What are the government's latest coronavirus grants, and can you get one?
Here’s a summary of what is currently available
By LEON HARRISCalculating taxes(photo credit: INGIMAGE)
While some businesses operate smoothly from the office or from home, others are less lucky and need government aid. In Israel, grants come and go, here’s a summary of what is currently available. Several grant programs are new or revamped this week following Knesset legislation last week.“Third wave” fixed cost participation grants:Government grants of up to NIS 400,000 are available for freelancers, companies, charities and partnerships, with certain exceptions. This applies to freelancers with annual sales (i.e. revenues) between NIS 300,000 and NIS 20 million and other businesses with annual sales between NIS 18,000 and NIS 20 million. If they apply by September 15, they need to experience a 25% drop in sales in March-April 2020 compared with last year. If they apply by November 1, they need to experience a 25%-60% drop in sales in March-June 2020 compared with last year.Back-to-work job grants:Government grants of up to NIS 7,500 per qualifying employee taken on in June-September or July-October (depending on which chosen) are available to employers in most sectors other than state-funded bodies. The application must be made within 60 days after the end of the relevant month (the first being June). There is no need to prove any sales drop!New job grants:A separate new job program facility operated by the Investment Authority makes available grants 20%-30% of monthly salaries in the range NIS 6,890-NIS 16,000. Applications by 3 p.m. on September 13, 2020.Economic safety net program 2020-2021 – social grants:The government has begun paying an upfront grant of up to NIS 7,500 and intends paying up to NIS 15,000 every two months to freelancers, and company owners regarding the claim period May 1, 2020-June 30, 2021. This is provided there was a sales drop of at least 40% in the grant entitlement months compared with the previous year, AND taxable income in 2018 or 2019 was in the range NIS 8,568-NIS 651,600. Applications may be filed from August 25, 2020 and thereafter on the 15th day following each month claimed, but within 90 days of each respective date.
Economic safety net program 2020-2021 – more fixed cost participation grants:More fixed cost participation grants are available regarding the claim period May 1, 2020-June 30, 2021.For freelancers (osek patur and osek morshe) that started up in January-February 2020, bimonthly grants of NIS 3000-NIS 4000 may be available if sales in 2020 are in the range NIS 18,000-NIS 100 million. This is provided there was a sales drop of any magnitude in the claim period compared with January-February 2020 and sales of at least NIS 1500 in January-February 2020.For freelancers, companies, charities and partnerships (not excluded bodies) with annual sales of NIS 18,000-NIS 300,000, bimonthly grants of NIS 3,000-NIS 6,000 may be available if there was a sales drop of at least 40% in the claim period compared with the previous year. Applications are apparently needed by October 27, 2020.For freelancers, companies, charities and partnerships (not excluded bodies) with annual sales in the range NIS 300,000-NIS 400 million, bimonthly grants of NIS 6,000-NIS 500,000 may be available, provided there is a sales drop compared with the previous year. The minimum sales drop for these purposes is 40% if annual sales are in the range NIS 300,000-NIS 100 million, 60% if sales are in the range NIS 100 million-NIS 200 million, 80% if sales are in the range NIS 200 million-NIS 400 million.Withdrawals from study funds (hishtalmut):These are tax-efficient savings plans. Normally there are tax implications if there are withdrawals within six years after opening a study fund. Now a tax exemption is possible for such withdrawals by February 9, 2021, of up to NIS 7,500 by employees furloughed or dismissed on or after March 1, 2020, or freelancers, or their spouses. This is provided their monthly average taxable income before the claim was less than 2019 monthly average.Rules and procedures:You or your accountant generally apply online. Each grant has detailed rules which have been programmed into government computer systems. These systems make use of your earlier tax or VAT or national insurance returns. Make sure the government knows where to wire your money!Comments:The above summary is based on our best understanding. There were demonstrations complaining that the government grants are too little, too late. Now they are perhaps too complex. In reality, even richer countries have depleted their resources, whereas COVID-19 is still around. As a result, many people are re-training or looking for new online e-commerce activities.As always, consult experienced tax advisers in each country at an early stage in specific cases.The writer is a certified public accountant and tax specialist at Harris Horoviz Consulting & Tax Ltd. leon@h2cat.com
