Targeting spending on private schools – What the first audits showed

Sweeping checks and cross-checks are being launched by the Inland Revenue, which is targeting, among other things, tuition fees paid to private schools to confirm whether they are declared as living expenses.

Specifically, the annual objective expenditure – that is, the living expense for private elementary and secondary schools – is determined for each student based on the service receipts issued for the payment of tuition fees. The information is sent by private schools to the CPS based on the Tax ID to which the receipt is issued.

This means that the amount shown on the receipt is a presumption of subsistence and must be declared in code 769 of the E1 of the tax return by the taxpayer.

The following information is required for complete recording:

• • a) VAT number of the liable person, i.e. the parent or guardian paying the tuition fees.
  • b) Full name of the obligor, if there is no TIN by the date of signing this document.

b) The name of the person liable, if there is no TIN by the date of signing this document.

• c) Amount of tuition and fees paid for any additional benefits (e.g., activities or services beyond tuition)

The cross-checks by the tax authorities are aimed at verifying the recording of these amounts as living expenses, as many people avoid recording them, despite the fact that the expense statement has been posted on Taxisnet.

Through the first cross-checks taxpayers who did not fill in the relevant codes on the E1 form were identified, with the result that the authorities are also investigating relatives, such as grandparents, who often bear the expenses on behalf of children. Even in such cases, the expense must be declared by the person who paid the amount.

Upon completion of audits, the liable parties will be called for explanations and, in cases of older years that are soon to be time-barred, the tax authority will proceed to retroactive taxation by sending a new tax statement.

taxpayers have the option to challenge the statement if they consider it to be inaccurate. Those who do not do so are required to pay the amount due. For unaccounted-for years, taxpayers will be asked by the relevant authorities to provide the necessary information and clarify how the tuition fees are covered.

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