Charitable Donation Scheme
Who can claim the relief? Donations from individuals
When an individual donates, ORM claims the tax relief. To allow ORM to claim the relief you must complete one of the following forms and give it to the organisation:
If you allow the charity to claim the relief, you will not be able to claim a refund of the same tax yourself.
Calculating the relief on donations from individuals
The relief is calculated by grossing up the donation at the specified rate. The specified rate is currently 31%. This is explained in the following example.
Joan makes a donation of €1,000 to ORM in 2018. The ORM 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 ORM is €449.27.
Once Joan has completed either the Enduring Certificate or Annual Certificate, ORM 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 ORM can claim is €350.
Donations from companies
When a company makes a donation to a charity or approved body, it is the company that claims the relief. There is no grossing up arrangement in this case.
Calculating the relief on donations from companies
Company X donates €1,000 to ORM in 2018. Assuming the Corporation Tax rate is 12.5%, then the relief that the company can claim is €125 (€1,000×12.5%).
In this example ORM 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.