Deductions ניכויים for income tax purposes
As we described in an earlier post (see here), certain deductions can be claimed, even if they are not direct business expenses. This post will look at some of these in greater detail. The tax saving for the deduction allowed will depend on your marginal rate of tax, including Bituach Leumi (if you’re self-employmed). Disability insurance ביטוח אובדן כושר עבודה You are able to take out insurance that will pay you a monthly “salary” if you are forced to stop working for a period of time due to certain health issues (check with your insurance agent for precise details). The premiums paid are tax-deductible,
The Capital Statement
Tax authorities around the world like to use a “standard-of-living” test to assess whether taxpayers are declaring all of their income. Essentially, someone with a low earning should not be living in a mansion – unless there’s some sort of decent explanation e.g. inheritance. In Israel, the system is more formalised with the tax office asking taxpayers to produce a statement of their assets and liabilities worldwide on a periodic basis. The idea is to compare the overall movement between the two statements with reported income and known or expected expenses (e.g. taxes, regular living expenses, one-off large expenses such as
Are you entitled to a tax refund?
In a previous post, we considered who was required to file a tax return. However, it could be that even if you are not required to do so, it will be on your interests – if you are due a refund. Any refund due to you is given back with the addition of interest (4% per annum) and linkage – all tax free. You can’t get anywhere near that in the banks these days, and even the most successful investments would be hard-pressed to give you such a favourable post-tax return! You are able to apply for refunds – which necessitates filing a
