Income tax division: Illegal gambling income subject to full tax

Bonuses granted to taxpayers by employers or businesses are ineligible for a 25% reduced tax rate.

The Ministry of Finance income and property tax division has ruled that profits from illegal gambling are subject to the regular tax rate. These profits are ineligible for the reduced 25% tax rate granted for income from legal gambling and lotteries, which applies only to profits of over NIS 70,000.

The income tax division added that the exemption ceiling for legal gambling was for specific profits; only single gains of over NIS 70,000 are taxable. On the other hand, if one lottery ticket wins two prizes that total over NIS 70,000, the profit will be considered as one prize, and will be taxable. A single prize of over NIS 70,000 is taxable, regardless of the number of people sharing the lottery ticket.

Multiple prizes won by a lottery subscriber are not cumulative for tax purposes; each such prize is exempt up to NIS 70,000.

The income tax division also said that taxpayers winning prizes attributable to their labor, occupation, or employer will be taxed at the ordinary rate. Money prizes granted by employers and sales bonuses are counted as ordinary income, and enjoy no exemption.

On the other hand, a prize given in the context of personal relations, such as within a family, will continue to be completely tax-exempt. It can be assumed that these provisions will lead to attempts to represent bonuses in family businesses as family-related.

Published by Globes [online] - www.globes.co.il - on August 18, 2004

Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018