The Irish government plans to introduce tax changes so that donations from all individual donors would be treated in the same manner, with the tax relief in all cases being repaid to the charity. As a result, self-assessed taxpayers would no longer be able to claim a deduction on their tax returns for donations.

Minister for finance Michael Noonan says he wants to see the changes take effect from January next year. He would also introduce a blended rate of relief that will apply to all taxpayers, regardless of their marginal tax rate. This would involve a rate of refund of around 30%. In addition, all donations will be 'grossed up' as is currently done for donations from individuals within the pay-as-you-earn (PAYE) collection system.

The charitable donations scheme would be removed from the scope of the high earners’ restriction, and an annual limit of 1m euros per individual for tax relief under the scheme will be introduced.

Noonan said: “Officials from my department, the Revenue Commissioners and the Irish Charities Tax Reform Group have been working together on possible options to simplify the relief scheme and thus reduce the administrative burden on charities and the Revenue Commissioners of operating the scheme. Simplification of the scheme is also one of the recommendations of the Forum on Philanthropy and Fundraising. Having considered the proposals made to me by the working group and the Forum I have decided to signal my intention to introduce changes to the tax relief scheme from next year.”

Noonan has launched a public consultation on the proposals, which will close on 11 May 2012.

Submissions may be emailed to charities@finance.gov.ie or sent by post to ‘Donations Scheme Consultation’, Income Tax Incentives, Financial Services and Taxation Division, Department of Finance, Government Buildings, Upper Merrion Street, Dublin 2.