Income Tax Ordinance

51. Expenses incurred by a life insurance company in acquiring Contracts for life insurance, including payments to an agent, shall be deemed expenses in the year in which they were incurred or credited to the agent's account, whether or not the Company charged these expenses to its profit and loss account for that year.

A life insurance company that has received the majority of its premiums from outside the country — its profits shall be deemed to be a proportionate part of its total investment income, being the ratio between the amount of premiums received by it in Israel and the total premiums received by it, or its actual investment income in Israel, whichever is the greater, after deducting from the amount of profits the expenses of the branch or agency in Israel and a fair proportionate part of the expenses of the head office of the Company situated outside the country.

A person who is not a resident of Israel who is engaged in insurance business and to whom premiums have been paid in connection with the insurance of Real Property in Israel, or in connection with insurance against an event that may occur in Israel only, or that have been paid by insured persons who are residents of Israel, not through a branch or authorized agent in Israel authorized to issue policies in its name — shall be deemed to have derived profits in Israel from that insurance business, and the amount of his profits shall be deemed to equal 10% of the total amount of premiums paid to him as aforesaid; however, if the person has submitted to the assessing officer a report of his profits from the said business and the report satisfies the Commissioner of Income Tax, these profits shall be computed in accordance with the provisions of Section 49 or Sections 50–52, as the case may be.

"kibbutz" means a kibbutz or kvutza organized as a cooperative society under the model regulations approved by the Registrar of Cooperative Societies for societies of that type;

"member", in relation to a kibbutz, means an individual who was a member of that kibbutz at the end of the tax year.

The assessment of a kibbutz and of all its members shall be made, notwithstanding the provisions of this Ordinance, in accordance with the provisions of Sections 56–60.

The value of the provision of subsistence and of other benefits given by a kibbutz, by virtue of membership, to its members and to those in respect of whom the members would have been entitled to a deduction under Sections 37, 40, and 41, but for the provisions of this Division, shall be regarded as part of the taxable income of the kibbutz and not as income of the members.

A kibbutz shall pay tax in an amount equal to the total tax that its members would have been liable to pay, had all of its taxable income been divided among them in equal shares and had that been their sole taxable income; however, for the purposes of this section, the deductions or credits from tax under Sections 34 to 46 and 48 shall be allowed, and the provisions of Chapter Three — except for Section 66 — shall apply, as if the total number of members were comprised of household units in a number equal to half the total number of members (hereinafter — household units), and household units shall, for the purposes of this Division, have the same status as married couples, all subject to the provisions of this Division.

For the purposes of computing the tax under Section 57, each household unit shall be deemed to have paid during the tax year amounts for the purposes specified in Section 45, in an amount equal to at least 10% of the amount resulting from dividing the taxable income of the kibbutz by the total number of household units, before any deduction under Sections 57–59.

The Commissioner may, at his discretion, direct that the provisions of Division A shall apply to the assessment of cooperative moshavim or of other cooperative societies for agricultural settlement and of their members, if it has been proven to his satisfaction that the methods of conducting business in those societies are similar in character to those customarily practiced in a kibbutz.

A cooperative society classified as an agricultural cooperative society for the purposes of the Stamp Tax Ordinance13 shall, in a given tax year, have the same status as a Partnership for the purposes of this Ordinance, if the society, with the consent of all its members, so claimed in a report under Section 131 for that tax year, specifying the names and addresses of its members and the share due to each of them in its taxable income in that tax year.

A close company within the meaning of Section 76, all of whose assets and business consist of the holding of buildings, shall have its income treated, upon its application, as the income of the members of the Company, and the distribution of that income, for the purposes of assessment, among all or some of the members of the Company shall be made as the Commissioner shall direct; any person who considers himself aggrieved by a direction of the Commissioner may Appeal against it before the court as referred to in Sections 153–158.

11 Laws of Palestine, Vol. II, Chapter CXLV, p. 1802.

The income of a married woman living with her husband shall, for the purposes of the Ordinance, be deemed to be the income of the husband and shall be assessed in the name of the husband and not in her name nor in the name of her trustee; however, if necessary, a proportionate part of the tax with which the husband is chargeable may be collected from the wife, even otherwise than by assessment, in the ratio that the amount of the wife's income bears to the total income of the husband and wife.

Income derived from the personal exertion of a husband and wife in an agricultural holding, which is liable to tax under Section 2(8) in respect of one of them, shall, for the purposes of this Ordinance, be deemed to be the income of the husband and wife in equal shares, and a deduction shall be allowed to the husband under Section 38 and an additional deduction of 200 pounds; however, a separate computation of tax under Section 66 shall not be permitted.

[Husband and wife in an agricultural holding]