preface

124
TAXATION
8.3.7.3. Setting-off Capital Losses from the Sale of Negotiable
Securities Held by Individuals Losses Created With Effect
from the 2006 Fiscal Year
8.3.7.3.1. Prior to the 2006 amendment, losses from negotiable
securities held by individuals who, in determining their
chargeable income, the Adjustments Law did not apply, could
be set-off only against profit from negotiable securities. Loss
from foreign securities could be set-off only against profit
from foreign securities. With effect from 2007 fiscal year, the
"basket" of losses will be consolidated into a single basket,
such that it will be possible to set-off losses against interest
and dividends on negotiable securities. Furthermore, this is
performed by way of offsetting the tax that would have been
paid on the loss against the tax due on the realistic capital
gains from the sale of securities (tax versus tax).
8.3.7.3.2. In the context of the reform, the tendency to broaden the
"basket" for setting-off losses from securities was advanced
to 2006. Accordingly, a capital loss as aforesaid will be setoff
in a similar manner to a regular capital loss and
furthermore, the loss may be offset against income from
interest and dividends. Also, the loss will be set-off against
profit and there will be no further deductions by way of "tax
versus tax".
8.3.7.3.3. In summary, as far as losses created in the 2006 fiscal year
and subsequent fiscal years are concerned, the basket for
offsetting losses will be consolidated into a single basket,
without distinguishing between negotiable and nonnegotiable
assets, nor whether the assets are located in Israel
or overseas. A loss from negotiable securities created during
the 2006 fiscal year and subsequent fiscal years may be offset
as follows:
♦ According to the rule for setting-off capital losses prescribed
in the Ordinance - i.e. losses may also be setoff against
capital gains from the sale of non-negotiable securities.
♦ Against income from interest or dividends paid for the said
security.
BDO Israel