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Home Market Research Business

Treasury tries new tactic on advanced training funds tax breaks

by TheAdviserMagazine
6 months ago
in Business
Reading Time: 3 mins read
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Treasury tries new tactic on advanced training funds tax breaks
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After years of failed attempts to curtail the generous tax benefits on advanced training funds, it appears that the Ministry of Finance has found a new way of advancing this aim. The ministry seeks to subject advanced training funds to the rules of the planned reform designed to reduce the gaps between different savings programs, which was originally intended to equalize conditions and benefits between just three programs: investment provident funds; savings policies; and mutual funds.

Their name implies that advanced training funds are a means of financing in-work training, but in fact they have simply turned into tax-free saving schemes.

In the coming months, the Ministry of Finance and financial authorities team is due to publish its final recommendations for the plan. The Capital Markets, Insurance and Savings Authority, the regulator that supervises the advanced training funds, is adamantly opposed to the reform in general, and in particular to including the advanced training funds in it, on the grounds that this was not part of the mandate given to the team.

Sources at the Ministry of Finance involved in the work of the team believe that it is still too soon to know in what configuration the advanced training funds will be introduced into the reform recommendations. The main question is whether a tax exemption ceiling will be set for advanced training funds, similarly to what is planned for savers in investment provident funds in the framework of equalizing conditions for the different products. A less severe option will be to include the advanced training funds in the new platform to be set up for marketing and management of the various instruments “under one roof”, separately from the unifying the taxation conditions, as will probably done in the case of the pension funds.

The Ministry of Finance is currently beginning to prepare the 2026 budget. The dramatic reform in the savings market will probably be the main reform in the Economic Arrangements Law accompanying the budget, after a dearth of reforms in previous budgets. It contains benefits for the public as well as decrees, and also a welcome simplification for savers who are currently bewildered by the taxation and regulatory maze of the savings world. But if the Ministry of Finance introduces a hit to advanced training funds by the back door, it will be a quite different sort of reform.

The Histadrut (General Federation of Labor in Israel) is already gearing up for the regular fight over the advanced training funds in the context of the budget, which in previous years has ended in victory for the workers’ organization. In a letter to Minister of Finance Bezalel Smotrich, Histadrut chairperson Arnon Bar-David warned against “egregious departure from understandings with the Histadrut on the Economic Arrangements Law, among other things concerning taxation of advanced training funds.” In relation to the 2025 budget, the two sides did agree on removal of the planned hit to advanced training funds and other austerity measures, in return for a temporary cut in public sector pay.

The interim recommendations of the team responsible for the reform were published two months ago. They contained a vague reference to the advanced training funds: “The team recognized that although, in its appointment letter, it was asked to examined three short and medium-term savings instruments, there are additional instruments that serve the same purpose for customers, among them advanced training funds, holding stocks, bonds, and other securities, in independent trading accounts. Some of these products are also in an inferior taxation position in relation to some of the instruments that were examined.”

The Ministry of Finance stated in response to the report: “The team for reducing arbitrage in investment instruments for short and medium-term savings continues its work under the chairmanship of Ministry of Finance director general Ilan Rom. The team is examining comments received from the public after the publication of the interim report in February, and will proceed with its work as normal until the formulation of its final conclusions.”

Published by Globes, Israel business news – en.globes.co.il – on April 28, 2025.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2025.




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