Calculating the tax relief on donations from individual
To calculate what extra your donation is worth head to Charitytaxback.ie
If an individual makes a donation of over €250 in the year, the charity or approved body can claim a refund of tax paid on that donation by the donor. The relief is calculated by grossing up the donation at the specified rate. The specified rate is currently 31%.
Joan makes a donation of €1,000 to an approved body in 2016. The approved body can claim a refund of the tax Joan has paid.
The tax rate is 31%, so this means that the donation of €1,000 is 69% of the total donation.
To calculate the relief, the total donation is grossed up as follows: (€1000/69)*100 = €1449.27.
The refund amount that can be claimed by the approved body is €449.27.
Once Joan has completed either the Enduring Certificate or Annual Certificate, the approved body can claim the refund.
The amount of the refund cannot be more than the amount of tax paid by the donor for the same year. So, in example 1, if Joan only paid tax of €350 in 2016, then the maximum refund the approved body can claim is €350.
By filling out this form more funds can be donated without you having to spend another cent.
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Calculating the tax deduction on donations made by a company.
If a company makes a donation of over €250 in the year, the company can claim a tax deduction as if the donation was a trading expense.
Company X donates €1,000 to an approved body in 2016. The Corporation Tax rate is 12.5%, so the relief that the company can claim is €125 (€1,000×12.5%).
In this example the approved body has the benefit of receiving €1,000, but the cost to the company of making the donation is only €875 (€1,000 – €125). The company simply claims a tax deduction on the donation as if it were a trading expense.
There is a four year time limit for making a claim under this scheme.
Donations that qualify for tax relief
The following donations to approved bodies qualify for tax relief:
- a minimum donation of €250
- a maximum donation of €1,000,000 in any one year.
Relief will be restricted to 10% of the donor’s annual income if there is a connection between the donor and the approved body.
The repayment to Western Alzheiemrs cannot exceed the amount of tax that the donor has paid for that year. The donor is not allowed a repayment of any tax that has been repaid to us.
The donation must:
- be in the form of money or designated securities (quoted shares and debentures) or a combination of both
- not be repayable to the donor
- not benefit the donor or anyone connected with the donor
- not be a condition or connected with any arrangement involved in obtaining a property other than by way of a gift from the donor to Western Alzheimers.