We have entered “the most wonderful time of the year” which is recognized worldwide as the season of giving; a time at which individuals and entities across the world are known to undertake charitable activities to bring joy to the less fortunate as well as those in need of “good cheer”.
In addition to the joy of knowing you have made another individual’s day brighter, there are other benefits to donating to registered charitable organizations. One such benefit is that certain monetary donations to a registered charitable organization may be deducted from a person’s statutory income for the purposes of calculating income tax. However, it should be noted that having a charitable purpose does not make an entity a “registered charitable organization” under the law. The Charities Act defines a charitable organization as:
- a charitable trust; or
- any institution, whether incorporated or not, which:
- is established for a charitable purpose exclusively;
- is intended to and does operate for the public benefit; and
- has no part of its net income or assets enuring to the personal benefit or any governing board member or settlor of the organisation, or any other private individual
Charitable purposes include those for the prevention or relief of poverty as well as for the relief of those in need because of youth, advanced age, ill-health, disability, financial hardship or other disadvantage (including temporary disadvantages such as the effects of a public disaster or public emergency).
They also include those for the advancement of:
- health or saving of lives
- the arts, culture, heritage, or science
- animal welfare
- environmental protection or improvement
Whether you are a large corporate company actively involved in philanthropic endevours or a small group or individual with a desire to give back to your community, the law looks favourably at your giving spirit. In order to obtain the tax relief, the charitable organization must be registered under the Charities Act. A list of the registered charitable organizations in Jamaica can be found at the Tax Administration Jamaica website or here.
There are also tax incentives for registered charitable organizations. These organizations are entitled to obtain tax relief under the Customs Act, the General Consumption Tax Act, the Income Tax Act, the Property Tax Act, the Stamp Duty Act, and the Transfer Tax Act. Some of the relief includes:
- No import duty payable on any article (except motor vehicles) imported into Jamaica or taken out of bond in Jamaica.
- No special consumption tax payable on imported articles or articles taken out of bond in Jamaica
- Exemption from income tax
- Exemption from property tax of all buildings used solely for charitable purposes
- Exemption from liability to pay stamp duty in respect of any instrument executed by or on its behalf.
The process of having an entity become a registered charitable organization includes the submission of an Application Form as well as a Fit and Proper Questionnaire to the Department of Cooperatives and Friendly Societies the Charities Act. These documents can be accessed at their website. The application should be supported by a Certificate of Incorporation and Articles of Incorporation.
Registered charitable organizations need to renew their registration every two (2) years.
We at Myers, Fletcher and Gordon wish all a safe and happy holiday season and the best for the new year.
Kerri-Anne Mayne is an Associate Attorney-at-Law at Myers, Fletcher & Gordon, and is a member of the firm’s Commercial Department. Kerri-Anne may be contacted via Kerri-Anne.Mayne@mfg.com.jm or www.myersfletcher.com. This article is for general information purposes only and does not constitute legal advice.