Charities play a vital role in society through their efforts to promote the public good. Many individuals establish charitable organisations to access tax exemptions such as relief from General Consumption Tax (GCT), transfer tax, income tax, and customs duties, thereby maximising the impact of donations received. To qualify, an organisation must be registered under the Charities Act and established for charitable purposes as defined by the Charities Act. These purposes encompass a wide range of activities, including alleviating poverty, advancing education, religion, health, promoting the arts, culture, heritage or science, and amateur sports and supporting human rights.

Following Hurricane Melissa, a temporary waiver of import duties and GCT has been granted in respect of specified goods until December 31, 2025. Ordinarily, items exceeding an aggregate value of US$100 would be subject to import duties and taxes. Individuals may import goods on a personal basis under this waiver, provided the goods fall within the prescribed exempted categories. Registered charitable organisations, being generally exempt from import duties and GCT, may import items outside the scope of the temporary exemption, where such goods are intended solely for charitable purposes.

An applicant must be an organisation (whether incorporated or not) or a charitable trust. The applicant must submit a completed application to the Department of Co-operatives and Friendly Societies (the “DCFS”), accompanied by supporting documentation and fees.

The constitution of a registered charitable organisation, which is to accompany an application, must include the following particulars:

a) the charitable purposes of the organisation and any power conferred in support of those purposes;

b) management arrangements, which must:

i) state that the governing board shall be constituted by not less than two governing board members;

ii) outline the duties and terms of office of the governing board members;

iii) require at least one governing board member to be a Jamaican resident; and

iv) require the authority to be notified in writing of any changes in the membership of the governing board;

c) conflict of interest procedures;

d)provisions prohibiting governing board members from receiving payments from the charitable organisation;

e) the required quorum for meetings of the governing board;

f) the details of any immovable property;

g) the financial year of the charitable organisation;

h) constitution amendment provisions; and

i) provisions for dissolution of the charity.

Any donation made to a registered charitable organisation for a lawful purpose specified by the donor must be used exclusively for that designated charitable purpose. If the donor does not specify the charitable purpose, the organisation must apply the donation as follows:

a) If the donation is tax deductible, it must be used in alignment with the organisation’s stated charitable purposes.

b) If the donation is not tax deductible, it may be directed towards any activity undertaken by the organisation in pursuit of its charitable purposes.

If a donation, or any portion of it, is not used in accordance with the conditions outlined above, the registered charity is required to either refund the donation to the donor or apply it to an alternative charitable purpose, subject to approval by the organisation’s governing board. All funds invested must be done in accordance with the terms of its constitution.

To safeguard against the misuse of charitable organisations, it is essential to ensure that the registered charitable organisation’s operations comply with applicable regulations.

A registered charitable organisation must keep written accurate financial records that enable true and fair financial statements to be prepared and audited to allow any “recognised assessment activity” to be carried out in relation to the charitable organisation.

“Recognised assessment activity’ means an activity undertaken by the DCFS to evaluate a charitable organisation’s registration eligibility or compliance with the Charities Act and its Regulations or by the Commissioner General of Tax Administration Jamaica to evaluate the organisation’s compliance with revenue laws.

A registered charitable organisation must keep and maintain its books, documents, and other records for not less than seven years. The DCFS may require a registered charitable organisation to provide copy of the accounts and any other relevant records.

A registered charitable organisation is required to:

i) issue receipts for every donation received; and

ii) keep a record of all donations that have been made to the charitable organisation, which must include, for a period of not less than seven years from the end of the year of assessment in which the donation was received:

i) the receipt number;

ii) the name of the donor;

iii) the date on which the donation was received;

iv) the type of donation received and how it is received;

v) the amount or value of the donation received; and

vi) any terms and conditions under which the donation was made.

The governing board must arrange for the organisation’s financial statements and accounts to be audited each year by a registered public accountant or Chartered Accountant. Audited financial statements that meet the requirements of the Charities Act and the Charities Regulations. Additionally, a new auditor is to be appointed at least once every five years.

Within three months after the end of each financial year, the following documents are to be submitted to the DCFS:

a) the audited financial statements;

b) the auditor’s report on the financial statements;

c) the auditor’s report on the use of donation monies and whether such use is in accordance with the charitable purposes of the registered charitable organisation;

d) information on fund-raising activities and spending plans for the next financial year; and

e) the annual report.

A registered charitable organisation must, no later than 28 days after it first becomes aware of the circumstances, notify the DCFS if its name, registered office, or constitution has changed, if a person has been appointed as or has ceased to be a governing board member or a body has ceased to be or has become a subsidiary of the registered charitable organisation or if it has contravened a provision of the Charities Act.

The governing board members must ensure that:

a) accurate minutes of its meetings are kept;

b) the charitable organisation operates for the public benefit;

c) no portion of the charitable organisation’s net income or assets is used for the personal benefit of any governing board member, settlor, or any other private individual;

d) contributions to the charitable organisation are applied consistently with the charitable purpose of the charitable organisation; and

e) it conducts its affairs in a way such as not to cause harm to or jeopardise the public trust and confidence in charitable organisations.

Charitable status is not indefinite. This status will expire every two years. A charitable organisation may apply for the renewal of its registration within 60 days prior to the expiration or 180 days after the expiration of the charitable status.

Peter Goldson, Helen Liu James, and Rachel Poole are members of the firm’s Commercial Department. They may be contacted via peter.goldson@mfg.com.jm, helen.liujames@mfg.com.jm, Rachel.poole@mfg.com.jm or www.myersfletcher.com. This article is for general information purposes only and does not constitute legal advice.

Peter Goldson.

Helen Liu James.