שחרית https://sbit.co.il/en/ ביטוח ופיננסים Thu, 10 Oct 2024 13:38:38 +0000 en-US hourly 1 https://wordpress.org/?v=6.7.2 https://sbit.co.il/wp-content/uploads/2021/11/‏‏לוגו-רקע-שקוף-חדש-01-עותק-150x150.pngשחריתhttps://sbit.co.il/en/ 32 32 Are you a controlling shareholder or company owner? You can make tens of thousands of shekels of your earnings tax-free!https://sbit.co.il/en/are-you-a-controlling-shareholder-or-company-owner-you-can-make-tens-of-thousands-of-shekels-of-your-earnings-tax-free/ https://sbit.co.il/en/are-you-a-controlling-shareholder-or-company-owner-you-can-make-tens-of-thousands-of-shekels-of-your-earnings-tax-free/#respond Sun, 17 Jul 2022 04:25:44 +0000 https://sbit.co.il/are-you-a-controlling-shareholder-or-company-owner-you-can-make-tens-of-thousands-of-shekels-of-your-earnings-tax-free/ Are you a controlling shareholder or company owner? Here’s how to make tens of thousands of shekels of your earnings tax-free:

The self-employed, business owners, and controlling shareholders in a business can set aside money in pension and education funds (keren hishtalmut) and qualify for tax benefits on that money. The Israel Tax Authority’s regulations on employees who are also controlling shareholders in the business differ slightly from the regulations on the self-employed or business owners, but this article will still be useful for those situations. Here’s a simple guide on how to get the most out of your tax benefits:

Pension Savings: (Pension fund, and/or executive insurance and/or provident fund):

The minimum required by law: The employer must contribute an amount equaling 6.5% of the employee’s gross salary, while the employee must contribute 6% of their gross salary. The employer also must contribute an amount equaling 6% of the employee’s gross salary to a separate fund that is used for severance pay in the event of firing.
The maximum allowed by law: The employer may contribute an amount equaling up to 7.5% of the employee’s gross salary, and the employee may contribute up to 7% of their gross salary. The employer may also contribute an amount equaling up to 8.33% of the employee’s gross salary to the severance pay fund.


The employer’s contribution: up to a salary of 26,378 shekels, all contributions by the employer to the pension fund, up to 7.5% of the salary, are classified as business expenses for the employer and are not classified as income for the employee! For salaries above that amount, contributions by the employer will still be classified as business expenses, but will be classified as income for the employee. The bottom line: if your monthly salary is under 26,378 shekels it is best if your employer contributes the maximum amount allowed by law, 7.5%. If you earn more than that per month, then any employer contributions to your pension fund above this ceiling will be considered income, so there is no benefit there, as personal income is taxed at a higher rate.


The employee’s contribution: The employee gets a 35% tax credit on contributions to their pension fund on insured salaries up to 8900 shekels. Your insured salary may not be your full salary, but if possible, your contribution to your pension fund should be calculated using your full salary, so that your employer’s contribution to your pension will also be calculated using your full salary, and you will reap the tax benefits on employer contributions detailed above. The bottom line: for salaries up to 8900 shekels, you should contribute 7% of your salary to your pension fund. For salaries above this amount, contribute 6% of your salary, or 7% of 8900 (623 shekels), whichever is higher.


The severance pay fund: Contributions by the employer up to 12,640 shekels per year, (1,053 shekels per month), are classified as business expenses, and are not classified as income for the employee. Employer contributions between 12,380-34,900 shekels per year are not classified as business expenses, but are also not classified as income for an employee who is a controlling shareholder. Usually, your marginal income tax rate plus Bituach Leumi will be higher than the corporate tax, which is 24%, so it makes sense as a controlling shareholder and employee to contribute more than 12,640 shekels per year to your severance fund, up to 34,900 shekels, or 2908 shekels per month.

Education fund (Keren Hishtalmut):

The minimum required by law: none
The maximum allowed by law: the employer may contribute an amount equaling up to 7.5% of the employee’s gross salary. The employee may contribute up to 2.5% of their gross salary.


The employer’s contribution: for salaries up to 15,712 shekels per month, contributions equaling up to 4.5% of the salary are classified as business expenses. Contributions above 4.5% and up to 7.5% of the salary are not classified as business expenses, but are also not classified as income for the employee. Usually your marginal income tax rate plus Bituach Leumi will be higher than the corporate tax rate, which is 24%, so it makes sense as a controlling shareholder and employee to contribute the full 7.5%, so that it will not be classified as personal income. Additionally, the first 4.5% of the contribution will still be corporate tax-exempt. Finally, the entire keren hishtalmut is exempt from capital gains tax, which is 25%. The bottom line: the optimal employer contribution to a keren hishtalmut, especially for an employee who is also a controlling shareholder, is 7.5% of the salary for salaries up to 15,712 shekels per month.


The employee’s contribution: If the employer contributes a sum equaling 4.5% of the employee’s salary, then the employee must contribute 1.5% of their salary to the keren hishtalmut. If the employer contributes 7.5%, then the employee must contribute 2.5%. There are no tax benefits on employee contributions to a keren hishtalmut, apart from enabling the employer contribution, which does have tax benefits. The bottom line: For salaries up to 15,712 shekels per month, if the employer makes a 4.5% contribution, then the employee msut contribute 1.5%, and if the employer makes a 7.5% contribution, then the employee must contribute 2.5%   This article is for informational purposes only. It is not exhaustive, and does not constitute professional advice. The author is not responsible for direct or indirect damage caused by use of the information in this article. Always consult a professional when dealing with pension funds.

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I’m perfectly healthy. Do I really need private health insurance?https://sbit.co.il/en/im-perfectly-healthy-do-i-really-need-private-health-insurance/ https://sbit.co.il/en/im-perfectly-healthy-do-i-really-need-private-health-insurance/#respond Sun, 20 Feb 2022 14:49:16 +0000 https://sbit.co.il/im-perfectly-healthy-do-i-really-need-private-health-insurance/

“It’s all good, we’re healthy. Do we really need to buy private health insurance?”

I’ve heard this sentence over and over.

But it’s far from accurate.

First of all, I hope that you remain healthy. But the fact of the matter is that the best time to purchase private health insurance for yourself and your children is when you are in good health!

Why?

Because private health insurance covers significant areas of healthcare that aren’t covered by your kupat cholim, including livesaving procedures, such as surgeries and transplants performed outside of Israel, medicines that aren’t in the “health basket” set by the government, and complex conditions that can run up millions of shekels in treatment costs.

However, private insurance can only be purchased when you are healthy.

Part of the signup process for private health insurance is a health evaluation. If you are not perfectly healthy when you sign up, the insurance company may not give you complete coverage, or they may reject you outright. There’s no way to know what your medical needs may be in the future, or how much they will cost. There are many people who would like to purchase private health insurance, but their poor health means that they cannot.

Buy insurance while you can. Once you need it, it’s too late.

We can provide you with quality private health insurance. Contact us, and we will get back to you as soon as possible. 
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Planning a trip out of the country? Read this first!https://sbit.co.il/en/planning-a-trip-out-of-the-country-read-this-first/ https://sbit.co.il/en/planning-a-trip-out-of-the-country-read-this-first/#respond Sun, 20 Feb 2022 14:20:45 +0000 https://sbit.co.il/planning-a-trip-out-of-the-country-read-this-first/ Did you just buy airline tickets for yourself or a family member?

Whenever you book a flight, you need travel insurance to go with it.

Travel insurance is a critical part of a successful vacation. If you need to cancel your flight due to a medical emergency, whether it’s you or an immediate family member, travel insurance covers the rebooking. But you must buy the insurance in advance! If you wait too long, and your flight date is near, you may not get full coverage. And when do issues come up the most? That’s right, in the two weeks before your flight. Don’t lose all the money you’ve spent on your vacation. Save yourself the heartache, and get travel insurance as soon as you purchase your ticket. But where to buy it? I recommend PassportCard. The most important thing about travel insurance, when you are away from the resources of home, is service, and PassportCard is the best of the best.

 

To purchase travel insurance from PassportCard online via our service, click here

Here are some more important points:

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Buy travel insurance as soon as you book your flight. There is no way to purchase travel insurance after you’ve begun your trip.

🚗🚕🚙

If you are renting a car, add deductible coverage to your travel insurance package, it’s much cheaper than paying for no-deductible insurance from the rental company.

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Add coverage for your luggage. It will appear as an option when you buy travel insurance, and it’s good for your peace of mind.

👨‍💻👨‍💻👨‍💻

Insurance is done via an agent. If you use the link I have provided to purchase travel insurance, I will be registered as the agent for your policy, and will be able to assist you with everything that you need.

Finally…🛫Have a great trip!🛬

 

To purchase travel insurance from PassportCard online via our service, click here

 

Want to learn more? Shacharit Insurance provides fast, professional service. We’re looking forward to assisting you.

 

Note: This article is for informational purposes only. It is not exhaustive, and does not constitute professional advice. The author is not responsible for direct or indirect damage caused by use of the information in this article. Always consult a professional when purchasing insurance.

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What is a pension fund? And how do I get the most out of it?https://sbit.co.il/en/what-is-a-pension-fund-and-how-do-i-get-the-most-out-of-it/ https://sbit.co.il/en/what-is-a-pension-fund-and-how-do-i-get-the-most-out-of-it/#respond Sun, 20 Feb 2022 11:00:31 +0000 https://sbit.co.il/what-is-a-pension-fund-and-how-do-i-get-the-most-out-of-it/ Pension funds are complicated, but after reading this article, you’ll know more about them than 90% of the people around you.

A pension fund has three purposes:
Saving for retirement. No one wants to work until they die, after all.
Disability insurance. If you are permanently injured or otherwise become unable to work due to disability, your pension fund covers you.
Residual insurance. Residual insurance is a form of life insurance, and your pension fund can be used for payments of this type as well. In the event of your death before retirement, your pension fund will be used to make monthly payments to your spouse until their death, as well as to your children until they reach age 21.

Pension funds are built with a mutual guarantee mechanism. What does this mean?
When money is added to a pension fund, it is divided between two internal funds, one for insurance, and one for retirement savings. If the money being deposited in the insurance fund is not enough to cover insurance payments, then the shortfall is made up by taking a small percentage of the retirement savings. This mechanism is called actuarial balance. In some cases, this balance is negative, up to 0.3% per year, but in other cases it is positive, which means that money from the insurance fund will be moved to the retirement fund.

How much money will you get from your pension fund at retirement or when the insurance pays out?
The pension depends on how much you saved, so it is important to choose a pension fund with a high return on investment and low management fees. Insurance payouts for death or disability are tied to your salary.

To maximize your retirement savings and insurance benefits, meet with your insurance agent on a regular basis, at least once every few years, to check on your accounts.

Do you want professional pension planning and management? We’d love to help you out. Contact us with the form below, and we’ll get back to you.

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Self-employed? Use tax benefits to save hundreds of thousands of shekels!https://sbit.co.il/en/self-employed-use-tax-benefits-to-save-hundreds-of-thousands-of-shekels/ https://sbit.co.il/en/self-employed-use-tax-benefits-to-save-hundreds-of-thousands-of-shekels/#respond Sun, 20 Feb 2022 10:56:37 +0000 https://sbit.co.il/self-employed-use-tax-benefits-to-save-hundreds-of-thousands-of-shekels/ Are you self-employed? Discover hundreds of thousands of shekels worth of benefits when you use your pension and education funds!

To fully understand how you can gain from tax benefits available to the self-employed, consider this example: A person is 37 years old, self-employed, and earns 25,000 shekels a month before taxes. The last 4000 shekels of this is in a higher tax bracket, and is taxed at 35%, plus an additional 18% for Bituach Leumi and the health tax. So just over 50% of this 4000 shekels are taken in taxes. To simplify, only 2000 shekels of that 4000 remain. Our self-employed person wishes to save this money for retirement. They have two options:

Option A:

The regular way: Put the 2000 shekels in savings every month. This will earn 7% annual interest at the most. After 30 years, the savings will total around 1.5 million shekels, and will be subject to a 25% capital gains tax.

Option B:

The smart way: Put the 2000 shekels into a pension or education fund (keren hishtalmut), and get an additional tax refund of 2000 shekels, for a total of 4000 shekels deposited into the fund every month. 3000 shekels of that will go to a provident fund, and the remaining 1000 will go to an education fund. This will earn 6% annual interest, but will not be subject to capital gains tax. After 30 years, the savings will total around 3.9 million shekels. That’s 2.4 million shekels more, just by utilizing tax benefits.

How does our self-employed person get the money at retirement?

Assuming they didn’t withdraw any money in the interim, here’s how it works: 1.78 million shekels will be available as a lump sum at retirement, tax-free. (975 thousand from the education fund, and 800 thousand capital-exempt allowance). The remaining 2.12 million shekels will be paid out at 10 thousand shekels per month.

So, do you want to get the most of your tax benefits this year?

 

Important note:

Those who make less than the person in the example above can also gain from these tax benefits. The important thing is to be prepared for your future and ensure that you have income after retirement. This tax benefit is granted once per tax year, for deposits that were made during that year.

 

Join hundreds of other business owners who chose Shacharit Insurance and Pensions, and get a personalized pension plan.

Call now: 079-5599400, or email: service@sbit.co.il

Note: This article is for informational purposes only. It is not exhaustive, and does not constitute professional advice. The author is not responsible for direct or indirect damage caused by use of the information in this article. Always consult a professional when dealing with savings funds.

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