Tax expert: Reporting overseas income

For Red Tape resources click here. Miriam Vilner is a licenced CPA (Isr.), a member of the Institute for Certified Public Accountants in Israel and a qualified Arbitrator registered with the Ministry of Justice. She holds degrees from London University and the Weizman Institute Send us your questions >> and please leave your comments on the Q&A below. * * * Volumes I - XIII Volumes XIV - XIX Volumes XX-XXIII Volumes XXIV-XXVI Volumes XXVII-XXVIII Volumes XXIX-XXXI Volumes XXXII-XXXIII Volume XXXIV * * * Vol XXXVI Q: An article posted Sept. 9, says the law exempting reporting and taxes for out-of-Israel income is for "new immigrants and returning citizens as of Jan. 1, 2007". Does that include people who made Aliyah since Jan. 1, 2007 (I made Aliyah Sept. 2007)? I had heard the law would only be retroactive to those immigrating since January of 2008? A: Thank you for your e-mail. I apologize that it took so long to answer I have been intending to write an article about the new laws, but some health problems delayed this. I hope to have it out by next week. In the meantime, in answer to your question, new immigrants and "veteran" returning residents are exempt from reporting income abroad and from filing a declaration of assets and liabilities for 10 years after coming on Aliya. This includes trust funds. The law was originally for those coming on Aliya from 1/1/2008 but was changed to 1/1/2007, so it applies to you. It applies only until 31/12/2009 - unless there is is a change by then. You may, however, be obliged to file a report if you have a business or are freelancing in Israel. Welcome to and good luck in your new country. * * * Vol XXXV Q: I'm an avid reader of your column. I have certain questions and thus seek your advice. I was an Temp. Resident for about one year in 1995, returning thereafter by Aliyah in 2004. I worked in an company for 6 months after my Ulpan. Thereafter I opened a Art Gallery in partnership with my friend, (my shares being 49%). My partner does not heed my advice or discuss things which ended in loss. Thus I prefer to leave the company to take up an job in my field. I need guidance on benefits or procedures before I resign my shares. 1) What are the necessary documentation req'd prior to leaving this business & partnership? 2) Are there any details/ formalities, I need to be clear about so as not to have any problems at the further date in regards to Tax, business, etc.? 3) I receive a salary of NIS 4K. every month only. NB: I recently submitted the newly received Tax forms from Ashkelon to our CPA for filing. Thanking you & please Advise. A: When? Did you receive tax benefits for an Oleh? How long did this business run? Your first question is a legal question and you must refer to the lawyer who set up the partnership. As for your second question: Yes. You must ask to close the file in Mas Hachnasa. Your file will be designated 9.6, You will be asked to continue reporting for a further period until they finally close your file to a type 13. This might require following up as they sometimes forget to change the file type. You also have to close the file with Mas Erech Musaf and if the business closes and you received tax rebates on fixed assets you will have to return them. You must also inform Bituach Leumi of your changed status and receive an update as to your monthly payments. You may be entitled to a tax rebate 1. If you worked as an employee part of the year and then had business losses. 2. If your business made a loss and you made payments on account to Mas hachnasa and Bituach Leumi every month I can check this out for you for previous years if you let me have the relevant documentation by fax. For the year 2008, it will be dealt with when you file the report for this year. Q: My former employer went bankrupt. Now there is a settlement offer: is the severance pay I am entitled to subject to Israeli taxes upon my receipt? A: Thank you for your e-mail. Severance pay is not taxed provided that: 1. You are not paid more than 1 month's salary for each year you worked (this is calculated per day so you do not lose out on a partial year) 2. All the necessary forms are filled out correctly by your employer and authorised by the income Tax Authority 9a formality if there is no problem with the forms). If you are unemployed for part of the year 2008, it is quite likely that you are entitled to a tax return at the end of the year. I suggest you contact me in January 2009 and let me have the appropriate documentation so we can check this out. We do not charge for this service. You wouild need the 161 forms of your severance pay and 106 which summarises all your salaries and tax deducted during the year. Good luck, I hope you find a new job soon. Q: I am preparing my 2007 Israeli income tax return - form 1301. I have entered my pension income from abroad in appendix daled - form 1324. The form states that the amounts are to added to the income reported in form 1301, fields 258 and 167. However, in the instruction booklet - Know Your rights and Obligations 2007 - at the bottom of page 64, left-hand side, it states regarding pension income from abroad - as opposed to other income, do not fill the parallel fields in form 1301 for this income. My question is - do I, or don't I, insert the pension amounts from abroad in fields 258 and 167? I realize that my total income from abroad will be entered in form 1301 - field 290 - Income from Abroad. A: Thank you for your e-mail. Sorry but this column is not intended to teach you how to fill out the forms for reporting to Mas Hachnasa. Although it appears simple - it isn't and there are many trapfalls. In my opinion this is a profesional job and if you "go it alone" to save monry, you may end up paying much more than you save. Sorry. Q: I am a US citizen -not Israeli or Jewish - nor did I make Aliyah. My husband is Israeli, lived in the US for 40 years and now we have moved to Israel together with our 4 children. He moved here 2 years ago and I moved here 1& 1/2 years ago. I have a teudat zehut--as temporary resident, and a US passport. He has been told that he isn't Toshov Hosair. Do either of us get any benefits to purchase a new car in Israel--can we get a tax break? A: Thank you for your e-mail but I don't think there is very much I can do for you. Customs duty is not a CPA's field or responsibility, so I know very little, you have to either go to the Customs authority or write them a letter or ask an Amil Meches or simply the local car importers, the latter is probably the easiest and they would know as they are the one's charging you. I don't understand why your husband is not considered a Toshav Hozer, something is wrong here. If he were a toshav hozer he would not be entitled to a tax-free car but would enjoy tax benefits from the Income Tax - Mas Hachnasa. 1. re income earned in israel, he is entitled to tax benefits for 3 1/2 years after returning to Israel. If he has not been receiving them then it is important to claim them for the years gone by immediately. If you call or fax me with information regarding his income in israel over the two years, we can check out whether you indeed have the rights to a tax refund. We do not charge for this examination. 2. Savings and investments abroad are tax free for 10 years If you think you should be getting a rebate call me (not Shabbat or Chag) Q: Recently my uncle, a citizen of Israel died. He has appointed me as heir to several funds in several banks in Israel. I am a pensioner and a citizen of Israel Do I have to pay inheritance tax on the money that he has left? Thanks for your kind assistance A: Thank you for your e-mail There is no inheritance tax in Israel. But, if your uncle was a US resident and the US tax authorities knew about these funds or if his will is executed in the US, you may be (probably are) liable for US inheritance taxes. If there is a lawyer or executor in the States, you will have to consult him/them. Anyway in Israel, you will not be taxed. * * * Cafe Oleh experts have been chosen for their knowledge and reputation. Cafe Oleh does not take responsibility for any advice they offer. Click here to send us your questions for Miriam. Cafe Oleh is the place where you can join in and be published. To send us your comments, article ideas, suggestions and community listings, click here. In the meantime, check out our comprehensive listings and calendar services.

Tax expert: Reporting overseas income

Vol XXXVI: An article posted Sept. 9, says the law exempting reporting and taxes for out-of-Israel income is for "new immigrants and returning citizens as of Jan. 1, 2007". Does that include people who made Aliyah since Jan. 1, 2007?

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