Proposals by the Commission on Taxation to put a cap on tax reliefs for charitable donations may act as a disincentive to high-net-worth individuals, according to lobby group Irish Charities Tax Reform.

Executive director Sheila Norden said the proposal to put a €500,000 cap on donations attracting tax relief will need to be tweaked to take into account the realities of fundraising in the recession. Currently, wealthy individuals are allowed to reduce their income by up to 50% for tax reasons making investments or charitable donations.The cap would put donations on a separate footing allowing philanthropists like Niall Mellon to donate independent of business interests.