(photo credit: AP)
A feature of the Israeli tax system is that you get more time to file an annual
tax return if you use an Israeli certified public accountant (CPA).
there a filing requirement? As explained in a previous column, not everyone has
to file a tax return; for example, employees whose salary did not exceed NIS
599,000 in 2009 if the required tax was withheld at source and whose other
income from investments was below certain prescribed amounts (depending on the
type of income).
In addition, new and senior returning residents are
exempt from Israeli tax and reporting obligations regarding non-Israeli
income and gains for 10 years after becoming Israeli resident. (Senior
residents are individuals who lived abroad at least five years and
reside Israel in 2007-09, or lived abroad 10 years if they returned to
after 2009.) If you are required to file an annual return and in the
business, employment or agricultural income, you must now file the
as well as the old-fashioned way (on paper).Tax circular
On May 27, the
Israel Tax Authority (ITA) published Circular 4/2010 containing rules
granting extensions for 2009 tax returns.Initial deadline
deadline for filing 2009 annual tax returns has been extended to June 30
(1) individuals who file tax returns based on double-entry books; (2)
individuals who must file online tax returns; (3) trusts. The initial
was extended to May 31 for individuals who are not required to file
returns and for those claiming “negative income tax” welfare payments.
represents a one- to two-month relaxation over the deadlines prescribed
Individuals who obtain an individual extension or an extension
under the above rules must file by the date prescribed but no later than
4.Deadline if you use a CPA
Alternatively, most accounting firms are
allowed to spread out the filing of their clients’ tax returns over a
period, without providing reasons, according to a special arrangement
the ITA and the Institute of Certified Public Accountants in Israel.
enjoy the CPA arrangement, the taxpayer must sign a form allowing the
represent him, and this must be registered with the ITA. This applies
CPAs who are listed as your “primary representative.” Many businesses
CPA as their primary representative and a bookkeeper as their secondary
The CPA-related extensions depend on whether the CPA is
linked electronically to a system known as Shaam – the ITA’s automated
data-processing system. Merely filing online is not considered to be a
The CPA’s progress will be reviewed in January 2011 regarding
individual clients and April 2011 regarding corporate clients. If they
meet their schedule, any subsequent filings will not be covered by the
CPA-related extension program.How much time can you gain?
CPA-related extensions, the CPA must stick to a schedule that specifies
and percentages. The CPA must file a prescribed percentage of clients’
returns by each date; in this way, the filings are spread out. This is
civilized than the painful US system, for example, of filing most annual
returns by April 15.Filing schedule
For 2009 tax
returns, here is the
filing schedule for CPAs in Israel: • Individual clients – non-Shaam
percent of client returns by June 30; 85% by July 29; 100% by August
• Individual clients – Shaam filings: 15% of client filings by June
30; 35% by August 31; 100% by November 30.
• Corporate clients –
non-Shaam filings: 30% of client filings by July 29; 70% by November 30;
January 31, 2011.
• Corporate clients – Shaam filings: 20% of client
filings by July 29; 50% by November 30; 100% by February 28, 2011.
go for a Shaam CPA filing, the directors/major shareholders can apply to
to receive the same deadline as their company.Capital declarations
Capital declaration (hatsarat hon), if requested by the ITA: The
filing capital declarations as of December 31, 2009, is the due date
120 days after the request) or the date for filing the annual income tax
whichever is later. This is unless the assessing officer decides
As always, consult experienced tax advisors in each country at
an early stage in specific email@example.com Leon Harris is an
international tax specialist at Harris Consulting & Tax Ltd.