The Israeli government has been widely criticized for not doing enough to help the business sector through the coronavirus crisis. The message seems to be sinking in.
Expanded business grants
On April 8, the Finance Ministry made an important announcement. We only hope the Israeli government acts on its announcement soon.
According to the announcement, the prime minister and the finance minister have determined that the grant to aid the self employed will be substantially expanded.
Employees who are major shareholders of companies will be included. This is a major proposal of interest to many incorporated businesses;
The grant may be increased to 70% of average monthly taxable income;
The maximum grant may be increased to NIS 10,500 (instead of NIS 8,000 apparently);
The taxable income upper limit may be increased to NIS 1 million (instead of NIS 240,000 apparently);
The household income criterion will be repealed (Comment: This apparently refers to the combined annual income limit of NIS 340,000 per couple);
Average monthly taxable income will be based on 2018 or 2019 at the person’s choice;
The 25% revenue decrease will be checked for the months March-June (instead of March-April).
In the light of the above, over 600,000 self-employed people are expected to be eligible for the grant.
Passover grant for parents, the elderly and others
On April 10, the National Insurance Institute (Bituach Leumi) announced that starting April 12, one-time Passover/corona grants would be paid to the bank accounts of parents. The amount should be NIS 500 per child up to NIS 2,000 for four or more children. Children born up to April 15 should be eligible, as are children who reach 18 in April.
As for the elderly and others, no payment date is stated, the National Insurance Institute is still preparing. The one-time grant amount would be NIS 450 for recipients of old age pension and welfare allowances; and NIS 500 for recipients of disability, income protection allowances, alimony law allowances. There will be no double payments.
Money remitted to Israel unjammed ?
As many immigrants and others know, it isn’t easy remitting money to and from Israel at present. The Israeli banks are required by Bank of Israel directives to apply anti-money laundering procedures to reduce the risk of crime money, including tax crime money.
Banks are ill-equipped to assess tax crimes so they typically ask the client’s accountant to confirm that all relevant taxes have been paid on that money (not only Israeli tax).
Until then, the bank typically freezes the money and it does not usually appear on the client’s bank statement. After a period which varies from bank to bank, the money might be returned abroad, with or without warning.
The Israeli Institute of CPAs initially advised its members not to comply with such demand from the banks unless they agreed with the CPA Institute. Intensive discussions then followed between the government, the banks and the CPA Institute.
This left bank customers and their accountants in a serious quandary. Can Israeli bank customers use their money from abroad or not? Can they sign property and other deals?
On February 17, the CPA Institute unilaterally issued Israeli-tax-paid confirmation forms for accountants and their clients to fill in.
On April 6, the Auditors Council at the Justice Ministry, which licences Israeli accountants, reminded accountants it is a disciplinary offense to sign a special confirmation that cannot be verified, even if it is demanded by a bank.
Finally, on April 12, the CPA Institute published a revised Audit Standard 3000 spelling out what accountants can and cannot sign in principle. One possibility is to do an audit on a sample basis on data presented, and report accordingly.
Another more helpful possibility, is for the accountant to receive a statement about something from the client. The accountant, at his client’s request, may then check the statement “matches” supporting documentation and reports on the match. So it seems an accountant might check that income on a bank statement matches income reported on a tax return.
Comment
Let’s hope this unlocks the money remittance roadblock. There is no mention whether the above applies to a foreign tax return. In practice, it is customary for an Israeli accountant to receive a letter from his client’s foreign accountant that foreign tax returns are up to date.
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