In both rulings, opinions were divided: the majority opinion held that the presumption of the family unit should be applied and purchase tax should be imposed accordingly, as if it were not a single apartment. The minority opinion in both judgments was that of the Honorable Committee Member, Adv. Dan Margaliot.
Adv. Margaliot was of the opinion, in both appeals, that the appeals should be accepted, in light of the problematic language of the law that established the presumption of the family unit - with regard to minors (hereinafter: the "linguistic problem"). Later on, I will describe the linguistic problem in a broader way, and I will suffice here to note the argument that the legislature, despite its clear intention, failed in its language, so that the presumption of the family unit, in accordance with the language of the law, does not apply when the purchaser of the apartment (or the seller, for the purpose of betterment tax) is the minor.
An appeal was filed against the judgment in the Hagag case to the Supreme Court - Civil Appeal 4677/17 Hagag v. Tel Aviv Land Appreciation Tax Administration [Nevo] (April 4, 2019), and on the court's recommendation, the appellants announced that they would not stand by the appeal, which was rejected.
- In the appeal here, the appellants did not return to the argument relating to the linguistic problem, and from this it can be concluded that in this context they accept what was determined in the Ibn Ezra case and in the Hagag case, and it was prima facie acceptable to the honorable panel that sat in the appeal that was filed and recommended to the appellants not to stand on their appeal.
Summary of the parties' arguments
The appellants' arguments:
- The appellants claim that the presumption of the family unit, which is set forth in the section of the law, was contradicted in this unique case, since the source of the funds for the purchase of the apartments is external to the family unit (the grandfather's money).
- Gift agreements approved by the Family Court in practice created a complete and complete separation of property between the minors and their parents, by prohibiting the parents from living in apartments or using the rent, and the money would be deposited in designated accounts in the minors' names.
In light of this, the respondent in fact did not dispute that in this case - a property separation was created between the apartments that were purchased, and the minors' parents and the other assets of the family unit.
- The Supreme Court's ruling held that when property separation is proven, the presumption of the family unit is refuted. Moreover, in the case here, while there can be no dispute that the purchase was financed from the sources of the grandfather, Mr. Shahaf only, and not from the sources of the minors' parents, there is no basis for the tax planning that the presumption of the family unit is intended to prevent.
In these circumstances and in accordance with case law, the right of each individual, as a legal personality separate and independent from his parents and the other members of the family unit, should be recognized to receive the relief established by the legislature for those who purchase a single apartment.
- Indeed, the Supreme Court's ruling, which recognized that the presumption of the family unit is not an absolute presumption, dealt with the matter of spouses, and not with the case of minors. However, this difference is technical, not essential.
When it has been determined that the provisions of the law can be interpreted as not establishing an absolute presumption, and when it has been determined that the recognition of the rights of the individual justifies a deviation from the presumption of the family unit, when from a factual point of view he has been able to point to a real separation of property that is actually implemented, it is appropriate and proper to apply the same principles to minors as well.