Gidon, thanks for your blog, it’s really helpful! I am at the point of making my decision now – patur or murshe. and before i go to a tax advisor i’d like to know as much as i can. Can you please advise, whether osek patur can have deductibles like partial car expenses, gas, electricity, office rent, etc? I do not mean VAT, but reduction of the final profit i’ll get to pay taxes from? Or the taxes are calculated from my “brutto” income?
Someone also said, i cannot do web site support and development as osek patur, even if i get less than64k a year. Is it really so?
I’ll really appreciate your help.
Here’s my answer:
Remember, I am not an official tax advisor, just a fellow shnook who tries to help and be helped;-)
From my understanding, an Osek Patur makes so little money, they are patur (not required to) collect and foward/pay VAT tot he VAT authorities. This comes to about 64K NIS a year (give or take a few 10k’s). From my understanding, if you are making so little money a year, you are not going to be paying mas hachnasa to the mas hachnasa authorities, either. So “deductibles” are immaterial. The idea of deductibles is to deduct their value from your brutto gross income, and then calculate the tax you owe. Since you are starting with zero tax owed, you can’t go lower than that:-) PS this is what happens to me and so I am lax with collecting “deductible expense” receipts like cab fares, ink, computer, etc.
If you do end up owing taxes cause you make more than the minimum, than the bottom line is easy: was this expense instrumental in generating income for you. Would you have been able to generate income without expending for this. The partial expenses you list are maybe hazier than an ink cartridge, but you can and should ask on internet forums, this is a simple question.
>>Someone also said, i cannot do web site support and development as osek patur, even if i get less than64k a year. Is it really so?
Don’t tell that person about me, that’s exactly what I do:-) My declared business (iirc – they strangely do not give you a copy of your request to open a business including the field where you describe your services – I spent about an hour crafting that sentence!) was “Office Services, Translations and Internet services”. I think “sherutei Internet” should do the trick for you too.