22 February 2008
	INDUSTRIAL POLICY Doing good pays off By Stuart Theobald

Charities again received some relief through the budget - or, to be more accurate, donors to charities did. A significant change is a provision to allow employers to administer the tax deductions. Previously, individual taxpayers would claim back tax in their annual returns. Now, employers will be allowed to deduct donations in calculating their employees' income tax liability. In practice, it means employers can identify a list of charities that employees can support through donations. The employer would lower the employee's tax liability accordingly. Creative companies will be able to use this option as part of their corporate social investment projects. The description of charities that qualify under section 18A of the Income Tax Act has been broadened to include those that provide student loans. These will be added to the list of exempt public benefit organisations, which include educational and Aids charities and care for the elderly. That means donations will be deducted from income before tax is calculated - so up to 40% of such donations would be recovered in the form of tax not paid.