Most Israeli citizens donate to institutions or associations. Sometimes the donations are fixed by standing order or by credit card, sometimes the donations are occasional to children knocking on your door as part of one promotion or another, and sometimes even amounts paid to the synagogue, for example, are considered a donation. The state encourages donations by recognizing the amounts of donations for income tax purposes pursuant to section 46 of the Income Tax Law Ordinance, which enables the return of a substantial portion of the amount of the donation to the donor.

Who is eligible for a tax refund for donations?

• Individuals and businesses that are not incorporated as a limited company are entitled to a credit of 35% of the amount of the donation. If you donated more than NIS 190 per year – you are entitled to a refund if you paid tax during the year.
• Businesses incorporated as a limited company are entitled to a credit in the amount of the current corporate tax for the year in which the donation was made.
• Make sure that the donor institutions are recognized for tax refund purposes.
• You can receive a tax refund for a donation up to six years retroactively, along with original receipts documenting the donation.

What should be done?

Collect all source receipts you received for donations you made in 2021 to institutions with approval 46 of the Income Tax Ordinance.

Employees:

1. Print a copy of your November paycheck.
2. Fill out the Income Tax Form 116 – Application for Tax Coordination
3. Submit the application with the tax assessor closest to your place of residence

In some workplaces, the application can be submitted to the employer, who himself offsets the amounts with the income tax. Definitely worth checking with the employer. You can get a document for the employer that will allow you to be credited with tax on the upcoming salary.

Self-employed and salaried employees submitting an annual report:

Form 1301 (annual report) must be filled out at the end of the year and the original receipts for the donation must be attached.

Institutions eligible for a tax refund

In order to know whether the donated institution is included in the list of institutions eligible for a tax refund? First of all, it should be written explicitly about the receipt of the donation of the donated institution. Second, simply search the “Donation Institutions” page of the Tax Authority for the file number or name of the donated institution and see if it exists in the database.

Note: The above information does not constitute a substitute for professional and legal advice and you should not rely on the aforesaid without consulting with a tax advisor, accountant, lawyer, who specializes in the field before taking any action or making any decision. This is true only at the time of writing, and their correctness may change from time to time.

Donate to the Paamonim

Formore information on the Kol-Zchut website.