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Towards the end of the civil year, you may be eligible to receive a tax refund.
Whilst we are obliged to pay our taxes on a monthly basis, income tax is calculated on an annual basis. In some cases, we may be paying more than needed, and may therfore claim for a refund.
To do this, you are required to submit an online request on the website of Israeli income tax, and if found eligible for a refund the tax authorities will transfer the due amount money directly to your bank account.
So who is entitled to a tax refund?
If you are employed, over the age of 18, and if you tick one of the following boxes you may qualify for a tax refund:
Did you work part-time during the past year (due to unemployment, unpaid leave, switched jobs, involved in part-time work) change jobs without applying for tax coordination, work overseas whilst working in Israel or withstood medical problems of a firsthand family member?
Make a changes to your personal status, due to marriage, birth of a child, divorce, payment of alimony, etc.?
Did you relocate your permanent residency to the periphery zones of Israel where tax benefits are available?
New immigrants and veterans are also entitled to tax benefits.
For additional information visit the website of Israeli income tax.
Tax refunds are also available to those who self-sufficiently invested funds into a pension scheme, benefit saving funds (kupot Gemel) or life insurance funds, to those graduating academic institutes after 2005, or to anyone that donated above NIS 190 to a registered charity under section 46 in Israel.
How is it done?
Ensure you have the required documents: 106 employment form, confirmation of deposits made to funds, receipts for donations made, confirmations from national insurance for auxiliary payments such as maternity benefits, or unemployment, etc.
Use the calculator facility available on the income tax website, or contact a lawyer, tax consultant or CPA who will validate your eligibility.
Did you know that you can also apply for a refund in retrospect, from 2016 onwards? Well yes, the time limit for submitting income tax returns and receiving tax refunds is up to 6 years back.
Couples are required to submit their papers collectively and the refund is calculated based on the income of both partners.
When can you expect to receive the money?
With accordance to the Israeli law tax refunds can be made within 90 days or by July 31 of the following tax year and will be deposited directly in to the bank account of report applicant. It is key to ensure you provide the correct bank details when submitting the report.
As we enter the new civil year, we at Paamonim strongly recommend you turn this coming year to one of sensible and responsible financial management.
No one will do this for us and cash returns alone may reach thousands of shekels each year.
For tools, knowledge and tips for smarter financial management, visit Paamonim’s website.
Note: The above mentioned information cannot replace professional nor legal advice, and should therefore not be relied upon. We recommend consulting with an industry expert in the relevant field prior to making significant decisions.