The real time Variable Contribution process allows people to contribute to Enspiral Foundation and participate in Enspiral's Collaborative Funding process.
It also allows existing Enspiral contributors to give more funds to Enspiral Foundation above any funds you chose to contribute in your annual Opt-in. The Variable Contribution process works like this:
- People complete the Variable Contributions Form specifying how much they would like to gift to Enspiral Foundation.
- Enspiral Foundation sends an invoice to them for payment.
- Once the invoice is paid, 100% of the amount is allocated to the user's cobudget.co account for use in the collaborative funding process.
People making Variable Contributions can choose to have an automatic repeating invoice sent for a recurring Variable Contribution each month.
Tax Implications of Variable Contributions
In April 2016 we received advice from Deloitte.
From an IRD point of view the contributions are a gift and won’t be taxable or have GST charged on them. They are not tax deductible for the giving party and need to be paid with post tax money.
The gifts are not classed as income for the foundation - they go straight onto the balance sheet and no tax is paid on them.
Gifts from Individuals
Gifts from individuals are made using post tax money and are not tax deductible.
Gifts from Businesses
Gifts from business are not tax deductible, unlike yearly contributor fees or monthly venture fees.
Because business gifts are paid with pre-tax funds, the business will need to keep 28% aside for the future tax bill.
For the initial release of the Variable Contribution process, the gift amount entered by businesses is treated as the post-tax amount after 28% has been set aside for tax.
For example, if a business enters $100 into the Variable Contribution Form it will keep an additional $38.89 (28%) set aside for tax.
Business Tax Component Calculation
Businesses gifting funds to Enspiral Foundation are responsible for setting aside and managing tax on donations. Businesses can calculate the tax to keep aside using this formula:
($x / (1-.28))-$x
$100 gift example:
- ($100/.72)-$100 = $38.89.
- Foundation receives $100.
- Business keeps $38.89 aside for tax.
$350 gift example:
- ($350/.72)-$350 = $136.11 tax.
- Foundation receives $350.
- Business keeps $136.11 aside for tax.
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