Be wary of your investments -- the TAXMAN is watching

[iago]

Is this true? It would mean I unnecessarily declared and paid tax on my foreign investment account...

(As of this year I've figured out that I do qualify as a resident for tax purposes)

Assets and income are not the same thing. I believe the threshold is 20,000,000 income where you have to provide a detailed asset/liability report with your tax return. But whatever the threshold, you still have to declare the income from those assets...

[minamon]

I'd guess the majority of non-Japanese here have some sort of bank account abroad. I wonder how many of us declare all overseas accounts and pay tax on the interest earned? (Very few?)

If you do declare your foreign bank account and pay some tax, wouldnt that cause more problems? The J-tax folks could easily ask if youve paid enough tax, and if youve paid for all the time youve been here, and if you have any other accounts or pension funds etc.

It would be a real hassle if asked to prove everything about all accounts, getting papers from here and there for years back. Seems better to just keep quite about it unless you've left an electronic trail with transfers.

[Super Grover]

I'd guess the majority of non-Japanese here have some sort of bank account abroad. I wonder how many of us declare all overseas accounts and pay tax on the interest earned? (Very few?)

If you do declare your foreign bank account and pay some tax, wouldnt that cause more problems? The J-tax folks could easily ask if youve paid enough tax, and if youve paid for all the time youve been here, and if you have any other accounts or pension funds etc.

It would be a real hassle if asked to prove everything about all accounts, getting papers from here and there for years back. Seems better to just keep quite about it unless you've left an electronic trail with transfers.

Oh I hope everyone can be that lucky and not be found. As for the real hassle part above, yeah, it certainly was!

[minamon]

"Oh I hope everyone can be that lucky and not be found. As for the real hassle part above, yeah, it certainly was! "

It's a matter of luck (of being audited) if you have left an electronic trail.

If you haven't left a trail, then it's not luck. You've to decide if you want to declare everything, But I'm wondering if after declaring, instead of being thanked for it, you get more questions...

[O'Hanlon]

When they asked you:"Why was this money transferred or imported?" why wasn't your answer: None of your business!"?
I don't understand why would anyone answer such a question.
Once you pay taxes on your income what business is it of anyone what you do with your money?
You are under no obligation to tell anyone what you do with it.
If they are qurious/suspicious let them do their homework and try to find where the money is (provided you did the appropriate steps to shield yourself from prying eyes).
Why be cooperative/honest/forthcoming/naive etc.?

Your questions reflect an attitude that would land you in deep trouble. Tax investigators give you the opporotunity to explain cash flow/income. You can adopt a cocky attitude, then you will see how much information they already have. The access to bank accounts in Japan; and the international aggreement with other tax authorities, banks to request your financial status on, the grounds that money transfer could be suspicious. Then, when they have done their homework and received all the answers you refused to answer, they finally select one of 3 categories to "punish" you. 1. Did not understand Japanese tax law. 2 . Did understand tax law and was late paying and 3. Deliberate tax avoidance and lied/refused to disclose assets/income to the investigator. Each has a different punishment scale and type 3 is serious. Tax owed over the years income that was generated, a penalty fine and then duplication of all their findings to city ward office local tax to let them take a second bite. Considering their attention to detail, I would not have liked to see the nasty side, or have them arrive at my home.

[Super Grover]

Your questions reflect an attitude that would land you in deep trouble. Tax investigators give you the opporotunity to explain cash flow/income. You can adopt a cocky attitude, then you will see how much information they already have. The access to bank accounts in Japan; and the international aggreement with other tax authorities, banks to request your financial status on, the grounds that money transfer could be suspicious. Then, when they have done their homework and received all the answers you refused to answer, they finally select one of 3 categories to "punish" you. 1. Did not understand Japanese tax law. 2 . Did understand tax law and was late paying and 3. Deliberate tax avoidance and lied/refused to disclose assets/income to the investigator. Each has a different punishment scale and type 3 is serious. Tax owed over the years income that was generated, a penalty fine and then duplication of all their findings to city ward office local tax to let them take a second bite. Considering their attention to detail, I would not have liked to see the nasty side, or have them arrive at my home.

True, but #3 is reserved for major offenders. Also, in #3, there is a difference between refusing and having them do things. For example, in my case when they "requested" that I provide them with 5 yrs of bank statements, I got those. I could have forced them to get a court order in Canada since that is the only way the Cdn. banks will release info to outsiders and that wouldn't have been refusing. The meter was running, however, and I knew I was going to be forced to pay one way or another.

To repeat to any newbies reading this: Get an accountant!

[Ken44]

"Oh I hope everyone can be that lucky and not be found. As for the real hassle part above, yeah, it certainly was! "

It's a matter of luck (of being audited) if you have left an electronic trail.

If you haven't left a trail, then it's not luck....

Exactly. I`ve never been audited in Japan or the US because I`ve never given the tax authorities in either country a reason to question my returns.

[SantaKraut]

The purchase of a house will be the trigger for the National Tax Agency to send you a form (inquiry) asking you for information on how your purchased the house. The "inquiry" (o-tazune) carries no legal obligation for you to reply.

However, the sending of the inquiry is already an indication that the tax agency thinks something looks suspicious. So if you compound this by not returning the inquiry, you now look doubly suspicious, and instead of a friendly inquiry, you should now be preparing yourself for a fairly intrusive audit.

Are you suggesting that every time a house purchase is made in Japan the bank or the real estate agency notifies the NTA? I find that hard to believe.
Or are you saying that a notification is made because a FOREIGNER purchased a house?
Now that would be blatantly racist/xenophobe/discriminatory, wouldn't it? Not that it would be far fetched when I come to think of it as we all know foreigners are inherently suspicious (a couple of weeks ago a saw a warning on the news about "furikomi" crime, the perp was a blond haired foreigner).

As well if "the sending of the inquiry is already an indication that the tax agency thinks something looks suspicious" then as might as well not volunteer them any information, why would you disclose anything that they may or many not be able to discover on their own since the investigation will probably commence anyway?

Your questions reflect an attitude that would land you in deep trouble. Tax investigators give you the opporotunity to explain cash flow/income. You can adopt a cocky attitude, then you will see how much information they already have. The access to bank accounts in Japan; and the international aggreement with other tax authorities, banks to request your financial status on, the grounds that money transfer could be suspicious. Then, when they have done their homework and received all the answers you refused to answer, they finally select one of 3 categories to "punish" you. 1. Did not understand Japanese tax law. 2 . Did understand tax law and was late paying and 3. Deliberate tax avoidance and lied/refused to disclose assets/income to the investigator. Each has a different punishment scale and type 3 is serious. Tax owed over the years income that was generated, a penalty fine and then duplication of all their findings to city ward office local tax to let them take a second bite. Considering their attention to detail, I would not have liked to see the nasty side, or have them arrive at my home.

My contention is that when they make that inquiry they are unto you already, they are just collecting as much information as possible and hope that you'll be kind enough to provide something that they wouldn't be able to discover/dig up on their own.
It is the same when a police man comes to my door and inquires about something he thinks might be suspicious. I am under no obligation to cooperate and would never do so whether I am innocent or guilty.
There is nothing new about tax departments being able to look into people's bank activities, if that bank is located in their jurisdiction, or looking into past tax filings if the country of origin has a reciprocal agreement with the adopted country.
I think double taxation is inherently unfair so I don't see anything wrong with trying to protect one's assets from such practice.

[Super Grover]

Exactly. I`ve never been audited in Japan or the US because I`ve never given the tax authorities in either country a reason to question my returns.

Great! Your tips?

[Ken44]

Great! Your tips?

Keep wire transfer well under 1,000,000 each month and make sure money orders from Japan are kept under $3000 if sent to the US.

I use Citibank to transfer money into my US bank account. Not the J-bank where my teaching salaries are deposited.

[Majestic]

Are you suggesting that every time a house purchase is made in Japan the bank or the real estate agency notifies the NTA? I find that hard to believe.
Or are you saying that a notification is made because a FOREIGNER purchased a house?

When you purchase property in Japan, you must pay a property acquisition tax, and so through this transaction the NTA already knows the details of your purchase. The real estate agent and the bank have nothing to do with the inquiry.

The inquiry is sent at the discretion of the NTA. They do not single out foreigners. Regarding your strategy of ignoring them; best of luck.

Maj

[ozzijp]

To repeat to any newbies reading this: Get an accountant!

Agreed. Tax Audit 101. Quality advice; a rare GP phenomenon.

[AltonDelmote]

Great way to invest your money. Welcome to your new online business trading options and penny stocks.

[nkjapan]

First time reading this thread, sorry if I'm repeating any points as I only read the first and last page.

You are required by law to declare worldwide income after you have lived in Japan for 5 years (I think you have to have spent more than half of each year in Japan each year for 5 years consecutively). This includes real-estate, interest, salary/wage, trading profits etc. If you're not sure whether you're liable for this, call the tax office and without giving your name ask how it works.

You can use this to declare a loss as well remember, lowering your taxable income and possibly setting you up for a tax refund (ku tax and shotokuzei both). Travel, legal, maintenance, depreciation, salary costs... these all can be claimed here. If you're not sure how to declare, just ask the local tax office folk (take someone who speaks Japanese if you don't), if you're humble and go in with the approach that you want to get this right and would love them to teach you, they'll do 90% of the forms for you.

If you're not sure what is declarable, ASK. If you think you've paid too much, ASK. The tax office are public servants, they're not rewarded on how much they collect. If you can show that you paid too much, they'll give it back.

Once you year 20mil+ the filing is different, I'm not sure if it's the same kakutei shinkoku you'd have to use to declare other income or losses because I don't earn 20mil+, this is a different question to worldwide income however.

[nkjapan]

Agreed. Tax Audit 101. Quality advice; a rare GP phenomenon.

You don't need an accountant if you speak and read Japanese. I just went into the tax office and worked through it. It can be a hassle however, but I wanted to know how it all works.

[Super Grover]

First time reading this thread, sorry if I'm repeating any points as I only read the first and last page.

You are required by law to declare worldwide income after you have lived in Japan for 5 years (I think you have to have spent more than half of each year in Japan each year for 5 years consecutively). This includes real-estate, interest, salary/wage, trading profits etc. If you're not sure whether you're liable for this, call the tax office and without giving your name ask how it works.

You can use this to declare a loss as well remember, lowering your taxable income and possibly setting you up for a tax refund (ku tax and shotokuzei both). Travel, legal, maintenance, depreciation, salary costs... these all can be claimed here. If you're not sure how to declare, just ask the local tax office folk (take someone who speaks Japanese if you don't), if you're humble and go in with the approach that you want to get this right and would love them to teach you, they'll do 90% of the forms for you.

If you're not sure what is declarable, ASK. If you think you've paid too much, ASK. The tax office are public servants, they're not rewarded on how much they collect. If you can show that you paid too much, they'll give it back.

Once you year 20mil+ the filing is different, I'm not sure if it's the same kakutei shinkoku you'd have to use to declare other income or losses because I don't earn 20mil+, this is a different question to worldwide income however.

Well, in this thread there has been lots of discussion and disclosure. It might be an interesting? read. There's no chaotic lunacy (except for my rants) like much of the rest of GP and reading Majestic is worth the price of admission! Without going ballistic, I would suggest that this sentence you wrote is subject to interpretation:

The tax office are public servants, they're not rewarded on how much they collect. If you can show that you paid too much, they'll give it back.

I believe there is a mandate to aggressively collect tax. New(s) stories tend to support this. If you are audited as I was, there is a paper you must sign acknowledging that your right to revisit the audit expires in 3? 5? days (very short anyway). Once it's over it's over and if you missed something such as declaring family support overseas (only an example), tough noogies.

If your taxes are simple, indeed, you can go in there and they will help you. Like tax agencies around the world, however, they will not explain ways to minimize your taxes (firsthand experience). If one's situation is somewhat complex, using a smart, qualified accountant is the only way to go. S/he will save you thousands.

[nkjapan]

sure. My situation was simple. I'm not american and I own offshore real-estate. Minimizing tax meant filling in the depreciation claim correctly and including backup documentation. I did find the folk at the tax office very pleasant to deal with, but I speak Japanese well enough that it wasn't a struggle.

If you have a more complicated situation, particularly if you're from the states and have to pay tax on your worldwide income there also, then I agree a top level tax accountant will make your money back dozens of times over. It took me 3 visits to the local tax office to get everything sorted so it's not for everyone. I didn't do that for the fun of it either, the tax accountant I wanted to work with was unavailable for a month so I just thought what the heck and went in and started asking questions.

Going forward I might use a tax accountant anyway (I think I'm doing the depreciation too quickly and could get another 1-2 years of benefit, also I want to add more income streams) but I highly recommend the experience. You make a very good point that they're not there to help you lower tax, that's true, but understanding at a really low detail how the process works meant I felt more in control of what was happening.

[minamon]

sure. My situation was simple. I'm not american and I own offshore real-estate. Minimizing tax meant filling in the depreciation claim correctly and including backup documentation. I did find the folk at the tax office very pleasant to deal with, but I speak Japanese well enough that it wasn't a struggle.

-----------
Just wondering -- did you declare your offshore property in your first year as a Japan resident?
If not, did the tax office start quizing you about where you got the money to buy the property, whether you paid all J-taxes on it for all the time you've been in Japan, etc.?

[nkjapan]

-----------
Just wondering -- did you declare your offshore property in your first year as a Japan resident?
If not, did the tax office start quizing you about where you got the money to buy the property, whether you paid all J-taxes on it for all the time you've been in Japan, etc.?

In my case I purchased the property 5 years after arriving. Even if I had bought it earlier I would not have been liable for any taxes because your worldwide income is not taxable in Japan until you have been resident here five years.

No they did not quiz me about where I got the money to buy the property (more than one now). Perhaps this is because the property is a rental for mid-lower income earners and was not expensive... but actually I think this is because I accumulated the deposits during the 5 years where my global assets where not taxable .

I hope that answers your question...

I've found from talking about the experience of using real-estate to offset tax with others that it's a 4 hour conversation and everyone has different questions and stages of readyness - so I'm putting all my experiences about this into an ebook and I'll post here when it's ready.

[nkjapan]

Maybe this calculation helps -

If you do have untaxed income, what would it cost you to pay all back-taxes on that?
Now, if you were to wipe out all shiminzei and shotokuzei for 4-5 years what is that worth to you?

Which number is higher?

[iago]

Maybe this calculation helps -

If you do have untaxed income, what would it cost you to pay all back-taxes on that?

Don't forget to factor in interest and penalties, though...

[minamon]

In my case I purchased the property 5 years after arriving. Even if I had bought it earlier I would not have been liable for any taxes because your worldwide income is not taxable in Japan until you have been resident here five years.

No they did not quiz me about where I got the money to buy the property (more than one now). Perhaps this is because the property is a rental for mid-lower income earners and was not expensive... but actually I think this is because I accumulated the deposits during the 5 years where my global assets where not taxable .

I hope that answers your question...

Yep, thankx.

[TJrandom]

... Some people are saying that the J Govt will want their cut too on that foreign income after residing here for over 5 years? I find that very hard to believe!

Yes a refusal to believe what is known to be true - is sometimes called constipation of the brain. It is sometimes brought on by too much radiation, but some people are just born that way. Now if you said that it was hard on your wallet - well, then most would understand.

[TJrandom]

Where does it say that I get taxed ...

http://www.mof.go.jp/english/tax_pol...xes2010e_c.pdf

Please see II.a (page 32).

[TJrandom]

But it doesn't.

....

But it does. Unless of course you are not actually living in Japan. The Japan tax laws clearly state that if you have lived in Japan 5 out of the last 10 years, that you pay taxes on worldwide income. Yes - there are adjustments for taxes paid to foreign governments - such as Australia, but you are taxed in Japan.

And - no, I am not going to go into double taxation or tax treaties - I am only saying what the Japan tax law says. If you want to quote Australia tax law to a Japan tax authority - please be my guest.

This is where we started:

Some people are saying that the J Govt will want their cut too on that foreign income after residing here for over 5 years? I find that very hard to believe!

[edin日本]

TJ, my take on that section is that it's vague enough for there to be any number of loopholes-one of which is that the Japanese would consider any profits made overseas by a non corporate individual to be taxed first by the J gov't. This of course wouldn't sit well with the British tax people, who consider that they get to levy taxes on all property and investments first.

Madmax, in short, you are going to get hosed.

[Majestic]

Max, TJR posted something which clearly states your tax obligation to the NTA, and TJR was kind enough to point out the exact page where you could find it. You are simply being obtuse and pretending the passage does not apply to you because of your particular interpretation of a wonderfully vague phrase in an Australian tax guide. A tax treaty doesn't automatically absolve you of any taxes due to another country. The tax treaties generally offer you relief from double-taxation through credits or deductions, but there is no guarantee of a one-for-one credit, and the treaty certainly doesn't grant you blanket amnesty from filing taxes in your country of residence.

However, I have no doubt you will continue to pursue your line of thought in which the ATO has generously granted you abstention from taxes owed to Japan. Best of luck.

[TJrandom]

So the devil is in the detail... Of which you draw a big blank...

So be it - but at least I challenged your suggestion that it was BS. It is definately not BS - it is the law.

[iago]

But it doesn't.

That's why we have tax treaties, so we aren't taxed twice. I don't see any mention of tax treaties in the page you quoted.

In any case each country has different laws. i am only referring to Australia and its tax treaty with Japan, for which I have posted in black and white direct from the ATO, and it clearly states that taxes are paid only in Australia on Australian property...

Again...

"Income, profits or gains from the alienation of real property and from the alienation of shares or other interests in land rich entities, or from the alienation of business assets of permanent establishments or assets otherwise attributable to a permanent establishment may generally be taxed by the country in which the property or permanent establishment is situated."

You haven't posted anything that otherwise contradicts this.

But it doesn't say "only". It just says it may be taxed by the country in which the asset is established. It may also be taxed by the country in which the owner is resident (e.g. Japan).

The reciprocal tax treaty will define how much of the tax paid in one country can be used as a deduction to offset the tax payable in the other country in order to avoid some or all of the double taxation.

The Australian tax authority doesn't have jurisdiction over the Japanese tax code. The tax treaty governs the reciprocal agreement between the two authorities.

In principle, you can be taxed twice on the same income. The tax treaty exists so that in practice you are not (or at least the burden is reduced -- i.e. if the amount you would be taxed on it in Japan is higher than the amount you would be taxed in Australia, you will likely still have to pay the difference if your are a permanent resident in Japan for tax purposes).

[jrp]

Madmax, you are so wrong in you assumptions - and good luck trying to change either the Aussie or J taxman's interpretation of Tax Laws.

What's funny is you probably also don't realise you may also get taxed on your Japanese earnings when you get back to Aussie (minus what you've already paid to the J govt). It's a bit hard to get retrospective non-resident tax status if you still have a rental property that you're paying tax on while you're away.

http://www.ato.gov.au/taxprofessiona...tent/64144.htm

Introduction Australian residents are taxed on their worldwide income. This page outlines the tax implications in Australia if you are working or thinking about working overseas. You will also need to take into account the tax law of the country you are working in. If you are working overseas, you need to work out whether you are still an Australian resident for tax purposes. If you are unsure, Residency - what you need to know can help you work out your residency status. Non-residents pay tax differently to residents on their Australian sourced income. The following flowchart will help you work out if you need to lodge an Australian income tax return.

[jrp]

That link doesn't tell me anything I don't already know. Non residents still pay tax to Australian on their assets at 30% in the case of rental income. It says nothing regarding Japan and the treaty tax treaty with Australia. Still no definitive, or useful links...

Anyway... Any real world examples? No evidence up to this point anecdotal or otherwise of Aussies being double taxed in Japan on foreign income...

So what Aussies on these forums have had foreign income such as rental income taxed by the J Govt?

And if you have... why bother even putting yourself in a position where you are doubletaxed... To live in Japan? Lol?

It's pretty simple, just search the ATO and J tax-man sites, or you can even ring the ATO and ask, or there are loads of legal case studies on-line that anyone can access. Why the fcuk should anyone else spend time doing for you what you can do for yourself.

What you'll end up finding out is you have to comply with both countries tax laws:
1. Australian tax residents are taxed on their worldwide income.
2. Japanese tax residents are taxed on their worldwide income.
3. Because of the Double Tax Agreement you don't don't end up paying twice - but you have to declare your income to both countries tax agencies. So you are not double-taxed as you put it because of the Double Tax Agreement.
4. Both Japan and Aussie are voluntary tax systems. It's up to you whether you comply with the law or not. But if you don't, and you're caught - then the penalties are very steep.
5. In your case it probably be worth either countries tax department to go after you as you have a rental property (unless the bank owns too much of it) so they would probably be able to cover the penalties you will owe them.

Sounds like you are declaring your income for Aussie earnings in Aussie (your rental property) - but you are meant to declare your worldwide income (your Japanese earnings) - which I don't think you are.

I would also assume you pay tax in Japan for what you earn in Japan - but are not declaring your worldwide earnings (your rental income in Aussie). I think you will find you are breaking both countries tax laws.

Luckily for you most tax departments do not automatically share information - so it possibly won't become an issue for you. But is sounds like the J tax-man has done a data mine and sent information requests to Canadian and US tax agencies (almost all the 'Western' tax agencies have data sharing agreements). And it looks like it has been successful for them so they will probably do more.

If they do a similar check with Aussie, and you haven't declared all your worldwide income correctly, then you might be in for a visit from the tax-man - and you can spout on about what you think all you like - it won't change anything.

It's pretty simple really.

[Super Grover]

That link doesn't tell me anything I don't already know. Non residents still pay tax to Australian on their assets at 30% in the case of rental income. It says nothing regarding Japan and the treaty tax treaty with Australia. Still no definitive, or useful links...

Anyway... Any real world examples? No evidence up to this point anecdotal or otherwise of Aussies being double taxed in Japan on foreign income...

So what Aussies on these forums have had foreign income such as rental income taxed by the J Govt?

And if you have... why bother even putting yourself in a position where you are doubletaxed... To live in Japan? Lol?

Hello. I started this thread to warn and help others, not wanting them to find themselves in a situation similar to mine (hopefully over and done with forever!). As far as I know there has been an absence of BS in this thread.
Tax departments in quite a number of countries do indeed have cooperation agreements where they share information. Australia and Japan cooperate. If you were to have quite a bit of time and were to read through the many postings, you'd find that I mentioned I knew several people who were also audited. One of those is (and their audit is ongoing some six+ months later) an Australian, though I did not state that. He is being totally roasted for failing to be cooperative. I thought my situation was a nightmare, but compared to his I got off easy (I did NOT get off easy, however!). There is no magic silver bullet for Aussies, sorry.
Majestic was kind enough to point out that taxation does not line up/cancel each other out from country to country. As a result, people like me ended up across from these cockroaches as they tried every trick in the book. I think you need to develop a more in depth understanding of the ways taxes are applied. They suck!
As for the rest, people are often unaware of the tax laws, and, personally, I believe that the tax authorities here wait until they can collect maximum penalties. Why remain/be in Japan, etc.? Well that is just childishness, isn't it? Some of us are experts in our fields. Some are married with kids mid-way through school. Some are hooked on Japanese food, anime, yukata and riding the Keio Line trains!

[Super Grover]

My Aussie friend was just stubborn. He is paying the price for that. But in fairness to his situation, it seems like the NTA here is looking to create a revenue stream from him. Most people do not seems to realise that these agents have targets to meet. The louder you complain, the more vicious they will become because they sense there must be something more to find.

I am sure that for many it is not so easy to up and leave, though when it was happening, I was considering that. Then we wondered, "Would they simply come after the other if one of us left?" We actually do not know the fine points of that scenario. When the crash happens (I think it has only just begun), stock prices will be incredibly undervalued, so we will want to take advantage of them one last time. Yet if we can, and make some real money, the tax bill would be punishing. At that time, I will have to know whether to leave or not.

[Ken44]

I asked an accountant here in the States about the US tax treaty between Japan and was told I have nothing to worry about even though I am a long-term resident of Japan who owns investment rental properties in the United States:

2010 return
Property #1 shows $40,000 profit, property#2 $10,000 loss. Roll over losses from previous years and my net gain is $0.

Now.... if I understand correctly the Japanese are required to abide by what the IRS determines and Schedule E line 26 on my 2010 tax return has $0 total rental income (after write-offs) so I paid no US taxes.

Thus I have no overseas income to declare


But I've had tax accountants screw up before and tried looking up:
http://www.treasury.gov/resource-cen...8-c24f360101f2

in order to verify what I was told but I can't really understand the legal jargon.

[Ken44]

Update:

First off while it is true Japanese tax officials can obtain a complete rundown on all of my US assets they are required to have just cause.


However, to be on the safe side...

American lives in Japan six years and buys rental property in US.

O.k. what to do...?

1. File US taxes first.

2. Bring tax return to J-tax accountant and file J-taxes. J-accountant must work off US tax return and accept write-offs allowed in US. If U.S. IRS says you earned $0 net income J-tax office must abide. The key is to make sure you file correctly in the US and everything is in order.


But .. what can I do given I have never reported my U.S. rental income and suddenly get audited by J-tax authorities?

1. Bring copies of US tax returns proving income was never hidden in the US.

2. Explain since I had no net income in the US that I didn't think I was required to report anything in Japan.

3. I will be hit with a penalty but there will be much less trouble if (a) I wasn't seen as deliberately trying to scam the J-tax authorities and (b) that I wouldn't have owed money had I filed correctly from the beginning.


So what will I do now....?

Nothing.

I've never given the J-tax authorities reason to audit me and don't plan on starting anytime soon.

However, if I ever do get called in I now have a plan of action.

[TJrandom]

... How would they know about the assets in nz, if you're not remitting money?

In principle, they will not.

But once you receive more than 20mm in income, you are required to provide a list of assets when you file your tax return – so you would be telling them about those assets.

[Super Grover]

Question to those who have attracted the attention of the NTA: was your income above the standard tax rate, over 8 million?

I do not know what the "standard tax rate" might be, or if "income" means "salary," but "yes" in my case.

It is the remittances that attract attention.

[skimpy]

Question to those who have attracted the attention of the NTA: was your income above the standard tax rate, over 8 million?

In my case my Japanese income is well below that but I still attracted attention...and my transactions were below 1 million but I must admit I did quite a few transfers or around the 8~900,000yen figure.

Interestingly I got my PR 5 years ago...so it seems like it's collection time for the NTA.
Surely there must be more profitable avenues...behaving in this manner will only scare away those who planned to add to the population pool.

BTW, I apologise if this has been answered before but can anyone tell me what amount one can receive each year as gift money? And would that mean individually, so say a family or 3 could receive 3 times that?

[Dusty McNugget]

Surely there must be more profitable avenues...behaving in this manner will only scare away those who planned to add to the population pool.

Thats it there for me. To keep the wife happy I had possible long term plans to keep assets in Australia and do some sort of early retirement thing in Japan. This thread is like a real turn off for me. The possibility of inheritance tax also concerns me greatly.

I wonder if there is a way to spend half the year in Japan without being a resident? Three month tourist visa's and some sort same day return flights to Korea might be in order.

The fact the J gov is really stooping to this shows how well and trully f a r k ed things are now in Japan. The country is a shadow of its former self.

[shamar]

I find myself approaching the 5 year mark. Although I would like to continue staying on I really can't see it happening. I would be interested to know if you agree with my thinking.

I am 43, Australian non-resident status, staying in Japan on a spouse visa. Main purpose of stay in Japan is for the kids to attend regular J school and be raised as bi-cultural. I work as a business E instructor and do the weddings gig on the weekend. The problem comes with the investments in Aust, $1.3m in shares, $300k in term deposits, no property. At the moment I am only required to pay 10% withholding tax on the bank interest, the share income through dividends is not considered (probably wrong choice of words there), but also the imputation credits cannot be taken into account. I probably earn about 4m yen in Japan. I file 2 different tax returns which at the moment are independant of each other.

Now, I realise that from the 5 year mark, my worldwide income will need to be disclosed if I stay in Japan. Would this mean the income that I am required to declare on the Aust tax return, ie $18000 in interest earnt of which $1800 tax is paid, or would I also need to disclose all the income earned in Australia, ie include the dividends, with the imputation credits?

I realise that I will need to get professional advice on it, but just looking for others opinions first.

Thanks a lot.