Employee-Employer Relations: The income of the minority company will be attributed to the individual as personal income (according to Section 2(2) to the Ordinance) if the income of the minority company derives from his activity on behalf of another person, and it is the type of action that an employee performs on behalf of his employer (and see the details In section 62A(2), (3) and(5) to the Ordinance). The changes made to this alternative in the framework of Amendment No. 277 to the Ordinance are also not at the center of the petitions.
Companies with a high rate of profitability: This alternative, which was added as part of Amendment No. 277 to the Ordinance In section 62a(a1), is intended to attribute to the active shareholders of the company (as defined in the Ordinance) a portion of the income derived from activity that is highly personal (income that is not "other income" as defined in the Ordinance In section 62A(d) to the Ordinance; In human language - income that originates, in general, not capital but from a business or occupation), when the profitability of the company is relatively high. This alternative applies only when the company's profitability rate in the tax year exceeds 25%, and only in relation to companies whose income from high-intensity personal activity is less than the ILS 30 million multiplier of the number of controlling shareholders in the company. It was further determined that this alternative will not exist where the company's accumulated profits do not exceed ILS 750,000 in the previous tax year (see details In section 62a(a1) to the Ordinance). It should be noted that this alternative, and especially the conditions set for its application, are at the heart of the Petitioners' arguments In a High Court of Justice case 35810-08-25 [Nevo] In relation to Section 62A (Hereinafter: The Petitioners andThe First Petition, respectively).
Co-Income: Part of the income of the minority company will be attributed to its controlling shareholder (as defined in the Ordinance), when it comes to income deriving from a partnership in which the minority company's share in its income is less than 10%, insofar as the source of the partnership's income is the personal labor of the controlling shareholder (Section 62A(A2) to the command. When the share of the minority company in the partnership's income exceeds 10%, the permanent arrangement applies In section 62a(a1)(2)(b)(1) to the Ordinance). This alternative is not is at the center of the petitions.