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Leaving a job every year?

Turns out it pays off

High-tech workers lead the distribution of workers who realize their entitlement to tax refunds of tens of thousands of shekels.

Why is this happening and how does it relate to the fact that two years in the same position will light a red light over your forehead?

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• Income Tax

David Rosenthal

Sunday, 28 February 2021, 00:00

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This time it is the turn of the income tax to be under pressure: April 1, the date when the possibility of requesting a tax refund for 2020 will open by leaps and bounds, and following the Corona crisis, the amount accumulated in the state coffers jumped to billions of shekels.

Hundreds of thousands of workers whose wages were damaged after being expelled from the army and tens of thousands of those laid off who did not complete a full calendar year of work are entitled to request tax refunds from the tax authority, along with tens of thousands of other workers who are entitled to a tax refund for additional reasons. The state coffers are dramatically higher than in all previous years

, however, there is no optimism: there is a significant gap between the number of applications submitted by employees for reimbursement and the amount accumulated in the coffers, a reality backed by a special report issued by the state comptroller.

In light of the above and due to the cash flow difficulties that many workers in the economy have encountered, the bureau calls on workers not to hesitate and to act to exercise their entitlement to a refund.

And the price is surprising

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There is no optimism.

Chairman of the Tax Authority Eran Yaakov (Photo: Official website, -)

It could be assumed that employees who can receive a refund, sometimes in amounts amounting to tens of thousands of shekels, will work to exercise their entitlement, but, as mentioned, reality shows that many do not bother to receive the money they deserve.

A survey conducted by the Consumer Council shows that almost half of salaried employees "contribute" to the state about 80,000 shekels a year on average. When examining the distribution of workers who have exercised their entitlement, they find that more than 20% of them are employed in the high-tech industry. A recent study by Oketz Systems, which provides computerized solutions in the field of manpower, shows that 21.6% of the workers employed in the past two years belong to the Israeli tech industry and about 16.4% to the finance industry, which is

why workers who earn the highest average wages in the economy turn to them. The low do not bother to act on the issue? "This is big money for them, the amounts to which many of them are entitled easily reach levels of twenty thousand shekels, and in quite a few cases, even double that," explains CPA Ofer Krabi, owner of Karbi Management Ltd. He specializes in tax refunds for high-tech people. That they deserve from the state coffers.

However,

this is part of the benefits they provide to employees. "

15%, which means that every year, tens of thousands of high-tech workers move from one job to another, when often, several months pass until the job is found and the job begins.

"Good software people are always in great demand in the high-tech industry.

Echo Hunters are constantly courting them on LinkedIn, their friends trying to attract them to the startups they signed up for.

Even if they are most dedicated to their role and company, the eye is always squinting out and the ear is always attentive to suggestions.

In fact, if you are a software developer, product manager, etc. - staying in the same position for more than two years is a warning sign or a red light for you, "says Yoav Melamed, a recruitment expert, career building lecturer and founder of the social enterprise.

The norm is to upgrade a job, a company and especially a salary within one to two years of signing the contract. "

Upgrade a position one to two years from the signing of the contract.

Yoav Melamed (Photo: Yachz)

Why is the lack of continuity a justifiable ground for repayment?

According to CPA Ofer Karbi, “The law stipulates that the income tax that the employee pays should be calculated on an annual basis, even though it is paid from the employee’s salary each month.

Thus, in case of discontinuity of work, the tax calculation does not take into account that the employee was employed only in part of the tax year and therefore an amount that reflects work in the full said year is deducted from his salary.

In such a case, the employee is entitled to a refund whose amount varies according to the amount of tax actually collected. "

Another niche characteristic that allows many high-techists to receive an oil tax refund during school is to specialize in high-tech companies, while they earn 25,000 shekels a month. "There are a few dozen large companies or international corporations in Israel that allow internships of 3 to 6 months for outstanding students in the last year of their degree.

"These are usually envelope positions and not the core of the product - that is, for business administration, economics, etc. students who usually get a taste of marketing or sales jobs," Melamed explains. This is usually a limited period of employment of several months for which they are taxed as if they were employed throughout the year. "The tax refund in such circumstances also amounts to NIS 60,000," notes Krabi, "there is no reason for a hitchhiker to waive his right to receive such sums, since no effort is required of him to obtain them."

In addition, large companies, with a large number of veteran software personnel, do not object to the recruitment of inexperienced employees and if they are students who are considered promoted, say Dean's outstanding students from the Technion, they are offered signature grants that can reach NIS 50,000.

"Those students are a bit like home players who grew up in the youth department of a football team - earning less at first and being very connected to the organization," Melamed adds.

However, as stated, due to the tax system in Israel, they are entitled to a refund in the amount of tens of thousands of shekels.

Hitmakers have no reason to give up easy money (Photo: ShutterStock)

The remuneration structure in the industry creates another situation that entitles many of them to receive a refund of state funds, including the receipt of options and shares.

Employees who exercise options and sell shares usually pay an excess amount due to maximum tax collection while the sale is usually made when leaving the company.

Therefore there is a high chance of a tax refund.

In addition, in the years in which losses were recorded on the stock exchange, the tax paid can be offset between the profits of the shares received from the employer and the sale of shares at a loss in the private portfolio, "explains Karbi CPA.

As a result of the amounts that employees are entitled to receive, quite a few players have entered the tax refund industry in recent years, some of them without an understanding in a field that definitely requires proficiency and experience.

Typing the word tax return on Google brings up many dozens of results.

The lack of regulation and supervision is clearly evident.

During the investigation of the article, we collected a long list of testimonies from employees who turned to the tax return channel and were burned, whether as a result of incorrect advice they received, which in some cases even led to an increase in tax assessment, but especially those who later found out they were entitled to a larger sum. , Had to settle for a reduced amount.

For example, Krabi explains, the transfer of tax credits between spouses is an example of this, when the rights are not exhausted by one of the spouses, they can sometimes be transferred to the other spouse and thus save tax within the family.

Another example is the tax that is automatically collected for compensation to the employee when leaving work, which can be saved by actively applying to the income tax. "

The common cases that qualify for a tax refund for employees

• Job or employer change during the year.

• Work abroad in parallel with work in Israel during the year.

• Your or your family's medical problems.

• Change in personal status Marriage, birth, divorce.

• Beyond the national priority area (development cities, Galilee, Golan Heights, Negev).

• For new immigrants - the first three years of immigration to Israel.

• Veterans - three years from the end of their compulsory service.

• Deposits to a pension fund, provident fund, life insurance independently, for salary without sociality.

• BA - Bachelor's degree or teaching certificate since 2005.

• If you donated at work - donations over NIS 180 to institutions recognized in section 46.

• Parents of children with disabilities

• Capital market activity when there are losses in the investment portfolio.

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