cpa in israel

Amendment 190 and tax benefits for pensioners

In recent years, there have been publications on Amendment 190 and the tax benefits inherent in it for the members of the third generation, which has made the issue of depositing into provident funds much more attractive for everyone who is nearing retirement.

Amendment 190, issued in 2012, is a broad amendment to the Income Tax Ordinance that has the ability to influence the way the tax liability is calculated in relation to pension savings and to obtain better savings channels and encourages the management of free money for retirees in a smarter way.

Under Amendment 190, it is possible to deposit funds into a provident fund, maintain the liquidity of the money and enjoy far-reaching benefits, such as:

1. Significant savings in bank fees.

2. Lower taxation on profits – the tax is 15% of the nominal profit instead of 25% of the real profit (the benefit is for those over 60 years old).

3. Tax deferral – there is the option of investing through an IRA fund, in which the tax is paid only on the day of realization and the actual withdrawal of the funds to the bank account and not every time a paper is sold at a profit.
This means that instead of the tax itself being reduced from the value of the portfolio already at the time of realization, it remains part of the investment.

4. Future taxation planning for bequeathing to future generations with full tax exemption or reduced tax.

5. Option to withdraw a monthly allowance without paying tax.

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