According to an update from the Tax Authority as of 28.06.2023, the form will took effect on 1.11.2023. No new guidelines have been issued regarding the form beyond the change in the effective date.

The Tax Authority launched a comprehensive initiative aimed at helping the public fulfill its obligations and realize its rights at one of the most critical junctures in life – transitioning between jobs and/or retiring.

On April 19, 2023, an update was published regarding the new Form 161, which replaces the existing Form 161 and Form 161A (Employee Notification).

The new Form 161 is revolutionary as it shifts the responsibility of tax calculation onto the employer.

Until now, the professional responsibility rested with the Income Tax Department. With the proposed change, both the employee and the employer become responsible, even if they lack sufficient professional knowledge.

The main beneficiary of this process is the Tax Authority. Until this change, its clerks handled various calculations, but now, in most cases, the employer will have to calculate the taxes and deduct them for various funds.

Up to this, employers are required to report to the Tax Authority about any employee resignation using Form 161.

Alongside the employer’s report, the resigning employee must notify about their choices regarding grant money, such as withdrawing the  tax-free funds or allocating them to a pension fund, using Form 161A. With the current change, both the employer and the employee will report the resignation using the new Form 161, which replaces and consolidates the two forms.

The obligation to report using the new form was applied from July 1, 2023.

This obligation will include resignation events from July 1, 2023, or resignation events that occurred before July 1, 2023, but were first reported by the employer from the aforementioned date onwards.

For guidelines from the Tax Authority, click here.

In which cases are employees required to approach the “Shomah” clerk?

In cases where employers have given instructions to the pension funds in Part C.1, it is the employees’ responsibility to submit this form to the pension funds, and there is no need to approach the Shomah offices.

Employees should approach the Shomah clerk in cases where, in Part G.2 of the form, employers have directed the employees to the Shomah clerk for approval of their request. The request will be submitted to the Shomah clerk where their personal file is managed or to the Shomah clerk related to their place of residence, as appropriate.
The request can be submitted in one of the following ways:

1. The referral system of the Tax Authority

2. Personal area

3. Shomah clerk – you can visit the Shomah clerk by prior appointment (booking through the personal area / Income Tax website)

The service is provided free of charge.

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Note: “Shomah” is a term specific to the Israeli Tax Authority and doesn’t have a direct English translation. It refers to a specific type of clerk or officer within the Tax Authority.