כיצד השינוי בסעיף 46 לפקודת מס הכנסה משפיע על גיוס תרומות לעמותות? / חני סודרי

Section 46 of the Income Tax Ordinance states that donors to non-profit associations, institutions and organizations that work for the public are entitled to a 35% tax credit in that year, provided that the amount of the donation ranges from NIS 190 to NIS 9,304,000 or is up to thirty percent of his taxable income, according to The lower amount.

This means that a donation to an association that is recognized within the framework of this section allows donors to qualify for a portion of the tax they are obligated to pay to the state, and this undoubtedly constitutes an incentive for donors and many times a preference for choosing such associations over non-recognized associations.

Despite this, today less than 6,000 non-profit associations and organizations in Israel are recognized under Article 46, out of approximately 36,000 such organizations. Until recently, the process of receiving this recognition was long and tedious, up to several years, and without a doubt this is one of the reasons for this situation.

Towards the end of 2013, the Minister of Finance, Yair Lapid, appointed a committee to examine the criteria that entitle a public institution to recognition under Article 46, chaired by the retired judge, attorney Sara Frish. public institutions and proper use of the tax benefits provided to them.

Development of resources for associations in light of the change

In 2014, the committee submitted its recommendations regarding the desired policy measures. Among the recommendations were the expansion of the public goals that meet the criteria for eligibility and simplifying the processes of receiving tax credits. These recommendations, which were accepted by the Minister of Finance, have significant consequences for fundraising processes for non-profit organizations . Although the legislation on the subject has not yet been completed, some of the recommendations are already being implemented today.

Public purposes that were not previously on the list and were added to it in the committee's recommendations are, for example, saving lives, activity and advocacy for Israel abroad, protection of property, human rights, art, and more. This change is significant for associations that operate in this field and had difficulty in the past in resource development processes due to non-recognition for the purpose of section 46.

As mentioned, until now the process of obtaining approval for section 46 was long, and also created an opening for discrimination, inequality and the involvement of political considerations due to the fact that there were no regulated and clear criteria for recognizing an association or organization for the purpose of approval for section 46. Associations and non-profits were required to first submit an application to the Tax Authority. After that, an internal committee of the Tax Authority reviewed the request. The requests approved by it were submitted for approval by the Minister of Finance, and only after that, those approved by him were forwarded to the Finance Committee for approval.

The recommendations of the committee appointed by the Minister of Finance stemmed from an understanding of the need for objective treatment of association requests, and included, among others:

Establishing regular criteria for examining applications for recognition for the purpose of section 46.
Transfer of authority to approve Article 46 from the Minister of Finance to the Director of the Tax Authority.
The internal committee that will examine applications will also consist of public representatives.
The internal committee will forward the names of associations to the finance committee. If the latter does not request a discussion regarding a certain association within 14 days, this association will automatically receive recognition for Article 46.
The Tax Authority department will complete each application approval procedure within one year from the date of its submission.

It is important to note that alongside these recommendations, which can help in fundraising processes for non-profit organizations , the committee also recommended increasing control, supervision and transparency in the process, and there are stricter requirements from non-profit organizations. This is reflected, for example, in the amendment to the Law on Associations, which, among other things, increased the supervision of associations, increased the responsibilities and duties imposed on the bodies of the executive committee, the board of directors, and the audit committee of associations, and established the obligation to appoint an internal auditor for associations with a turnover of more than NIS 10 million, and Associations with a turnover of over NIS 1 million must submit a financial report audited by a CPA.

If so, the change in Section 46 of the Income Tax Ordinance brings with it opportunities to improve the results of resource development processes for associations that will be able to operate professionally and efficiently so that they meet the criteria and requirements of the law. Acknowledgment of Section 46 will be an incentive for potential donors to provide donations and support to the association, and without a doubt examining a request for a donation that reflects professional and efficient conduct will also improve the chances of receiving a positive response.