Supreme Court upholds decision recognizing childcare costs as business expense
However, court makes it clear that Knesset can pass legislation to change the situation if it so wishes.
By DAN IZENBERG
It's now official - for the time being. On Thursday, the Supreme Court upheld a ruling handed down last year by the Tel Aviv District Court declaring that working women may deduct part of the cost of sending their children to day care centers from their taxable income.
However, the court made it clear that the Knesset can pass legislation to change the situation.
The original decision, handed down on April 6, 2008, by Judge Magen Altuvia, came in response to an appeal by a self-employed lawyer, Vered Peri, after the Dan District's assessing officer rejected her request to recognize as a business expense child care payments she had made between 1999 and 2001.
Altuvia ruled that Peri would receive a tax deduction equal to two-thirds of the cost of the day care centers to which she had sent her children if the price did not include lunch, or one-half of the price if it did.
At the time, the Tax Authority estimated that if the ruling were implemented nationwide, it would cost the state NIS 2 billion per year.
The assessing officer quickly appealed the decision to the Supreme Court. In the meantime, he ordered tax clerks to make it difficult for anyone requesting deductions for child care payments, despite the district court decision, and not to reopen cases that had already been closed.
But the government's hopes for overturning the lower court decision were dashed by the Supreme Court. A panel of five justices headed by Deputy President Eliezer Rivlin and including Miriam Na'or, Elyakim Rubinstein, Edna Arbel and Esther Hayut unanimously upheld the lower court ruling and determined that child care should be considered a tax-deductable business expense.
However, Rivlin added that "all that we have determined today is that as long as no Knesset legislation governs this matter, judicial law determines that the assessor must make a tax deduction. The Knesset can decide otherwise, and as long as it does not, all we are doing is declaring the existing situation."
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