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1 June 2014

Negative Income Tax Grant 2013 - מס הכנסה שלילי

A number of years ago, the government introduced a scheme designed to help workers earning very little. This grant, based on average monthly earnings in the previous tax year (hence the term "income tax"), was initially available only to those living in certain parts of the country.

Who is eligible?

You must meet the following criteria:
1. Be aged 55+ or aged between 23 and 54 and have at least one child.

2. You, together with your spouse, own no more than a 50% stake in any land or property (worldwide) that is not your residence.

3. Your average monthly earnings in 2013 (salary or freelancer, based on actual months worked) was between approx. NIS 2,050 and NIS 6,717.

It should be stressed that you are not eligible for months on which you received salary from a family member, or a company controlled by a family member.

Furthermore, maternity pay received from Bituach Leumi is treated as earnings for these purposes.

4. If you were required to file a tax return for 2013, you did so on time.

5. The claim must be made by 30th September 2014, so you need to move fast!

6. Any employer filed their employer-summary form on time (form 126). If they did not, you will be asked to provide the authorities with form 106 in order for them to fully process your claim.

How much is the grant?

The grant, per month of eligibility, is based on your average monthly earnings and can reach as high as NIS 705. The full table is as follows:


Monthly grant (NIS)
Average monthly income (NIS)
- woman (1 or 2 children)
- single father responsible for 1 or 2 children
- married father (1 or 2 children)
- aged 55+ without children
- woman (3+ children)
- single father responsible for 3+ children
- married father (3+ children)
0-2,050
0
0
0
0
2,051
120
80
180
120
2,500
228
152
339
226
3,000
350
233
515
343
3,570-4,760
495
330
720
480
5,000
413
275
636
424
5,500
240
160
459
306
6,108
30
20
N/A
N/A
6,109+
0
0
N/A
N/A
6,716
N/A
N/A
30
20
6,717+
N/A
N/A
0
0
The amounts here are based on the 1st June 2013 figures, and should have increased with inflation on 1st June 2014 - I have yet to see the revised figures.
In certain circumstances, the amount due to you will be reduced. This is the case if you are in receipt of one (or more) of the following:

1. Pension income, excluding disability or survivor pensions.
2. Bituach Leumi grant for work or other accident.

Similarly, your spouse's income could reduce your grant.

A simulator (Hebrew only) has been provided by the tax authorities here. It's worth having a look at if you think your claim is borderline.

How to make the claim

The claim is made at a post office branch (and only there), and must be made in person. Be careful though: not all post offices are officially branches - check the postal service website before setting off.

You need to take with you your ID card (Teudat Zehut) and a cheque (of formal notification of account details from the bank).

The clerk will hand you a form on which you state:
  • Number of employers in 2013 for both you and your spouse.
  • Whether you we're self employed in 2013
  • Postal address
  • Bank details
You will get to keep a portion of the form, which will have details regarding how to monitor your claim. You can monitor your claim online here (Hebrew only).


How you get paid

If you are an employee only, you will receive your grant in two or three equal payments directly into your bank account, depending on whether you get the form in by the end of June 2014 or later.

If you are (also) self-employed, the grant is offset against your 2013 tax liability. If you have excess grant, it will be offset against the next three year's tax liabilities (i.e. 2014, 2015 & 2016). If, after that, there is still some grant left over, 75% of the remainder will be paid directly into your bank account on 15th July 2018.

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