Money saving tips for the end of the tax year

As we approach the end of the tax year we are happy to bring to your attention important tax updates that can help you submit the information to the tax authorities at the right time and manner. See our list of money saving tips for the end of the tax year. Feel free to contact us with any question.!

General tips

1. Pay all your  business expenses (Salaries, rent, etc.) before 31 December
2. Postpone new revenue until the beginning of new year.
3. Pay tax advances for the current tax year, which have not yet been paid, before the  31.1 of the new year in order to avoid interest and linkage charges. Payments made in February or March will be entitled to partial exemptions from interest and linkage. Please note that payments made later than these dates will incur full interest and linkage charges.
4. Business Expenses – Make a list of all your business expenses in the past year. You may be able to add gifts, hospitality expenses and refreshments for work, per diem in the country, travel abroad, Professional literature, fixed assets, bank expenses and interest, mobile phone and vehicles.  Please note that not everything on the above list is relevant for everyone.
5. Transaction invoices and lost debts: Sometimes a service / product has already been provided and there is no ability to charge the money due to the honest difficulty in meeting the payment on the part of the customer. If in your assessment you will not be able to collect the debt, you can report it in the tax return as lost debt and potentially reduce the taxable income (the action involves seeking execution / confirmation from an attorney that the debt is lost, and relevant to those who do not report on cash transactions).
6. Realization of investments to take advantage of losses: Towards the end of the year, it is recommended to examine whether there are lost investments that you are no longer interested in holding. In such a case the investment can be realized, and the loss will be deducted from the income for the purpose of calculating tax.

Company tips

1. Deposit into the bank before 31 December all funds already received.
   If this is not possible, deposit the money on January 1 on a separate deposit slip.
2. Make an orderly list of all the funds in your possession as of December 31, Including cash, checks, deferred checks (if not deposited), and the balance of the cash in the petty cash fund.
3. An updated list of December 31 receivables, payables and expenses to be paid.
4. Do an inventory count in advance and make an ordered list of all items you have as of December 31. Enter items whose original cost is higher than their current value in a separate list.
5. Withdrawals of shareholders: Withdrawal of debit balances / use of assets by the shareholders of the company (holding of 10% or more) are taxable withdrawals. The tax bill date regarding the use of property is at the end of the tax year in which the withdrawal took place, while the tax bill date regarding debit balances is at the end of the tax year after the tax year in which the debt balance was created. Therefore, before using the funds, it should be examined whether it is worth withdrawing a dividend to pay a bonus and / or repaying a loan, thus avoiding a taxable event.

Self Employed and Individual Tips

1. Before 31 December, pay the self-employed Bituach Leumi payment for December due 15 January 2022.
2. Top up payments to the maximum allowed to the provident funds (Kupat Gemel), managers’ insurance (Bituach Menahalim), and/or advanced training funds (Keren Hishtalmut) before 31 December.
3. Donate to non-profit organizations and charities approved by section 46 of the Tax Ordinance before the beginning of the year and you will receive a tax relief (if you already have a loss, avoid it).
4. Update us on the birth of a new child to the family, and send us the updated appendix of your ID. Fathers and mothers of young children receive tax relief from the state. In addition, parents whose children have learning disabilities such as A.D.D or A.D.H.D are eligible for an additional tax benefit, depending of course on the level of disability and the educational framework in which they study.
5. Remember to update your accountant if there is a change in family status from the previous year. If you are supporting a child, spouse or parent who is incapacitated, credits can be claimed in most cases.
6. If you are ill and have been defined by Bituach Leumi as having a disability of at least 90%, you are entitled to significant tax benefits, please update us as soon as possible for the purpose of submitting the application.
7. Equipment replacement: If you decide to purchase equipment and services towards the end of the year, make sure before the purchase that it is recognizable in that tax year.
8. Please note that students and discharged soldiers are entitled to tax credits, soldiers are eligible from the date of discharge and students from the year following the end of the year in which their degree was finished.