At the end of every year, one is required to get one’s money matters in order. It will not be long before the year’s earnings must be declared to the tax authorities. Before the final documents are calculated and issued, one will be issued with a tax assessment. There are reasons why this document is so important. It is imperative to obtain this document as soon as you can into the new year, because it may end up assisting you early in the year. In this post, we’ll tell you how this document can help you, how one obtains it, and where one can obtain it from. We’ll also discuss more about Arnona and how this document can assist you in obtaining a discount!
The Shumah (literally: assessment) is a document showing the accountant’s calculations of amounts earned during the previous year. The Mas HaChnasah (literally: Income Tax [department]) will then acknowledge receipt of the statement from the accountant and will issue a document to the income earner indicating that they have acknowledged receipt and confirmation of the accounting information submitted being considered legally attended to.
The problem is this: Many times the person will not receive this document and not know how to obtain it! It should be sent in the regular post, but that is not always the case. One can end up waiting for it in vain. Asking one’s accountant may not in fact help, because practically there is nothing he can do to speed up the process of acquiring it. The document is located at the income tax department and it is only they who can issue it to you. Though the accountant may be able to send you a printed copy of what it will look like, he/she cannot issue an original copy of the document (or add a stamp testifying to its accuracy). Interestingly, the document issued from the main computers is a very primitive document – having been created on their programs still running on DOS machines! So in truth, one could easily fabricate the appearance of one’s tax information – were it not for the stamp that they put onto it (and hence the accountant’s print out will not help anyone.) One wonders if there will ever be an upgrade to the old system, making the system more modern and easier to work with – for both workers and recipients!
How can the Shumah help one?
One of the necessary payments paid to the authorities (the Iriyah [municipality]) each year is known as Arnonah. Arnonah is basically land tax. One pays for staying in an apartment (anywhere in Israel). Cost is based upon location, as well as the size of the apartment. This can often be a hefty amount for those living in the more centralised areas of Israel such as Jerusalem. It is really quite hefty for everyone altogether. In fact, it is a substantial amount to pay each year – given that one must still pay other taxes such as regular Bituach Leumi (national insurance) and (as in this article) Mas HaChanasah . VAT (currently 17%) is of course an additional tax which we pay every single day when we purchase something or pay an account. So, when one thinks about it all – everything is taxed and double taxed and more, as one goes through one’s day and calculates the various amenities being used.
Due to the huge taxes, it may well be that one cannot even afford the full Arnonah amount! There are tens of thousands of Israelis who simply do not earn enough to pay all the taxes. Were they to do so, they would literally have no money left for food. Money would go through to taxes, and leave them with nothing left for their own food for themselves. Think of it this way. With most Israelis working a minimum wage job and earning some ₪5000 per month, having to come up with a ₪8 000 bill for 100% Arnonah on a rented apartment can be extremely hefty!
The Iriyah (municipality) does offer discounts for Arnonah, anywhere from some 20%-40% depending upon one’s actual income. Of course, they don’t actually know how much a person earns… until the person presents the Shumah to them! Once they see this, they will know how much money was earned, and be able to offer a discount based upon this – and their charts, which show the reflected discounts due to particular income levels! There are other things they require too, which we will cover in a future post (so stay tuned!)
Unfortunately, when the new year begins, the Shumah will not be ready! In fact, it may take the accountant 5-6 months to prepare one’s accounting before submitting the final statements to the authorities. Thereafter, the Mas Hachnasah may still take a few weeks to process it before issuing the Shumah. This means that the person will still be required to pay the full 100% Arnonah amount at least once every two months (if they permit this instead of requiring a full year’s pay in advance) before being allowed to ask for a discount. This can be another blow to those with low incomes. It is a hard concept to understand – that those who work privately are forced to keep up with.
If one does not approach the Iriyah for one’s discount during the year because one has not yet received one’s Shumah, one will lose out on one’s discount for that entire year. That can be a great tragedy! It is therefore vital that the Shumah be obtained as soon as possible in order to take it through to the Iriyah and get one’s discount.
Where to Get the Shumah From
Since it is not the duty of the accountant to obtain this form, and it is for the person themselves to acquire it, it is imperative that one know where to get it from and how to get it. In fact this is quite simple! One goes through directly to the main office at 66 Kanfei Nesharim Jerusalem (see map below). On the third floor there are some offices there that will assist, and it literally takes just a minute for them to print out and stamp! Once done, you’ll be able to use that document to assist you in obtaining a discount for your Arnonah. This can make a substantial difference in your life and save you literally thousands of shekels each year – if you are struggling. See map below for location.
To the left, you will see a picture of the sign you’ll see when entering the offices to obtain the Shumah:
In a further post, we will be looking at other things one must take with one to the Iriyah in order to qualify for a discount for one’s Arnonah tax payment. These are important. Don’t forget to follow the instructions there when going through for your discount, because without these things, the Iriyah will not complete the process of giving you a discount for your Arnonah.
BeHatzlachah – and as always – please be in touch with us for further assistance.
Post prepared by Eliyahu Shear
