that look ahead, get ahead. Business profits and taxes need to be monitored
regularly, especially toward the year-end. Here is a list of planning tips to
ON THE BUSINESS SIDE
1. What are your goals, and are you achieving
2. Are your sales increasing?
3. Are you networking sufficiently? This can
be online or in person.
4. Do you check your bank balance(s) and cash
flow every morning?
5. What is your gross profit rate? Can it be improved?
What is your likely net after all expenses profit this year?
7. What is your
likely tax bill this year? Were sufficient tax installments paid?
year-end planning, consider the following: income and income timing; expenses
and expense timing; inventory count and levels. Are other accruals or provisions
appropriate? Is long-term project planning possible? Charitable donations?
Are your pension, study funds (hishtalmut) and life insurance enough?
10. Do you
optimize the aliya 10-year exemption for foreign income, if relevant? Many
11. Are you an exporting manufacturer? If so, do you qualify for
“preferred enterprise” tax breaks?
12. Do you have and optimize intellectual
property (IP)? If so, do you use it in your tax strategy?
13. Do you plan the
tax on any foreign-source income?
14. If so, has the transfer pricing between
your entities been reviewed?
15. Are your accounting books up to date and
helping you manage the business?
16. Is your tax, VAT and National Insurance
Institute reporting up to date? If not, there are penalties and the Israel Tax
Authority can even stop you from doing business with governmental entities and
17. Are all employee matters up to date? (e.g.,
employment agreements, mandatory pensions, etc).
18. Is it time to
incorporate due to increasing profits, and is legal protection needed? 19. Spare
cash? Consider bonus, profit distribution, pension contributions, studyfund
contributions, invest in equipment, car, real estate, marketing, etc.
THE FAMILY/PERSONAL SIDE
1. Do you and your spouse have up-to-date wills in each
2. Are you expecting an inheritance from abroad? If so, you
should plan against double tax.
3. Personal investments: Consult a
qualified investment adviser periodically (regarding diversification, etc);
check foreign taxes and any Israeli foreign tax credit or aliya exemption? Check
if Israeli tax is withheld at source and whether annual tax returns are needed
or not. Have you filed Israeli biannual capital-gains tax reports regarding
foreign securities sold?
4. Do you optimize the aliya 10-year exemption for
foreign income and gains?
5. Regarding trust(s), have you checked out the new
tax regime that commences on January 1, 2014, and taken appropriate action, both
transactional and accounting? In the case of relatives trusts, various
notifications and elections need to be filed with the ITA by January 27, 2014,
if desired; have you considered this?
6. Are your pension, study funds and life
7. Israeli home-rental income over NIS 4,980 per month (in
2013) is taxable. Do you want to elect and pay 10 percent tax of the gross rent
by January 30, after the year-end, or pay regular Israeli taxes of 30%-52% on
rents minus expenses and depreciation? There are at least three ways of
8. Charitable donations this year to approved
Israeli charities in the year may qualify for a 35% tax credit, within certain
limits. For example, if you donate NIS 1,000, you may get a NIS 350 reduction in
your Israeli tax bill.
The above is just a general overview of things to
check out for starters. Many other things may need checking in your
As always, consult experienced tax advisers in each country at an
early stage in specific cases.
firstname.lastname@example.org Leon Harris is a certified
public accountant and tax specialist at Harris Consulting & Tax Ltd.
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