Shai Aharonovitch, Director of the Tax Authority, recently participated in the Duns 100 forum and provided some interesting statements regarding the country's financial future due to the war. Among other things, Aharonovitch noted that "we started the war with 18 billion shekels in the compensation fund, and we estimate that the direct and indirect damage, in the south and north, will reach 20-22 billion shekels" and that the government should not fill the state coffers in a current manner and at any price. Will the economic situation also affect people who are going to apply for a tax exemption?
The war, with all the economic expenses it imposed on the State of Israel, left the Future Financial of Country , which wasn't particularly brilliant either. It is still too early to know whether the current situation will have an impact on income tax exemption recipients or on those who are in the process of applying for an exemption. However, it is reasonable to assume that the Tax Authority will not make it easier for new applicants to obtain a tax exemption, even if they request it for reasons of disability. How can the process of submitting an exemption request be carried out in the most efficient manner, in order to reduce the chances of it being rejected?
First of all – recognition of disability
Logically, exempt Solvent income For reasons of disability, it is given only to people who are already recognized as disabled by the National Insurance Institute. However, many are not aware that not every disabled person is potentially eligible for the long-awaited exemption. The disabled person requesting the exemption must be recognized as disabled at a rate of at least 90% disability and for a period of at least 185 days. It should be noted that the percentage of disability may be determined due to a single factor or as a weighting of several disabilities. In the case of weighting, at least one of the defects should be at least 40%.
Those who are not yet recognized as disabled by the National Insurance Institute have a long way to go before they reach the stage of applying for an income tax exemption. First, they will have to submit an application for recognition of disability in the National Insurance Institute. The applicant for recognition of disability must submit Form B.L. 7801 along with official medical documents proving his condition and submit them to the institution. The institution can determine the applicant's disability based on documents only, or summon him to a medical committee.
It is important to note that many of the lawsuits fall before the committees, as many plaintiffs do not know how to present their case convincingly, or they forget to bring critical medical documents with them to the committee's meeting. One way or another, if the claimant does not agree with the National Insurance Institute's determination, he can appeal it within 60 days from the date of receipt of the written notice from the institution.
Conditions for receiving an income tax exemption
As mentioned, the Tax Authority's prerequisites for receiving an income tax exemption are disability for a period of at least 185 days, and recognition of at least 90% disability. Also, the applicant must have taxable income. The applicant must fill out Form 1516 and attach a summary of the National Insurance Institute's decision (which determined his disability) and a recent pay slip from each employer. The application form and documents must be sent to the regional tax assessor, and an appointment must be made to arrive at the tax offices.
Those who have been determined to have a temporary disability will receive a request from the National Insurance Institute to submit up-to-date medical material towards the end of this specified period. Those who met the conditions of eligibility for the exemption in the years preceding the current tax year may receive a tax refund up to 6 years back. It should be noted that a tax refund request may attract the attention of authority Taxes He had a past income tax payment.
The real complexity
On the face of it, submitting an application for an income tax exemption may sound not very complicated. But the real complexity is not found in the stages of the process, but in the great bureaucracy that the exemption applicant has to deal with. It's not easy, especially for people who are already in poor health. The best way for exemption applicants to maximize their chances of receiving an income tax exemption in the end is to deal with the rigidity of government institutions, accompanied by expert professionals who are familiar with the intricacies of bureaucracy and have the patience to deal with it.