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Who is eligible for an income tax exemption? What should I do if I have not accumulated the required minimum disability percentage? How is the application process for the exemption carried out and how can I best prepare for it?

Section 9 (5) of the Income Tax Ordinance grants tax exemption to the income of a blind or disabled person whose disability rate is determined to be 100% or at least 89%, according to a special calculation.

Disability percentages are determined by medical committees held at the National Insurance Institute in accordance with the National Insurance Institute's regulations.

Although the determination of disability percentages will be done by medical committees at the National Insurance Institute, the very ones you may be familiar with when submitting an application for a general disability pension. However, when it comes to applying for income tax exemption, this is a completely different process that is conducted simultaneously with the Tax Authority and the National Insurance Institute.

Income tax exemption can be obtained up to an income ceiling that is updated annually and for those for whom the required disability percentages have been determined for a period of at least 184 days in a tax year. 

The exemption can be applied up to six years back in a retroactive calculation to income such as: rent from property, pension, salary, dividends, and more.

The exemption applies to percentages of medical disability only and not functional disability. 

The application for income tax exemption, 'Application for Determination of Disability Percentages for Tax Exemption', must be submitted to the Tax Authority, along with details of the medical problems you suffer from and all medical documentation in your possession. Applications submitted directly to the National Insurance Institute without referral from the Tax Authority will not be processed.

After the application is submitted, you will be asked to pay a fee voucher, a payment for the committees that will be held. 

The tax exemption application you submitted will be received and forwarded to the National Insurance Institute for further processing, in which you will be invited to appear before medical committees.

Only after the determination of the medical disability percentages by the National Insurance Medical Committees has been completed, will the file be returned to the Tax Authority with a summary of the total weighted percentages determined. A decision letter, along with the committee minutes, will be sent to you by the Tax Authority.

How to prepare for the medical committees and what documents to present to them?

It is important to understand that this is a medical procedure. Disability percentages are determined by doctors based on their impressions of the medical documentation presented to them, their impressions of the committee, and all in accordance with the National Insurance regulations.

Since determining a percentage lower than 89% weighted will not allow for income tax exemption, it is advisable to prepare for this procedure as required, in order to obtain a fair percentage determination and to prevent the need to file an appeal.

Preparation for filing an application for income tax exemption begins long before the application is submitted and the appearance before the medical committees – by preparing a medical file that details all medical deficiencies in all aspects. The medical file should address the status of the deficiencies from the date they began and as of today in order to allow for the determination of disability percentages even for a retroactive period.

It is best to consider submitting, with the application for income tax exemption, a medical opinion in specific medical fields, as well as a summary medical opinion regarding the disability percentages that apply. In certain cases, a medical opinion is of great value and contributes greatly to determining disability percentages that correspond to the medical condition.

After you have prepared yourself properly to submit the application for income tax exemption, all that remains for you is to arrive prepared at the medical committees.

In any area where your medical file presents a medical impairment, you will be asked to appear before a committee that will discuss it and determine the percentage of disability you are entitled to due to it. You should not underestimate the importance of determining the percentage of disability for one impairment or another, since in the income tax exemption application process, each percentage of disability has great value in the final percentage weighting.

It is important that you know in advance of each committee which committee it is and what areas it will discuss. Accordingly, prepare the things you want to say to it, the main points concerning each and every impairment you suffer from.

Appeal against the committees' decision to exempt from income tax

At the end of the income tax exemption application process, if you received a letter rejecting your exemption application, you can appeal this decision within 45 days. An additional fee voucher must also be paid for the Medical Appeals Committee.

Income tax exemption for heirs

The heirs of a deceased person can apply for an income tax exemption to exempt his income from tax in the period prior to his death.

As a general rule, a tax exemption procedure can be carried out even without the presence of the disabled person, provided that there is medical justification, such as the patient's medical condition, subject to approval by a National Insurance doctor.

The process of applying for a tax exemption without the patient's presence requires special preparation, as the disability percentage will be determined based solely on the medical file.

Can I work and get tax exemption?

Absolutely yes. Quite a few employees and self-employed people are eligible for tax exemption even during a period when their medical condition allows them to continue working.