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Published online by Cambridge University Press: 16 February 2016
The unanimous passage of the Income Tax Ordinance (Amendment No. 89) Law, 1992, by the Israeli Knesset fits in a series of amendments, which, during the last four decades, have gradually eroded the principle of aggregation of income of husband and wife introduced in 1941. It constitutes a further step towards a complete system of splitting the income of husband and wife for the purpose of calculating the amount of income tax; its primary purpose, however, is apparently to equalize the rights and duties of the married woman with those of the man as far as the procedural and administrative aspects of the assessment and collection of the tax on the wife's income is concerned.
The extension of the right to split the income of the married couple is fairly limited. The amendment for the first time entitles the married woman to opt for a separate computation of tax not only on her earned income but also on her income derived from property; provided, however, that such property was either owned by the wife at least a year before her marriage or acquired by her by way of inheritance. Thus, the tax burden on the married couple, which has basically remained the tax unit, has been alleviated to a limited extent only.
1 (1992) S.H. 1394, p. 177.
2 For a more detailed survey of the legislative history of taxing wife's income in Israel, see Lapidoth, A., “The Taxation of Wife's Income in Israel”, Bar-Ilan Annual Shapiro Memorial II (1972), vol. x, p. cxviet seq.Google Scholar
3 Income Tax Ordinance, 1941, P.G., No. 1126 of 22 August, 1941, Suppl. No. 1, p. 51.
4 1 L.S.I. [N.V.] 145, at 171.
5 Model Ordinance by the Inter-Departmental Committee on Income Tax in the Colonies not possessing responsible government, Cmd. 1788, London, H.M. Stationery Office, 1922.
6 The alleged offensive phrase “and not in her name nor in that of her trustee” has been deleted by the 1988 amendment effective as of tax year 1989. Income Tax Ordinance (Amendment No. 77) Law, 1988, S.H. 1261, p. 187.
7 Income Tax Ordinance (Amendment) Law, 1952, 6 L.S.I. 106.
8 Although the right to a separate computation is optional, an extra-legal-concession has been made, i.e., when the taxpayer is entitled to a separate calculation, the tax on his wife's income shall be calculated separately, whenever it saves tax, even though the taxpayer did not elect the “separate computation”.
The statutory provisions of the law governing the taxation of wife's income have been somewhat complicated by yet another provision, which entitles the taxpayer to a special tax relief in respect of a wife who “assists” her husband in his trade or profession.
A wife is regarded an “assistant wife” if her assistance is not less than 24 hours per week during nine months of each tax year. Such a wife, who does not get any remuneration for the services which she renders to her husband, will not qualify for a “separate computation” of the tax; she will only entitle her husband to the special tax relief in respect of an “assistant wife” (Income Tax Ordinance, sec. 39). The amount of that tax relief is lower than the amount of tax relief which is granted in respect of a “working wife” where her income is aggregated to the income of her husband.
9 See section 530 of the Income and Corporation Taxes Act 1970 (derived from section 525 of the Income Tax Act 1952). See also TA 1988, sec. 833 (4)-(6).
10 Bittkover v. Assessing Officer (1959) 13 P.D. 944.
11 Income Tax Ordinance sec. 66(b), added by the Income Tax Ordinance (Amendment) Law, 1957, 11 L.S.I. 77.
12 Feuchtwanger v. Assessing Officer (1960) 14 P.D. 1366.
13 Sachs v. Assessing Officer (1960) 14 P.D. 1848.
14 Benthal v. Assessing Officer (1961) 15 P.D. 1437.
15 5 L.S.I. 171.
16 Lubinski v. Assessing Officer (1962) 16 P.D. 405.
17 The status of “basic laws” was recently examined by Kretzmer, D., “The New Basic Laws on Human Rights: A Mini-Revolution in Israeli Constitutional Law?” (1992) 26 Is. L. R. 238–246Google Scholar, at 240-241. See also Barak, A., “The Constitutional Revolution: Protected Human Rights” (1992) 1 Mishpat Uminhal: Law and Government in Israel 9, at 15Google Scholaret seq.; S. Almog, “Basic Law: Freedom of Occupation; Basic Law: Human Dignity and Liberty”, ibid., at 185; Klein, C., “Basic Law: Human Dignity and Freedom” (1992) 2 HaMishpat 14Google Scholar (The two latter articles are in Hebrew).
Certain basic laws specifically provide that they shall not be amended save by a qualified majority. There is no similar provision in the Women's Equal Rights Law. See, however, Nevo v. National Labour Court (1990) 44(iv) P.D. 749, at 763-764. (A survey of this case appears in “A Digest of Selected Judgments of the Supreme Court of Israel”, in this issue, p. 377, at 386-390). The court stresses that it would prefer to construe a subsequent statutory provision as compatible with the principle of equality of sexes, unless the provision expressly contradicts the Women's Equal Rights Law.
18 Income Tax Ordinance, sec. 66(b) as amended by the Income Tax Ordinance (Amendment) Law, 1961, 15 L.S.I. 28.
19 Steinberg v. Assessing Officer (1971) 25(i) P.D. 92.
20 Assessing Officer v. Chayim Porat (1967) 21(ii) P.D. 411, at 419.
21 Ibid.
22 Income Tax Appeal Tel-Aviv 836/66, tax cases published by the Institute of Certified Public Accountants in Israel, (1968) vol. 2(2), p. 21.
23 See n. 20, supra.
24 Dr. Krakaw v. Assessing Officer (1985) 38(iv) P.D. 829.
25 Shalem v. Assessing Officer (1989) 43(ii) P.D. 163. See also Income Tax Appeal (Haifa) 5/89, not yet published, where it was held that a partial interdependence of husband and wife incomes does not preclude a separate computation of tax.
26 Ben Zikri and others v. The State of Israel (1990) Missim, vol. 2 (part 1) p. E-90.
27 Income Tax Ordinance (Amendment No. 22) Law, 1975, 29 L.S.I. 215.
28 See supra n. 6.
29 See supra n. 1.
30 E.g. rich couples may consider getting a legal divorce, under the terms of which the husband will transfer all, or part of his property to his wife. A year later they may remarry. The court may have to decide whether the wife is entitled to claim a separate computation of the tax on the income derived from the property allegedly “owned by her one year before the marriage”.
31 See, for example, Freidkes, N., “Tax Discrimination Against the Self-Employed”, Ha'aretz 13 April 1992 (in Hebrew)Google Scholar.