to discover that because of a failure by the Irish Red Cross to secure tax exemption between 20% and 41% of their donations would in fact not assist victims of the floods but instead go straight to the Government as tax. It would be reasonable to assume the Irish public would never forgive the Irish Red Cross for such an oversight, if such an oversight has occurred. Moreover if a tax exemption has not been granted this Blog wonders could the Irish Red Cross be obligated under law to actually inform the Revenue Authorities who the cheques have been issued to and for how much? Obviously the Irish Red, if obligated to do so must do so, but again having public donations for a specific appeal end up in the Government purse and flood victim’s relief funds reduced substantially because of tax liabilities would be disastrous on a number of fronts.

This Blog does not wish to be alarmist on this issue and if a tax exemption has been granted for the floods relief money then there is no issue. If, however, a tax exemption was not sought in writing from the Revenue then those responsible for such negligence would have to be held accountable.