Civil Appeal 7719/21 Saleh Hasarmeh v. Haifa Assessor - part 9

"[T]he “tax home” of an individual engaged in professional sports has been defined as his principal place of business or employment which generally is held to be the home office of the team by which he is employed."

See: Horton v.  Commissioner for Internal Revenue, 86 T.C.  589, 594 (1986) (in the case of an ice hockey player); see also Gardin v.  Commissioner, 64 T.C.  1079, 1083 (1975) (concerning an American football player); Dews v.  Commissioner for Internal Revenue, T.C.  Memo.  1987-353 (1987) (in the case of a baseball coach ).

34. My opinion is that in a case where the professional soccer player actually lives in the city where his team is located during the period of games and training, almost all of them, a presumption arises that this city is the "center of the player's life". In order to contradict this presumption, the tax assessor must point to the most significant connections of the actor to another place.

From the general to the individual

35. The question of "center of life" arose in the three appeals before us. I will begin by addressing this question within the framework of the Kiryat Shmona Municipality's appeal.  Next, I will examine the individual case of Abed and Hasarmeh.

The "center of life" of the employees of the Ironi Kiryat Shmona Group

36. The municipality of Kiryat Shmona granted its employees, including its players, a tax discount in accordance with section 11 of the Ordinance as part of the payment of their wages. The Tax Authority denied this benefit on the grounds that eligibility had not been proven.  In the dispute between the parties on this matter, the trial court sided with the position of the Tax Authority.  My opinion on this matter is completely different.  In my opinion, in the unique circumstances of the Kiryat Shmona Ironi team, proof of the residence of its players in Kiryat Shmona during the training and game periods is sufficient in order to determine that their center of life is there.  In light of the above, I would suggest to my colleagues to accept the team's appeal in this matter, with regard to its players - and this is subject to the submission of Forms 101 to the Tax Authority.

I will elaborate on my position.

37. As explained above, we have two principles for determining the "center of life" of a taxpayer with respect to the benefit under section 11 of the Income Tax Ordinance: (1) to the extent that the taxpayer's residence in the beneficiary's locality contributes more to the locality - and in particular, when his occupation in the beneficiary's locality, for which he is liable for income tax, contributes to the locality, the taxpayer's connection to the locality grows; and (2) in general, we tend to view the locality in which a professional sports team plays as the "center of life" of the professional athlete who plays in its ranks: This is in the absence of other weighty considerations that negate such a conclusion. In our case, and as far as the players of the Kiryat Shmona Ironi team are concerned, these two principles point to Kiryat Shmona as the center of their lives - whenever they live in this city during training and game periods.
38. The Kiryat Shmona Municipal Football Team is owned by the Ituran Company, which is owned by Mr. Yehezkel (Izzy) Sharetsky (hereinafter: Sheretzky). From the testimonies heard in the trial court, it is clear that Sharetsky manages and finances the team not only for its sporting achievements in Israel and abroad, but also as a community asset of the city of Kiryat Shmona and its residents.  According to Sharetsky's view, the Kiryat Shmona Municipal Football Club should be managed in a way that unites the city's residents - men, women, children and families - around it, for whom it is a symbol and a source of pride and turns them into the team's fans.  In other words: according to Sharetsky's vision, Ironi Kiryat Shmona is a soccer team whose sporting success is only one of its goals.  The group's other goal is to improve the city of Kiryat Shmona.
39. In order to promote these two goals together, Schretzky demanded that each and every player on the team live in Kiryat Shmona during the periods of the census and games. According to the evidence presented to the trial court, the team's players complied with this order.  Some of the players lived in the city, bearing the cost of living with their own money.  Other players lived in apartments or B&Bs rented for them by the team, which also bore municipal taxes as well as payments for services such as electricity and water.
40. Moreover, the way the team treated the city of Kiryat Shmona, under the direction of Sharetsky, clearly indicates its contribution and the contribution of its active players - who lived in the city during the time of the games - to the city and the community. This donation maintains the connection of donation to the community, which is the most important of the connections that determine the center of life of the team's players in the city of Kiryat Shmona.  Moreover, the players' contribution to the community is closely related to their occupation, for which they are liable for income tax.
41. Findings addto the fact that the Ironi Kiryat Shmona team is a professional football team. As already mentioned by me: As a rule, the center of life of the players of a professional soccer team, who live in the locality where the team is located during the training and game periods, is in the same locality, and not in any other place.  Hence the presumption that the city of Kiryat Shmona willbe the center of life for the team's active players who lived there during the training and game periods.  This presumption was not hidden.  On the contrary: the manner in which the group was managed by Schretzky, described above, intensifies this presumption to the point of turning it into an absolute presumption.
42. The trial court did not see things that way. According to him, the team did not provide individual proof of a "center of life" in relation to each and every player - something that stands in its way.  My opinion, as I said, is different.  I am of the opinion that the evidence provided by the Ironi of Kiryat Shmona laid a factual foundation from which it clearly emerges that the active players of the team determined the center of their lives in the city.  Indeed, the team did not provide the Tax Authority with all the required employee cards, Forms 101 - improper conduct, which should be credited to the team and its players.  However,this is a technical-formal issue that should be reflected in expenses rulings, and nothing more.  As President Landau taught us (see: Malkov case, at   686), whenever this failure can be corrected in order to reach a result that reflects a true tax - it must be done.  In this framework, it is appropriate to give the group another and last opportunity to present the relevant 101 forms to the Tax Authority.
43. For these reasons, I would suggest to my colleagues that the team's appeal regarding the center of life of its players who were active during the tax years in dispute be accepted - subject to the presentation of the necessary 101 forms to the Tax Authority. Such players are entitled to receive a beneficiary settlement benefit for those tax years.

Ahmad Abed

44. What I said about the center of life of the players of Ironi Kiryat Shmona also applies to Abed in the tax years 2011-2013. During these years, Abed was one of the team's players and lived in one of the apartments in Kiryat Shmona, which was rented for him and some of his teammates by the team.
45. During these years, Abed was single. He moved to an apartment in Kiryat Shmona from his parents' home in Nazareth.  The trial court viewed Abed's parents' home as his connection to the city of Nazareth, and I do not agree with this determination.  I do not come to doubt Abed's connections with his family in Nazareth - it is possible that he used to visit them frequently, whenever the team's schedule allowed him to do so - but these connections do not create a "center of life" connection between him and the city of Nazareth after he left for the big world as a professional soccer player who stays with his teammates - according to the demands of the team owners - in Kiryat Shmona.
46. The trial court also tied Abed to the city of Nazareth because he was registered with a health fund in Nazareth and because he had an account in a bank branch located in that city. I cannot be a party to this determination.  The health plan card that Abed had at the time probably meant that he received medical services at any of the health fund branches, including those located in Kiryat Shmona.  A person who moves from one locality to another is not required to do anything in order to continue receiving medical services from his health fund.  The same is true of bank branches whose deployment is nationwide.  The magnetic ATM card andcredit cards, which Abed had at the time, probably allowedhim to receive banking services in Kiryat Shmona and elsewhere, and not only in Nazareth.
47. Therefore, the Tax Authority's position on Abed's case cannot stand. This position is inconsistent with the characteristics of professional football as a unique business.  Subject to exceptional cases, in which we are not concerned, the proper conduct of this business requires each and every player to live near his team's facilities; And as I have already mentioned, this demand applies even more strongly to the players of the Kiryat Shmona Ironi team, since it came from the owners of the team who determined their salaries.
48. Let's assume that an actor like Abed was born and raised in the city of Kiryat Shmona, where his family lives.  When he grew up, he received an offer to play for another team, Maccabi Bnei Reina (as the real Ahmed Abed did).  Also, let's assume that Maccabi Bnei Reina rented an apartment near its facilities and that Abed lived in the same apartment alone during the team's training and game times.  In this hypothetical case, would the Tax Authority have agreed that Abed would receive the benefit of a beneficiary settlement - Kiryat Shmona - by virtue of section 11 of the Income Tax Ordinance? It is highly doubtful in my view whether such consent would have been given.  I estimate that in this case the Tax Authority would have determined that Abed's center of life is in or around Kfar Reina - but not in Kiryat Shmona.  This assessment strengthens my conclusion that Abed moved his center of life to Kiryat Shmona during all those years when he was an active player in the Kiryat Shmona Ironi team.
49. My assessment with respect to the Tax Authority's position is not mere speculation. It is based on the facts of the judgment in the Beltinsky case.  In the case discussed in this judgment, Mr. Baltinsky, who was born in the city of Nahariya, lived in his parents' home in Nahariya until he entered regular service as an intelligence officer, when he moved to live in rented apartments in the center of the country.  After he moved to live in a rented apartment in the center of the country, Mr. Baltinsky continued to report on Form 101 that his place of residence was Nahariya, and accordingly he received a tax benefit in accordance with section 11 of the Ordinance.  During this period, Mr. Baltinsky visited Nahariya several times a month, but he worked, spent, shopped and went to the gym in various places in the center of the country (see: Baltinsky case, paragraphs 2-3 and 16).  When the Tax Authority learned of this, it rejected Mr. Balatinsky's reports and claimed that his center of life was no longer in his parents' home in Nahariya, but in his place of residence.  This position was accepted by the District Court, which heard Mr. Baltinsky's appeal, and was approved by this Court.  An examination of the Tax Authority's position in the Beltinsky case, when it is contrasted with the Tax Authority's position in the case of Abed, raises questions as to the guideline that led the Tax Authority to determine two completely opposite tax assessments: one assessment, according to which the center of life follows the taxpayer's parents; and another assessment, according to which the center of life follows the taxpayer's place of work far from his parents' home.
50. I therefore determine that the center of Abed's life as a player for Ironi Kiryat Shmona in the tax years 2011-2013 was in Kiryat Shmona, and not anywhere else. As a result of this determination, and subject to the presentation of Forms 101, Abed is entitled to receive a beneficiary settlement benefit for the tax years 2011-2013.

Salah Hasarmeh

51. Hasarmeh's case is no different from that of Abed and the other players from Kiryat Shmona, who lived in apartments in Kiryat Shmona during the periods of the games and games. For these reasons, I believe that we must determine that the center of Hasarmeh's life, when he was a player for Ironi Kiryat Shmona in the tax years 2011-2012, was in Kiryat Shmona, and not anywhere else.
52. The trial court accepted the Tax Authority's position that the center of Hasarmeh's life during the relevant tax years was in the village of Ba'ana, where his family lived and where Hasarmeh stayed whenever the busy schedule of a professional footballer allowed him to do so. In my opinion, this determination cannot stand.  As stated, theevidence indicates that Sharetsky, the owner of Ironi Kiryat Shmona, made it clear to the team's players, through his assistant, the team's CEO, Mr. Y.  Edri, that the trip of a non-team player, which takes place in Kiryat Shmona, is not acceptable to him unless it is a very short trip.  As I have already noted, Sharetsky demanded that the team's players - including Hasarmeh, despite being married and the father of children - live in Kiryat Shmona during the periods of the games and games; and this demand was fulfilled by Hasarmeh, who did not exclude himself.
53. For these reasons, even if I were willing to accept the Tax Authority's position that Hasarmeh traveled, whenever he could, to Kafr Ba'ana in order to stay with his family, this would not change the conclusion I reached. As stated, in order to determine that the center of a professional player's life is in the city where his team is located, it is sufficient to prove that the player spent the entire period of training and games in the city where the team is located.  The fact that the player visited another locality when the schedule allowed him, and even did so frequently - when he avoided travel that would disrupt his team's training and game routine - does not contradict the aforementioned presumption.  A person's place of residence does constitute a connection that must be considered when determining his center of life, but this connection is not decisive, and it is examined against other connections to his center of life.  In our case, when the connection between the residence of Hasarmeh's family is confronted with his very significant ties to Kiryat Shmona - which, as stated, includes the connection of the donation to this city and the connection of Hasarmeh, as a professional footballer, to the city of his team - the connection of the family's residence cannot tip the scales in favor of Kfar Ba'ana.
54. To the collection so far, another reason is added to the recognition of Kiryat Shmona as the center of Hasarmeh's life in the relevant tax years. Accepting the Tax Authority's position regarding players such as Hasarmeh will create unacceptable discrimination against a married soccer player with children who belongs to Arab society.  Such an actor would not normally be able to deprive his spouse and their children, who live in an Arab community in the vicinity of their family, from the traditional system of life; andhe maynot want to transfer his children to one of the schools in Kiryat Shmona, with all the cultural and social implications that this entails.  Not only that: the way a soccer player chooses to combine his professional career with family life, parenting and relationships, is not the tax assessor's business.  It is quite possible that a soccer player from the Arab sector - and from any other sector - will move his center of life to Kiryat Shmona on his own during the periods of the HaiMuna team and the games of the Kiryat Shmona Ironi team, despite being married and having a family.  As mentioned, he is the one who decides how to manage his personal and family life in the window of time when his football talent is at its peak.  He - and not us, nor the tax assessor.
55. At this point, I have no choice but to state that the center of Hasarmeh's life, as a player for Ironi Kiryat Shmona in the tax years 2011-2012, was in Kiryat Shmona, and not anywhere else. As a result of this determination, and subject to the presentation of Forms 101, Hasarmeh is entitled to receive a beneficiary settlement benefit for the tax years 2011-2012.

Tax Liability for Employee Benefits

56. As stated, the group's appeal also includes an appeal against various benefits that the group provided to its employees, which the Tax Authority determined should be considered as benefits that are subject to income tax in accordance with the Ordinance. I will first discuss the general principles for classifying a benefit as taxable work income, and then I will examine the benefits that the group referred to in its appeal.
57. Section 2(2)(a) of the Income Tax Ordinance states that a person's income tax shall be subject to any of the following:

"Earning or earning from work; Any benefit or allowance given to an employee by his employer; Payments made to the employee to cover his expenses, including payments due to the possession of a car or telephone, travel abroad, or the purchase of professional literature or clothing, but with the exception of such payments that are permitted to the employee as an expense; the value of the use of a vehicle or mobile phone radio made available to the employee; And all - whether they were given in money or in money, whether they were given to the employee directly or indirectly, or whether they were given to another for his benefit."

58. This version of the section was amended in the framework of the Income Tax Ordinance Amendment Law (No. 22), 5735-1975 (hereinafter: Amendment 22).  The purpose of the amendment was to expand the definition of "income from work" as the tax base, so that this definition would include any benefit that the employer grants to its employee as part of the employment relationship.

This was discussed by the judge א' רובינשטיין Other Municipality Requests 3844/15 Petah Tikva Tax Assessor v.  Clalit Health Services, paragraph 27 [Posted inNevo] (15.12.2016); These were his words: