Financial statement
A capital statement is actually a statement of property and liabilities that the taxpayer is required to submit to the assessor, and this in addition to the annual tax report. In the capital statement, the taxpayer declares his assets and liabilities as of the end of the past year, or the end of a previous tax year.
Usually, every 3-4 years the assessor sends the taxpayer a capital declaration form, and asks him to complete the form within a few months. Through the capital statements, the assessor can learn about the growth of the taxpayer’s capital, compared to the previous statements, and compared to the taxpayer’s standard of living and income, in the periods between the statements. The goal is to examine whether there is an unexplained increase in capital (capital differences), between one capital statement and another.
What happens if you don’t submit a capital statement?
The capital declaration form was sent by the assessor by registered mail, so it cannot be argued that the form did not arrive. In this case, there is a presumption that the taxpayer did receive the form. Anyone who refused to accept, was judged as if he had received the form.
Anyone who does not submit a capital statement at the time set for this (usually within 120 days) along with all the required documents, will pay a fine for each month of delay. Also, failure to submit a capital declaration constitutes a criminal offense
How do you submit a capital statement in the best way?
Submitting a capital statement is not an easy task. It is important to take a series of actions, listed below:
Before submitting a capital statement for a particular year, a comparison must be made between the new capital statement and the previous capital statement to make sure there are no mistakes.
It is important to locate documents of various operations and documents of receipt of funds from various sources.
The creation of appropriate documents must be initiated. For example, if you sold a car for cash, or a valuable piece of art, it is advisable to draw up an agreement between the parties.
As a general rule, if you received money from a relative, it is preferable that the money be transferred through the bank, and not in cash, as it will be difficult to prove this. It should be remembered that the tax authority is suspicious of claims of money received as a gift from relatives.
It is important to take into account tax-exempt income, such as rent income up to the exemption ceiling.
Don’t forget to declare assets from abroad as well.
Who is required to submit a capital declaration?
Any business owner or controlling owner who opened a new business according to the income tax requirement.
Every business owner or controlling owner once every several years (3-4) according to the income tax requirement.
Employees who came up in some sample, those who purchased an expensive property (fancy car), and those who, according to the income tax, there is a concern that part of their wealth is not reported.
Another criterion for the capital statement requirement is a large activity in securities (buying and selling of securities), sometimes this requirement also applies to stock market investors who do not have to submit reports and capital statements to the income tax.
What does the capital statement include?
As we mentioned, the capital statement includes all your assets, capital and liabilities, and is divided into two parts: everything related to your business, and everything related to you personally.
And in a specific way?
Real estate – any apartment, lot, shop, property you inherited, or any other real estate you own.
Property – any vehicle you have purchased, home furniture (over a certain amount), jewelry, etc.
Equity – all the money that belongs to you that is not from the income of the business. This also refers to all your funds and insurances – bank savings plans, provident funds, education funds, etc.
Liabilities – loans, credit cards, mortgages. Both those you owe them and those who owe you.
Please note that the capital statement does not only include your data – the owner of the business, but also your spouse, and all of your children up to the age of 18. In many cases where, for example, the grandfather gives an apartment as a gift to his grandson, the apartment is registered in his name, and people forget from this in a statement. It is important to pay attention to the other family members as well.
